Kazakhstan: Procurator General Begins

UNCLAS ALMATY 000977

SIPDIS


DEPARTMENT FOR EUR/CACEN (JMUDGE, KLOGSDON),DRL/PHD PDAVIS,
EUR/ACE (MO'Neil),EUR/PPD

DEPARTMENT PASS TO USAID

SENSITIVE

E.O. 12958: N/A
TAGS: PGOV PREL PHUM KPAO KZ POLITICAL
SUBJECT: Kazakhstan: Procurator General Begins
Investigation of 33 U.S. Mission Implementing Partners

Ref: Almaty 346 and previous


1. (SBU) Summary: On March 9, the Procurator General's
Office (PG) for the City of Almaty, Kazakhstan
systematically began investigating 33 U.S. Mission
implementing partners at the instigation of Mazhilis member
E.A. Abilkasimov. Officials from the Procurator's Office
were often accompanied by members of the Financial, Tax or
Immigration Police. They requested immediate access to
financial and program documents, in some cases taking copies
with them and in others indicating return visits. Partners
received no advance warning and were told that non-
cooperation would be grounds for office closings and
criminal prosecution of individual staff.


2. (SBU) Summary, continued: The authorizing letter for the
scope of the investigation was quite broad, requesting
access to all financial and program documents dating back to
the original registration date of each organization in
Kazakhstan. While the list of organizations to be audited
contains a range of democracy, health and economic sector
agencies, GOK officials have told us that the purpose is to
investigate political party financing. The list contains
American for-profit and not-for-profit organizations,
international organizations with diplomatic status and
locally-registered NGOs. Based on the Ambassador's
discussions with senior GOK officials, the Mission has since
developed a cooperative framework for the investigations.
Nevertheless, they will continue for 30 days and will likely
place significant burden on democracy partners, who have
just finished complying with an earlier round of audits
begun in mid-January. End summary.

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Details of Investigations
--------------


3. (SBU) In January 2005 the PG, Tax Police, and Immigration
Police targeted five implementers of USAID's democracy
portfolio -- the Eurasia Foundation, Counterpart Consortium,
IRI, NDI and Freedom House (reftel). In response,
Ambassador Ordway and USAID's Regional Legal Advisor (RLA),
David Harden, met with Procurator General R.T. Tusupbekov
and agreed that no further investigations would be
instigated until the PG had first contacted the U.S.
Mission, discussed any concerns, and arranged mutually-
agreeable, reasonable terms for the audit. These
procedures, however, were not followed in the March
investigations.


4. (SBU) From March 9-11, the PG visited 18 organizations,
giving no advance warning to 14 of them, and in several
cases threatening partners with office closings and criminal
prosecution of staff. The PG initiated the audits in quick
succession, limiting the ability for anyone from the U.S.
Mission to be present. On the evening of March 9, after the
inspections had already begun, the Ambassador received a
faxed letter dated March 4 from Acting Procurator General I.
Bakhtibaev, indicating that from March through April his
office would conduct audits of U.S. funded organizations
operating in Kazakhstan.


5. (SBU) The audits were requested by Mazhilis member E.A.
Abilkasimov. Among the list of organizations to be audited
are American for-profit and not-for-profit organizations,
locally-registered Kazakhstani organizations, and
organizations with diplomatic status. The authorizing
letter allows PG officials and other Government authorities
access to all financial and program documents dating back to
the organization's original date of registration in
Kazakhstan.


6. (SBU) From March 9-11, the PG visited the International
Center for Not-for-Profit Law (ICNL),Counterpart
Consortium, Eurasia Foundation, the National Democratic
Institute (NDI),and the International Republican Institute
(IRI),Abt Associates, Alliance Open Society Institute
(OSI),Internews, Institutional Reform of the Informal
Sector (IRIS) from the University of Maryland, John Snow
Incorporated, the Kazakhstan International Bureau for Human
Rights and the Rule of Law, Pokoleniye (a Counterpart
grantee not on the original list),Project Hope, and


International Foundation for Electoral Systems (IFES).


7. (SBU) On March 10, 2005, USAID's RLA met with the Deputy
Prosecutor General of the City of Almaty, who narrowed the
scope to a single inquiry - support of political parties.
They mutually agreed that the investigations would
temporarily halt until a logical framework for the audits
could be negotiated between the two governments. However,
inspections continued March 11 with visits to an additional
four partners - International Research and Exchanges Board
(IREX),Adil Soz, Pragma, and the International Organization
for Migration (IOM).


8. (SBU) In two cases - at IRI and Counterpart - the PG made
several visits over the course of three days and directly
threatened the American chiefs of party. The PG visited IRI
on three separate occasions within two days, each time with
different letters and different teams of people. One
letter, signed by the Procurator General for Almaty, was
delivered by the PG and Financial Police, indicating a
general audit of financial and program related documents.
The second letter, signed by the Deputy Procurator, was
delivered by the PG and Immigration Police, requesting
registration documents for all foreign staff with particular
interest in a consultant from Russia, Yuri Asseev.


9. (SBU) The two teams, although from the same office, were
unaware of each other's mission. IRI, at USAID's direction,
requested that the PG return Friday afternoon so that
someone from the U.S. Mission could be present. The PG
official initially complied, but then returned and insisted
on access to all documents. Officials were so insistent
that IRI's Chief of Party went into her office and closed
the door to phone USAID, but the PG team still tried to
enter. She then informed the officials that USAID's RLA was
en route to a meeting with the Deputy Procurator to resolve
this issue and requested that they return at a later date.
The Immigration Police said they would return March 11, but
did not.


