GOA MOVES TO STOP CORRUPTION

C O N F I D E N T I A L SECTION 01 OF 02 ALGIERS 001652

SIPDIS

E.O. 12958: DECL: 08/10/2015
TAGS: ECON EINV PGOV EPET AG
SUBJECT: GOA MOVES TO STOP CORRUPTION

Classified By: Ambassador Richard W. Erdman, reasons 1.4(b)(d).

SUMMARY
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1. (C) A growing realization of the economic and development
costs of pervasive corruption in Algeria, coupled with
reported pressure from some key senior military figures, is
prompting increased government efforts against corruption.
Over the past several months, President Bouteflika has made a
number of high profile statements highlighting the evils of
corruption and indicating that no one, regardless of his
position or rank, will be immune from government prosecution.
Prime Minister Ouyahia also launched his politically
controversial "mains propres" (clean hands) initiative. A
new law on corruption was passed in June enlarging the
definition of corruption to include any kind of "illicit
enrichment", stiffening penalties for such offenses, and
establishing a new government body to design and implement a
national anti-corruption strategy. While the government has
only tackled the tip of the corruption iceberg, it has begun
to send pointed messages about its seriousness in cracking
down by: convicting senior government officials (the Wali of
Blida and former Wali of Oran),a retired senior military
officer, the transportation director of Oran; dismissing 55
customs officers, including several senior officials;
convicting, dismissing, or reprimanding several judges; and,
most significant of all, suspending and prosecuting 20
officials from Sonatrach, Algeria's hitherto sacrosanct
cash-cow. (End Summary.)

GOA CRACKS DOWN ON CORRUPTION
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2. (C) A source with close ties to the senior military
recently told Ambassador that a key motivating factor behind
increased Algerian leadership efforts against corruption over
the last several months was a memo to President Bouteflika
from Military Intelligence Director Tewfik Mediane. In this
memo, Mediane apparently expressed alarm over the dimensions
of the corruption problem and the need to address it by
sending a clear message to officials at all levels that
corrupt practices will no longer be tolerated. This same
contact, who has advised the senior military on a number of
issues and is in close contact with President Bouteflika,
told the Ambassador over a year ago he was advising that the
only way to address pervasive corruption was to go after some
high profile targets in order to set an example and send a
clear message to all officials. This same source said that
recent actions (see below) against mid-level managers in
Sonatrach was part of a deliberate effort to warn more senior
officials.

BOUTEFLIKA: NO ONE WILL BE IMMUNE
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3. (C) In this context, Bouteflika launched the
anti-corruption campaign with a high-profile speech in March
in which he highlighted the costs of corruption for national
development and made clear that no one, regardless of his or
her position, would be immune from prosecution. Since then,
there have been a number of high-profile investigations,
prosecutions, and convictions. The most prominent of these
has been the suspension and investigation in June of at least
20 managers of Sonatrach for suspected violations of contract
awarding procedures. While the daily El Watan broke the
story June 25, claiming that 130 officials of Sonatrach and
subsidiary firms like Naftec and Naftal, had been dismissed
following an official audit, Energy Minister Khelil the same
day told the Ambassador and subsequently the press that only
20 employees were under investigation for contract award
irregularities and had been suspended rather than dismissed.
(Comment: At Khelil's initiative, Algeria in 2001 adopted the
"Baosem rules" for oil and gas tenders, which provide for
lowest-price automaticity and are supposed to increase
transparency. Press articles this week quoted Khelil as
saying the number of suspended Sonatrach employees was 24.)


4. (C) Oil industry sources separately told Ambassador that
over-invoicing, leaking information to interested parties,
and tailoring tender specifications in return for kickbacks
were thought to be involved. According to El Watan, one
particular case under investigation involved over-invoicing
the purchase of improper gaskets from an international firm,
which the paper went on to speculate may have been a factor
in the Arzew LNG plant explosion last year. More recently,
El Watan reported August 3 that Khelil sent a formal letter
to Sonatrach Director Mohamed Meziane, who has notably made
no public statements on the apparent scandal, demanding all
documentation on recent sales. Separately, an adviser to
Privatization Minister Temmar recently acknowledged to Econ
officer that "vested interests" who have benefited from
corruption were themselves now trying to adapt to the new
market-based economy in order to maintain the profitability
of their operations. The anti-corruption or "Clean Hands"
campaign, as it has been labeled, has been criticized by some
officials, including the President's Personal Representative
Belkhadem, who see the crackdowns at local and Wilaya levels
as unfairly targeting FLN officials involved in customs
scandals, false invoicing, or illegal property transactions.

ANTI-CORRUPTION LAW PASSES PARLIAMENT
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5. (U) The Anti-Corruption Law passed Parliament in June and
is expected to pass the Senate in September. (The law was
expected to have passed the Senate in June, but did not make
it onto the Senate's pre-vacation calendar.) The law
reinforces existing legislation to comply with the U.N.
Convention against Corruption and contains provisions to
promote transparency in government and public procurement.
The legislation also contains new categories of crime (such
as "illicit enrichment"),reinforces existing penal
sanctions, and creates a new national organization to design
and implement a national anti-corruption strategy. The law
legitimizes the GOA's "Clean Hands" campaign that, in the
words of Head of Government Ouyahia, would spare no one in
government, including local officials.

ACTIONS AGAINST CORRUPTION IN
ORAN AND BLIDA SEND A SIGNAL
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6. (U) Many high-profile cases surfaced in the past several
months. In April, a criminal tribunal delivered guilty
verdicts on corruption charges against the ex-wali of Blida,
Bachir Frik, and ex-director of the real estate development
agency in Oran, Laoufi Tayeb. Both were sentenced to 8 years
in prison and a fine of 500,000 Algerian dinars (roughly
$7,000). In Oran, the ex-Wali was prosecuted on corruption
charges. Also in Oran, the wilaya's transportation director
was taken into custody on charges of "abuse of authority,"
"abuse of public confidence," blackmail, and corruption.


7. (U) In another case, Jutop beverage company's director
Cherif Abderezzak was jailed July 8 for forgery, use of
forged documents, and misappropriation of public properties
and agricultural lands in Blida. Abderezzak, using forged
documents approved by the former Wali of Blida, allegedly
took possession of three hectares of land, which he did not
own, for development of a mineral water plant and a dairy
products plant. Abderezzak was also able to submit the
paperwork and gain approval for the entire project within 41
days, an amazingly short period of time, leading observers to
question the transaction. The Director of Construction and
Urbanism from the Wilaya of Blida was also jailed for his
alleged involvement.

CORRUPTION IN CUSTOMS
AND THE JUDICIARY
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8. (U) Le Quotidien D'Oran, a respected French-language
daily, reported in February that the senior Algerian customs
official, Director General Sid Ali Lebib, said that 55
customs officers, 11 of whom were senior officers, had been
dismissed. Lebib indicated the dishonest behavior was
discovered as a result of thorough investigations into
corruption and embezzlement and that the results were
"solid." He said the fight against corruption within the
cadre of customs officers was very serious and that actions
tarnishing the reputation of customs officers would not be
tolerated. For its part, the Ministry of Justice Inspector
General led investigations in April against 40 judges and
disciplined 20 others, eight of whom, according to press
reports, were dismissed from their positions.

ERDMAN