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Identifier
Created
Classification
Origin
05SANAA1833
2005-07-06 08:47:00
CONFIDENTIAL
Embassy Sanaa
Cable title:  

DPM SOFAN ON CORRUPTION, USDA FOOD AID, AND

Tags:   ECON  ECIN  EAID  YM  COM 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
						C O N F I D E N T I A L SECTION 01 OF 02 SANAA 001833 

SIPDIS

CAIRO - PASS TO ATO/ASIF CHAUDHRY. USDA FAS WASHINGTON -
PASS TO KATRINA REID.

E.O. 12958: DECL: 07/03/2015
TAGS: ECON ECIN EAID YM ECON COM
SUBJECT: DPM SOFAN ON CORRUPTION, USDA FOOD AID, AND
MILLENIUM CHALLENGE PROGRAM

C O N F I D E N T I A L SECTION 01 OF 02 SANAA 001833

SIPDIS

CAIRO - PASS TO ATO/ASIF CHAUDHRY. USDA FAS WASHINGTON -
PASS TO KATRINA REID.

E.O. 12958: DECL: 07/03/2015
TAGS: ECON ECIN EAID YM ECON COM
SUBJECT: DPM SOFAN ON CORRUPTION, USDA FOOD AID, AND
MILLENIUM CHALLENGE PROGRAM


1. (SBU) Summary: CDA Nabeel Khoury met with Deputy Prime
Minister and Minister of Planning and International
Cooperation, Ahmed Sofan, on July 2 to discuss USDA food aid
program implementation, corruption, and Yemen's Millenium
Challenge Account (MCA) Threshold plans. Sofan agreed with
the DCM that the recent tendering of USDA food aid
commodities was not conducted in an open and transparent
manner and promised to fix the mistake. On the Business Plan
for Yemen's MCA Threshold program, Sofan agreed to
reinstitute corruption in the ROYG's MCA business plan either
as a stand-alone program or a cross-cutting issue with
specific steps in mind. End summary.

-------------- --------------
Issue of Corruption in the MCC Plan: Where Did it Go?
-------------- --------------


2. (SBU) In the ROYG's MCA Threshold concept paper, the ROYG
stated that the issue of corruption would be a main focus of
the Threshold implementation plan. However, in early drafts
of the implementation plan, corruption was not included as
one of the chosen foci. CDA Khoury communicated to Sofan
that the issue of corruption was central, in our view, to any
serious reform in Yemen and that the MCC presented an
opportunity for a realistic program to fight corruption -- an
opportunity that should not be missed. Sofan said he was
surprised that corruption had somehow been dropped from the
wrok plan and agreed that it should be featured prominently.
Sofan did, however, suggest a "delicate" phrasing of an
anti-corruption campaign in order not to "offend anyone."
CDA encouraged Sofan to cooperate fully with the USAID-funded
anti-corruption experts to fashion a long-term plan for
combatting corruption. (NOTE: Ministry of Planning and
International Cooperation (MOPIC) requested technical
assistance for MCA programs and the US has sent the two
currently visiting USAID-funded anti-corruption, democracy,
and good governance experts to assist MOPIC
. End note).

--------------
MOPIC Dragging Heels: The Marib Museum
--------------


3. (SBU) CDA raised the issue of the Marib Museum project,
which was agreed on in 2003 as one of the projects to be
funded by proceeds from the USDA food aid program. In a June
22 letter to Sofan, CDA requested that MOPIC transfer funds
to third-party government agencies in a timely and expedient
manner, starting with the Marib Museum project. The
memorandum of understanding (MOU) for this $3 million project
was signed by Sofan and former Ambassador Hull on March 17,

2004. Despite clear and specific 2-week fund transfer
requirements outlined in the MOU, MOPIC still had not
transferred funds to the implementing agency, the Social Fund
for Development (SFD). Sofan agreed saying, "Let's wrap up
the books on these old projects."

--------------
FY-05 PL-480 Tender: Not Kosher!
--------------


4. (SBU) The FY-2005 PL-480 agreement for USDA food aid has
yet to be signed between the ROYG and USDA Washington.
Nevertheless, the ROYG tendered, sold and selected a winning
bidder two-weeks ago without an agreement on said
commodities.


5. (SBU) In addition, the ROYG carried out negotiations after
the opening of the bids. (NOTE: Such practices are red flags
for potential corrupt practices and side deals. End note.)
In response, Ambassador Krajeski sent a letter to Sofan
outlining Embassy objections. USDA temporarily halted the FY
2005 food aid process pending further investigation and
clarification of the matter. In his meeting with CDA, Sofan
agreed that any negotiations conducted after the opening of
the bids do not adhere to international standards of
tendering. He ordered another tender but warned CDA that the
prices garnered may be lower than the first invalid tender.


6. (C) Comment and Action Request: The pre-emptive tender of
FY-2005 PL-480 commodities did not meet international
standards of transparency and violated the spirit of an open
and competitive bidding process required in USDA-ROYG food
aid agreements. In addition, Deputy Finance Minister
Al-Nahari leveled accusations of collusion amongst the bulk
distributors at a June 15 meeting with Emboff. The improper
procedure followed by MOPIC officially raises suspicions of
collusion with these distributors to fix prices in exchange
for kickbacks. MOPIC may have been embarrassed by Embassy
attention to suspicious activities and the temporary halting
of the FY-2005 food aid process. Sofan's comments about
lower than previous bid prices represent a subtle threat that
greater attention to international standards may result in
less aid to the Yemeni people. Having obtained an apology of
sorts and a promise to do things by the book, we are ready to
recommend to USDA the signing of the FY 2005 food aid
agreement. We promise, in our turn, to carefully monitor the
process and report our observations to Washington. End
Comment.
Khoury