Identifier
Created
Classification
Origin
05SANAA3206
2005-11-02 12:57:00
UNCLASSIFIED
Embassy Sanaa
Cable title:  

MOPIC PLAYS SHELL GAME WITH USDA $60 MILLION

Tags:  PREL EAID YM ECON COM 
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UNCLAS SANAA 003206 

SIPDIS

E.O. 12958: N/A
TAGS: PREL EAID YM ECON COM
SUBJECT: MOPIC PLAYS SHELL GAME WITH USDA $60 MILLION

UNCLAS SANAA 003206

SIPDIS

E.O. 12958: N/A
TAGS: PREL EAID YM ECON COM
SUBJECT: MOPIC PLAYS SHELL GAME WITH USDA $60 MILLION


1. (SBU) Summary: Ambassador met with Deputy Prime Minister
Ahmed Sofan on October 17, to convey USG's serious and
growing concerns about the U.S. Department of Agriculture
(USDA) food aid programs in Yemen. Ambassador told Sofan
that USDA is sending a compliance team shortly to investigate
and review the ROYG's handling of the programs from 1999 to
present. The review must precede authorization of a 2005
shipment and any future programs. Sofan shied away from
responsibility on previously signed commitments, saying, "It
is in your hands, not ours." End summary.

--------------
BACKGROUND
--------------


2. (SBU) In recent months, post has investigated the ROYG's
management of various PL-480 and 416b programs since 1999.
These programs amount to more than $80 million. According to
a September 28 conversation with USDA Export Credits Deputy
Director Ron Croushorn, USDA estimated that approximately $60
million remains unspent in Central Bank accounts. Post,
however, estimated that there were approximately $50 million
in unspent funds, based on limited documents, an estimate of
commodity sales, and the promised return of misallocated
funds by the ROYG. During the investigation since May 2005,
Post discovered several questionable expenditures and
processes in the program, which were reported to USDA FAS
Cairo and USDA Washington.


3. (SBU) On September 12, in an effort to resolve these
problems, DCM and MOPIC Director General Nabil Shaiban signed
minutes that outlined the following ROYG commitments:

a) Transfer of $8.9 million in misappropriated funds to an
interest-bearing commercial account by October 30;
b) Transfer of all FY 2003 and FY 2004 funds (amounting to an
estimated $39.5 million) to an commercial account by end of
October;
c) Signing of seven FY 2003 MOUs which have not been
completed since October 2004;
d) Cooperate with an official USDA review;
e) Justification for the purchase of 75,000 school desks; and,
f) Transfer of $1.6 million to the Social Fund for
Development (SFD) for the Marib Museum (allocated in
2002/2003)

--------------
"THE COMPLIANCE TEAM IS COMING"
--------------


4. (SBU) USDA will be sending a compliance team to Yemen to
review ROYG's management of the food aid program since 1999.
The Ambassador met with Sofan to communicate, in strong
terms, the seriousness of this action. He pointed out that
"this assessment must precede authorization of the 2005
shipment and any future programs." He urged Sofan to
complete all the commitments signed by the DCM and Shaiban
before the compliance team comes in order to demonstrate that
the ROYG has cleaned up the management of the program. Sofan
asserted that an honest effort was underway to meet all
commitments but his government would not be returning the
$8.9 million in misallocated funds until January when a new
budget line for the item can be put in the national budget.


5. (SBU) Ambassador explained that the issue is not just the
$8.9 million, but that the ROYG needs to transfer as much as
$60 million from the Central Bank into an interest-bearing
commercial account by October 30 and sign the seven 2003
MOUs. Ambassador continued, "You've got less than two weeks
to do this according to the agreement." Sofan indicated
that he knew of the commitments of the agreement, but
insisted that it was the Embassy that was stalling on the
program, that he would not do anything without the agreement
of the joint Embassy-MOPIC technical committee, and closed by
saying: "It is in your hands, not ours." The Ambassador
firmly disagreed, "No, it's in your hands," and ended the
meeting then moved on to other bilateral issues.


6. (SBU) As a direct result of this meeting, post received
the seven requested 2003 MOUs on October 22. We have yet to
see, however, a new interest-bearing account created in which
to place all food-aid money.
Krajeski