DEPUTY FINANCE MINISTER SHAHRANI - CORRUPTION IS

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E.O. 12958: DECL: 11/07/2016
TAGS: EFIN ECON PGOV AF
SUBJECT: DEPUTY FINANCE MINISTER SHAHRANI - CORRUPTION IS
UNDERMINING BUDGET SUSTAINABILITY


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Classified By: AMB RONALD NEUMANN for reasons 1.4(b) and (d).

1.(C) SUMMARY: Deputy Finance Minister Wahidallah Shahrani
told ECON Counselor that corruption in Customs, the Interior
Ministry, and among local governors is a limiting factor to
revenue collection, threatening Afghanistan's effort to
achieve budget sustainability. In some cases, private tolls
charged by MOI border police commanders and provincial
governors are threatening customs revenue collections. The
lack of transparency and accountability in governors' private
operating budgets is a corrupting influence. Shahrani, a
member of the GOA's anti-corruption committee, asserted that
the Finance Ministry's internal audit division would be
actively deployed to fight corruption by reviewing government
agencies' records. END SUMMARY.

2.(C) DFM Shahrani opened his October 30 meeting with ECON
Counselor with an apology for his late arrival because the
meeting of the GOA's anti-corruption committee, chaired by
the Chief Justice, had run long. He explained that the
committee is working on a report due to President Karzai in
early November. The committee, he said, has identified five
sources of corruption:

a) Nepotism;
b) Top GOA officials involving themselves in day-to-day
government activities;
c) Low government salaries;
d) Too many government offices;
e) Powerful private individuals wielding undue influence over
government officials.

3.(C) Shahrani highlighted corruption among Customs
officials, throughout the Interior Ministry, and local
officials as causing serious problems for the Finance
Ministry and the GOA in general. Nepotism is rampant in the
Herat and Islam Qalah Customs offices. He claimed that 70%
of the staff is from the same lineage group, and asserted
that this may be a factor in a recent case in which 700
vehicles crossed the border from Iran without stopping at the
border customs post. Shahrani prescribed establishing a
transparent hiring process as the solution to the problem.
In response to ECON Counselor's suggestion that following
through with the establishment of the Border Management
Initiative interministerial committee could provide effective
leadership, Shahrani agreed, but lamented that a breakdown in
communication between Customs and the interior Ministry has
prevented consensus on the basic question - which ministry
will chair the committee.

4.(C) At the root of the problem, Shahrani asserted, is the
corrupt behavior of interior ministry officials. He stated
plainly that the internal financial management of the
interior ministry is a complete mess. It is "rife" with
irregularities, he added. Border Police commanders in some
provinces are stopping commercial traffic and assessing $10
per truck private tolls. (Reftel noted that the Border
Police in Kunduz province are allegedly diverting traffic
away from the official border customs post by charging fee
rates lower than official tariffs.) According to Shahrani,
governors in Jalalabad, Ghazni, and Kandahar have followed
suit. He added that the Finance Ministry is not receiving
expenditure reports on the special operating budgets provided
to the governors of these three southern and eastern
provinces. Shahrani noted that since these special
allocations began, the security situation in the south has
worsened. He has also heard that ambitious individuals have
resorted to "unethical behavior" as they sought gubernatorial
appointments in the south. (COMMENT: Whether individuals
subsequently received appointment is unclear. END COMMENT.)

5.(C) In closing, Shahrani emphasized that the MOF's Internal
Audit division, which is responsible for reviewing the

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accounting records of government ministries and agencies,
would soon be aggressively deployed in the anti-corruption
campaign. He noted that a young, western-educated Afghan
with the family name of Sabit (a nephew of the Attorney
General) heads the office.

6.(C) COMMENT: Shahrani, a crisp, precise speaker, surprised
us by opening the meeting with a well-prepared, tightly-woven
presentation on the GOA's anti-corruption efforts, including
accusations against several government officials. Shahrani
is well aware of USG interest in this subject and that future
USG assistance could be endangered if there isn't progress on
anti-corruption. He may want to divert attention from the
MOF since squabbling with the MOI has laid ample blame on
each side. Clearly, the Finance Ministry is worried that
corruption will undermine revenue collection and the GOA's
ability to achieve budget sustainability. The fact that the
MOF's primary anti-corruption unit, the Internal Audit
division, is led by a nephew of Attorney General Sabit
suggests the Finance Ministry will support the Attorney
General's and GOA's effort to fight corruption. END COMMENT.
NEUMANN