(C) GOK RESPONSE ON IRAQ ASSETS IN BAHAMAS BANK

S E C R E T KUWAIT 005188 SIPDIS NOFORN EB/ESC/TFS FOR GGLASS AND NROTHSTEIN; S/CT FOR SFOX; IO/PHO FOR APEREZ E.O. 12958: DECL: 11/12/2013 TAGS: EFIN ECON ETTC PREL KU IZ SUBJECT: (C) GOK RESPONSE ON IRAQ ASSETS IN BAHAMAS BANK REF: A. SECSTATE 311703 ¶B. KUWAIT 5001 ¶C. KUWAIT 4840 ¶D. SECSTATE 310891 ¶E. 2002 KUWAIT 4266 AND PREVIOUS Classified By: CHARGE D'AFFAIRES FRANK C. URBANCIC, Reasons 1.4 (b),(d) and (e) ¶1. (C) In a 6 November meeting with the Minister of Finance, Ambassador delivered the substance of Ref A demarche on the $85 million in Iraqi assets frozen in a Bahamian bank. The Minister said that a joint Ministry of Foreign Affairs/Central Bank of Kuwait team had been established and was investigating the issue. The panel will deliver its report within two to three weeks. Econ Chief repeated the demarche on 9 November to the MFA Americas Department deputy, who confirmed that the investigation was underway and that the Ministry would report back to the Embassy as soon as possible. Econ Chief again delivered the message on 12 November at MFA. It should be noted that during OFAC Director Richard Newcomb's 4-5 October visit to Kuwait (Refs B and C),Central Bank officials said that they would abide by the relevant UN sanctions committee's decision on whether or not contested Iraqi assets should be transferred to the Development Fund for Iraq (DFI). However, they said they needed some time to review the commercial banks' claims before forwarding that information to the UN for review. ¶2. (S/NF) COMMENT. Post will continue its follow up on this. Certainly, our hand in pressing such issues would be strengthened considerably were OFAC to offer reciprocity on information exchanges with the GOK. During the October visit, GOK requested and OFAC promised to provide, transactions data that the GOK says are needed to meet OFAC's request for assistance regarding Kuwait Finance House operations. Specifically, OFAC agreed (Ref C) to forward detailed information (e.g., dates and amounts) on transactions carried out by the Kuwait Finance House on behalf of Lajnat al-Dawa al-Islamiya (LDI). Post has not succeeded in obtaining that information from OFAC (most recent request made by email on 2 November). Further, GOK complained of delayed action on an OFAC pledge to respond to the Revival of Islamic Heritage Society's petition to lift the freeze on its Afghani and Pakistani assets (Ref E). This matter was first raised during OFAC's May 2001 visit and revived for the May 2002 trip to Kuwait. Regarding LDI issues, our interlocutors report that once OFAC provides the promised information on the disputed transactions, the GOK will begin its investigation. With respect to these matters, clearly the ball now is in OFAC's court. URBANCIC