WASIT PROVINCAL FINANCES: TREASURY, PROVINCIAL COUNCIL AND

UNCLAS HILLAH 000065

SIPDIS

SENSITIVE

SIPDIS, BAGHDAD FOR TREAS--TAECKER, IRMO-FFA FOR GALLALEE

E.O. 12958: N/A
TAGS: EFIN EAID KCRS PGOV IZ
SUBJECT: WASIT PROVINCAL FINANCES: TREASURY, PROVINCIAL COUNCIL AND
GOVERNOR PREPARED TO SPEND IRAQI RECONSTRUCTION FUNDS.



1. (SBU) SUMMARY. In a April 12 meeting with Regional Embassy
Office staff, Wasit Provincial Treasurer Lu'ay Allah Wardi
described procedures instituted by the Wasit provincial
government to obligate and disburse the Regional Development and
Rapid Reconstruction funds allocated to the province by the
Baghdad Ministry of Finance. Overall, provincial authorities
appear to have the technical capacity to receive and obligate
the funds, as well as meet central government imposed reporting
requirements. Less certain is the ability of provincial
authorities to monitor reconstruction contracts for satisfactory
performance. Wardi, however, indicated that additional employees
sent to the province by the Ministry of Finance were
ill-prepared for their jobs and required additional training.
END SUMMARY


2. (SBU) Wardi said that he, Wasit Governor Lateef Turfa, and
members of the Provincial Council (PC) had opened two separate
bank accounts. The first account is designated for the receipt
of funds from the Regional Development allocation and is
controlled by the Governor. The second account will hold funds
from the Rapid Reconstruction allocation and is controlled by
the PC Chairman. Wardi does not foresee problems with this
arrangement as the respective Directors General would be
required to approve contracts and projects in their sector.


3. (SBU) A list of planned projects has already been forwarded
to the ministries of Finance and Planning, according to Wardi.
Many contractors have already received an advance of seven
percent, as specified by Iraqi contracting regulations. Wardi
did not know if any of the projects slated for this fiscal year
would be greater than USD one million and thus require approval
of a subcommittee of the Council of Ministers. However, he was
confident, that the PC had enough projects pending to obligate
the entirety of both accounts by the end of the FY 06.


4. (SBU) The Wasit Deputy Governor, according to Wardi, is
heavily involved in the contract oversight process, often
conducting site visits personally. Television stations in Wasit
also report heavily on the award of contracts and reconstruction
progress. Wardi did not know if other provincial council member
or Directors General were involved in contract oversight


5. (SBU) Of the seven additional accounting personnel promised
to the province by the Ministry of Finance, only four have
arrived, and they are young and poorly trained, Wardi related.
He is conducting additional training personally and does not
foresee problems in meeting his accounting and reporting
obligations. Wardi also reported that he expects to be connected
to the electronic Financial Management Information System in the
near future.


6. (SBU) COMMENT: Wardi is an experienced manager of Wasit's
finances with over 40 years of government service in the
province. His judgment that the Wasit provincial government has
the technical capability to obligate the two main Iraqi
reconstruction funds is likely accurate. More troubling is the
apparent lack of an established plan for oversight of the
contracts. REO staff will raise this issue with the Deputy
Governor within the next week. The technical ability to spend
the money, however, does not mean the Provincial Council has
developed a plan for reconstruction that adequately takes into
account the needs of the entire province, particularly the
often-neglected mixed Sunni-Shi'a areas of Northwest Wasit.
Given the domination of the Provincial Council by members from
provincial capital of Al-Kut and the presence of several
prominent general contractors on the PC, this will be a
challenge.END COMMENT

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