10. (SBU) Counterpart was visited March 9, 10 and 11. The
Tax Police had just favorably concluded an audit begun in
January. At that time, the Tax Police had asked for a list
of all banking transactions since 2001. After intervention
from USAID, the authorities agreed to a brief summary rather
than a detailed list. However, on March 10, the Tax Police
phoned Counterpart and demanded once more the complete,
detailed list of transactions. The call was immediately
followed by a second visit from the PG, stating that USAID's
meeting with the PG had just ended, the U.S. Mission had
agreed to the audits, and therefore the PG had the right to
continue its investigation.


11. (SBU) The investigators threatened Counterpart, saying
that any refusal to comply would be considered non-
cooperation and grounds for the PG to close Counterpart's
office and press criminal charges against staff. They gave
Counterpart three days to provide a range of documents.
Nevertheless, they returned the following day. Eventually
they left, after talking to the RLA by phone, taking a copy
of a USAID-issued email indicating that the PG had agreed to
temporarily halt any audits until agreement could be reached
on the scope, and receiving a letter from Counterpart
stating a willingness to comply with the audit once the
scope was resolved.

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Ambassador's Meeting with the GOK
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12. (SBU) Given the quick escalation of the situation, the
Ambassador, accompanied by the USAID Acting Mission
Director/RLA, met with Deputy Minister of Foreign Affairs
Aleksey Volkov on March 11 in Astana. Representatives from
the PG, Interior Affairs/Migration Police, Financial Police,
Finance/Tax Committee, and Presidential Administration also
attended. DFM Volkov praised the role of U.S. assistance in
Kazakhstan and offered the meeting as an opportunity to find
a way forward for the United States and Kazakhstan on
questions of NGO activities in country. The Ambassador
highlighted the importance of the U.S.-Kazakhstan
relationship, the U.S. expectation that NGO partners will


abide by both U.S. and local law, and the need to engage the
Embassy first and immediately if there is a question about
the activity of a U.S.-funded NGO.


13. (SBU) The PG representative explained that
investigations into NGO activities had been launched based
on a January request from Mazhilis member Abilkasimov. The
PG's principal concern was whether NGOs are funding
political parties. USAID Acting Mission Director/RLA
challenged this assertion since some of the groups targeted
do not work on democracy issues and the scope of the
investigation order is appears to be unlimited. Volkov
interjected that the broad list of NGOs, some not even
associated with the United States, simply demonstrated that
law enforcement action was not directed solely at U.S.
democracy NGOs but had the broader secondary purpose of
accounting for the range of NGO activities in Kazakhstan.


14. (SBU) The PG representative maintained that his office
merely wishes to "look at the books" of NGOs. The
Ambassador emphasized that the United States does not object
to audits or document checks of NGO partners, but there must
be agreement on the manner in which verification proceeds.
USAID Acting Mission Director/RLA spelled out three requests
for Kazakhstani law enforcement -- fair notice to the
Embassy of intent to visit a U.S. NGO partner; display of
proper identification upon arrival at an NGO's premises; and
a written order that sets out the scope of the
investigation. (Comment: That the Kazakhstani reps
appeared to see nothing unusual in broad/unlimited
investigation orders suggested that this may be a more
general law enforcement practice. End comment.) The
parties agreed to meet again on March 14 to discuss in
further detail how to accommodate these requests.

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Meeting with Partners
--------------


15. (SBU) On March 14, USAID hosted a meeting between the
Deputy Procurator for the City of Almaty and two of his
investigators with representatives of the targeted
organizations. The DCM and Acting USAID director attended
the meeting. The Procurator's Office was very open about
the scope of the investigation and fielded questions from
implementing partners. While the time frame will be limited
to 30 days (with a possible additional 30 day extension in
unusual circumstances),the scope remains quite broad. It
covers political party financing, employee records and
salaries, program activities, legal status of the
organization, and registration of branch offices. Documents
to be collected include the organization's charter and by-
laws; asset, banking, taxation and accounting records,
including contracts, invoices, agreement terms and amounts,
and sub-grants; a list of main activities, seminars,
trainings, and participant lists; employment documents; and
similar information on branch offices.


16. (SBU) The PG will issue a second letter this week to
each organization indicating the start date for the audit
and naming the investigators assigned to each audit. If
investigators overstep their scope, organizations have the
right to protest to the PG. The Deputy Procurator indicated
that the inspections are not to impede normal operations of
the organization. At the end of the audits, the PG will
issue a summary report per organization. This will be made
available to the organization for copying, so that they can
prove the scope and completion of the audit. The PG will
then compile the reports into a single document for Deputy
Abilkasimov.

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Comment
--------------


17. (SBU) Comment: The agreement of the GOK to work closely
with the U.S. Embassy in defining the scope of the
investigations is a step in the right direction. Also
positive was the willingness of representatives of the
Almaty PG not only to meet with assistance organizations,
but also to answer their questions in a USG venue.
Nevertheless, resolving this issue is going to be a long,


difficult, and time consuming process. Representatives
from assistance organizations remain extremely wary of the
investigations. Several Kazakhstani heads of local pro-
democracy NGOs receiving USG grants held a March 14 press
conference following the meeting with PG officials. These
NGO representatives accused the GOK of launching
"politically motivated" inspections against their
organizations. End comment.


18. (U) Minimize for Dushanbe considered.

Ordway


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