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
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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
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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