Comoran Union Government Fights Shell Banks

UNCLAS ANTANANARIVO 000411 SIPDIS SENSITIVE SIPDIS DEPT FOR AF/E AND EB DEPT PASS USTR PARIS FOR D'ELIA E.O. 12958: N/A TAGS: EFIN PTER PGOV PREL ECON CN SUBJECT: Comoran Union Government Fights Shell Banks REF: ANTANANARIVO 399 ¶1. (SBU) SUMMARY: In an ongoing struggle to attract foreign investment and repair the country's reputation, the Government of the Union of the Comoros has taken steps to address its "shell banking" problem and has renewed its request for U.S. assistance. Vice President Idi recently briefed PolEcon Chief on his efforts to eliminate money laundering and potential terrorism finance in the Comoros. Central Bank Governor Abdoulbastoi shared with us his dossier of actions against illicit financial institutions. The Governor emphasized that only the Union Central Bank, with the consent of the Union Finance Ministry, has the legal authority to issue banking licenses. He renewed his call for U.S. assistance in spreading the word that Anjouan-accredited institutions are illegal and must be barred from world financial activities. END SUMMARY. Vice President Hosts Money-Laundering Seminar -------------- ¶2. (SBU) The worldly Vice President Idi Nadhoim understands that the Comoros' international reputation for coups d'etat, shell banks, and possible terrorist harbor deters legitimate investors. Charged with attracting foreign capital to revive the Comoran economy, Vice President Idi has actively courted hoteliers and other businesspeople to the country's exotic shores. On the margins of the U.S. - Comoros bilateral talks April 19 (reftel),Idi was eager to brief PolEcon Chief on steps he had initiated to stop shell banking and money laundering in the Comoros. He is particularly keen to address this and other issues which may block the Comoros eligibility for the African Growth and Opportunity Act (AGOA). ¶3. (SBU) Vice President Idi and the Union Central Bank Governor recently co-hosted a widely publicized seminar on Union policy to combat money laundering and terrorist finance. With sponsor Bank of France, the World Bank, and other financial officials in attendance, the event highlighted the problem of Anjouan's "Offshore Finance Authority" which has sold illicit banking licenses for USD 25,000 each. Marc Lanteri, head of the Franc zone at the Bank of France, made a presentation on financial risk management and money laundering. ¶4. (SBU) Vice President Idi and colleagues cited World Bank analysis that a stable and healthy financial system is a prerequisite for economic growth; as important as governance and infrastructure. Jean Pierre Michau, advisor to the Governor of the Bank of France, indicated that internet-based banking license sales by Anjouan were against Comoran law and facilitated fraudulent banking activity. In a public statement Vice President Idi named Mr. Lecler, resident of the French Department of Reunion, as an accomplice of Anjouan authorities in setting up money laundering operations. ¶5. (SBU) A press report following the event highlighted "Anjouan Corporate Services" based in London and managed by Ronnie Dvorkin, indicating that this and other entities sanctioned by Anjouan Island authorities were in violation of Union finance laws and regulations. Union Central Bank Shares Shell Bank Dossier; Requests Help - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ¶6. (SBU) Vice President Idi also instructed Union Central Bank Governor Abdoulbastoi to send the entire shell banking dossier to the Embassy. The package includes Central Bank notices indicating the following entities are not sanctioned by Union authorities: National Bank of Anjouan, the International Company Office, the Wall Street Bank, anjouan.net, anjouan.com, and anjouan.org. Governor Abdoulbastoi cited a 2003 law which gave sole authority for granting banking licenses to the Union Central Bank and the Union Ministry of Finance. Having already communicated with banking authorities in Brussels and Paris, he asked that American authorities prohibit financial transactions with these and all other banks accredited illicitly by authorities of the Anjouan Island Government. Abdoulbastoi further requested that all internet sites of shell banks and other entities with illegal Anjouan licenses be closed. The Governor requested U.S. technical assistance in their efforts, expressing full willingness of Union finance authorities to be open and cooperative. ¶7. (SBU) The Union Central Bank shell bank file includes correspondence with several French commercial banks and banking authorities calling attention to shell banks and related internet sites established illicitly by the Anjouan Island Government. The Union Central Bank has issued several public announcements warning financial institutions about any entity associated with Anjouan, indicating these shell banks were illegal under Comoran law. Regularly published circulars list the six banks legally accredited by the Union Government: Central Bank of Comoros (BCC),Commerce and Industry Bank (BIC - Comoros),Comoros Development Bank (BDC), National Post Office and Financial Services Company (SNPSF),Meck Union, and Sanduk Union. ¶8. (SBU) COMMENT: The Comoros shell banking problem is one of several frustrations facing Union of the Comoros President Sambi with respect to his lack of authority over Anjouan Island President Bacar. During the Ambassador's recent visit to the Comoros, Sambi was holding his council of ministers meeting in Anjouan as a symbolic demonstration of unity. President Bacar maintains a personal army of at least 100 "bodyguards," and continues to resist Union Government attempts to integrate all Comoran security forces. Bacar thus runs Anjouan as his personal fiefdom, raising money with shell banking and other illicit activities. Having failed to bring Bacar into the fold by force or compromise during his year in office, Sambi is now pushing for observers to guarantee fair Island President elections in Anjouan; thus -- hopefully -- allowing the polls to rid him of his Bacar problem. END COMMENT. MCGEE