Identifier
Created
Classification
Origin
06CONAKRY1764
2006-12-04 15:35:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Conakry
Cable title:  

SYLLA/FUTURLEC SAGA: BLOCKING GUINEA'S PROGRESS TO A

Tags:  EFIN ECON PGOV IMF GV 
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VZCZCXRO5608
RR RUEHMA RUEHPA
DE RUEHRY #1764/01 3381535
ZNR UUUUU ZZH
R 041535Z DEC 06
FM AMEMBASSY CONAKRY
TO RUEHC/SECSTATE WASHDC 0300
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHZK/ECOWAS COLLECTIVE
UNCLAS SECTION 01 OF 02 CONAKRY 001764 

SIPDIS

SIPDIS

SENSITIVE

TREASURY FOR OFFICE OF AFRICAN NATIONS
TREASURY FOR USED IMF AND USED WORLD BANK

E.O. 12598: N/A
TAGS: EFIN ECON PGOV IMF GV
SUBJECT: SYLLA/FUTURLEC SAGA: BLOCKING GUINEA'S PROGRESS TO A
FUNDED IMF PROGRAM?

REFS: (A) Conakry 1718, (B) Conakry 1446

UNCLAS SECTION 01 OF 02 CONAKRY 001764

SIPDIS

SIPDIS

SENSITIVE

TREASURY FOR OFFICE OF AFRICAN NATIONS
TREASURY FOR USED IMF AND USED WORLD BANK

E.O. 12598: N/A
TAGS: EFIN ECON PGOV IMF GV
SUBJECT: SYLLA/FUTURLEC SAGA: BLOCKING GUINEA'S PROGRESS TO A
FUNDED IMF PROGRAM?

REFS: (A) Conakry 1718, (B) Conakry 1446


1. (SBU) SUMMARY. In the aftermath of the IMF's recent criticism
of Guinea's monetary and economic performance (ref A),EconOff
discussed Guinea's return to a funded program with IMF resident
representative Alvin Hilaire. In Guinea for less than two months,
Hilaire echoed the donor community's fatigue of Guinea's inadequate
economic reforms. Hilaire said the private Central Bank accounts of
Mamadou Sylla as well as relations between his holding company,
Futurlec, and the central government remain the most conspicuous
problems. After three audits of Futurlec's transactions with the
government, the matter remains unresolved. The audits were the
subject of much public speculation but, in the end, provided more
questions than answers and highlighted Guinea's fiscal weaknesses.
Hilaire believes holding Sylla responsible for his debts would be
interpreted as proof of Guinea's will and ability to implement
reforms, and would restore some confidence in the government. End
Summary.

--------------
Sylla and Futurlec Wearing Heavily On Guinea
--------------


2. (SBU) The recent IMF technical team's assessment of Guinea's
economic and monetary performance was critical (ref A). As the
government of Guinea analyzes the team's findings, EconOff asked
Guinea's IMF resident representative, Alvin Hilare, what Guinea
could and should do to reestablish a funded IMF program. Hilaire
said policy changes, while necessary, take time, but for immediate
positive effect, Guinea must resolve the "fiasco" of Mamadou Sylla's
overdrawn personal accounts at the Central Bank as well as unclear
financial transactions between his company, Futurelec, and the
national government.


3. (SBU) Initially one of the IMF's preconditions for return to a
funded program, the Sylla/Futurlec problems remain the subject of
much public speculation and provide fodder for critics of the
government (ref B). The third and most recent of the audits was to
be the definitive accounting, but it raised more questions than

answers. The official audit results have not been widely published
-- neither EconOff nor the IMF representative has seen the full
report.

--------------
I WON! I WON!
--------------


4. (SBU) Upon the conclusion of the audit, Sylla declared victory
and circulated a redacted and heavily edited portion of what
purports to be the definitive accounting. Sylla's company,
Futurlec, did and still does provide bonafide services to the
government of Guinea. Its current services are primarily supplying
food and other provisions to the military. Many of these
transactions are considered "sovereign" and are not made public.
The audit clearly stated that the findings "do not take into account
any of the transactions linked to sovereign expenditures for which
there exists no one set of justifying documentation." Since the
services are ongoing, it is most likely that the government of
Guinea has outstanding debts to Futurlec.


5. (SBU) However, Sylla also had a personal account at the Central
Bank, unrelated to services Futurlec provided to the government.
That personal account was overdrawn by 6 million USD. In their
accounting, Sylla and his lawyers leverage the government of
Guinea's contractual obligations to Futurlec against Sylla's
personal debts. In the accounting process, as in general discussion
of the matter, separation of Sylla and Futurlec is nearly
impossible. At the Central Bank itself, the Sylla and Futurlec
accounts were crossed at various points, with funds being
transferred between the two. The contradictory audit results are
mired in the inability to determine where Sylla's account begins and
Futurlec's ends.

--------------
AND THE WINNER IS?
--------------


6. (SBU) The ambiguity of the audits fatigues the donor community.
The "fiasco" to which Hilaire refers is both a reflection of
presidential cronyism and the Central Bank's chaotic bookkeeping
practices. Although present in Guinea for less than two months,
Hilaire already exhibits little patience for the host government's
inadequate reforms. The Sylla/Futurlec affair is particularly
egregious, and Hilaire refuses to allow the issue to be muddied.
His stance on holding Sylla responsible mirrors that of the IMF
technical team.

CONAKRY 00001764 002 OF 002



--------------
COMMENT
--------------


7. (SBU) COMMENT. The lone bright spot in Guinea's economic
picture is the series of budget reforms implemented for FY2007 and
their attendant budget review and justification processes. Those
reforms, however, are largely the results of U.S. Treasury technical
assistance and World Bank norms to which the government has agreed
to conform. Those steps, while admirable, do little to raise the
public's confidence in the government or satisfy the donor
community's desire for more immediate results. It is clear that, in
the eyes of the donor community, the Futurlec saga and Sylla himself
are liabilities to Guinea.

MCDONALD