SLOVENES TALK DEMINING TROUBLES WITH PM/WRA OFFICE

C O N F I D E N T I A L LJUBLJANA 000081

SIPDIS

SIPDIS

EUR/NCE FOR SSADLE, PM/WRA FOR MMCLOY, EUR/SCE, EUR/ACE

E.O. 12958: DECL: 02/11/2017
TAGS: MARR MASS KCRM PREL SI
SUBJECT: SLOVENES TALK DEMINING TROUBLES WITH PM/WRA OFFICE
DIRECTOR KIDD

Classified By: COM for reasons 1.4 (b) and (d)


1. (C) SUMMARY. Recently, both International Trust Fund for
Demining (ITF) and Slovenian Ministry of Foreign Affairs
staff expressed concern over the allegations of possible
malfeasance in the Bosnian demining sector, but understood
the importance of addressing them head on before the
reputation of ITF is irreparably harmed. While USG and
Bosnian authorities are taking the lead on investigating
demining problems in Bosnia, both ITF leadership in Slovenia
and the MFA pledged full cooperation and support with
investigations. All parties support an approach that keeps
demining activities going, works to keep the investigations
nonpolitical, and makes clear their committment to
transparency and accountability for USG-funded demining
programs in the region. END SUMMARY.

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Taking on Allegations of Malfeasance at ITF
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2. (U) Office of Weapons Removal and Abatement Office
Director Richard Kidd met on February 5 with staff from
Slovenia's International Trust Fund for Demining (ITF).
February 6 he met ITF Supervisory Board Member and Ministry
of Foreign Affairs (MFA) Security Policy Department Director
Stanislav Vidovic and MFA Director General for Bilateral
Affairs Bogdan Benko. At all three meetings, Kidd relayed
USG points on allegations of malfeasance in the Bosnian
demining sector, the response of ITF, and how the USG plans
to investigate allegations while moving forward with demining
programs.


3. (U) ITF Director Goran Gacnik began the meeting on
February 5 with a progress report on ITF's activities in
2006, a look at key challenges, and then an overview of plans
for the organization in 2007. Gacnik was generally positive
in response to the points from Kidd, saying that he was glad
to hear about USG steps going forward and noting that ITF had
already begun to work with the New Zealand company that will
make a management assessment of the demining firms in
February. Gacnik reiterated that ITF would be cooperative
with whatever efforts the USG decided to make to investigate
any and all allegations of malfeasance, saying "we are open
and they are welcome here."


4. (SBU) Gacnik was frustrated by the allegations, saying he
had "heard enough with all the rumors, especially in Bosnia,"
that "this discussion seems to happen every three to four
years at ITF," but that this new round of allegations was
particularly worrisome because of the effect allegations
might have on ITF's institutional reputation and its ability
to recruit and maintain donors. In ITF's defense, Gacnik
repeated comments made in previous meetings, saying ITF has
been cooperating fully with the prosecutors and financial
police in Bosnia (sharing "thousands" of pages of requested
information in September and December of 2006 alone),ITF is
operating openly and appropriately in the difficult
atmosphere of Bosnia's demining sector, and is the "only
organization in Bosnia with open tenders."


5. (SBU) Gacnik and ITF Bosnia Director Roman Tursic spoke at
length about the difficulties imposed on ITF by not moving
forward with USG matching funds and the tendering process,
saying that eight local community donors in Bosnia have been
waiting for over six months for USG matching funds. They
said that several hundred thousand dollars in potential
demining money could be lost because communities
(specifically they cited Ilijas and Stari grad Sarajevo) are
growing frustrated that tenders have not gone out for their
2006 donations and they are loathe to budget new money for
demining in 2007 when 2006 donations have not yet been spent.
Both Gacnik and Tursic were pleased to hear the USG's plans
for going forward with the tendering process in March 2007
with the direct assistance of staff from PM/WRA.


6. (SBU) In regards to questions about what actions ITF has
taken to respond to the allegations, Gacnik and Tursic laid
out the process ITF goes through to choose its demining
projects, check the legitimacy of the project, issue a
tender, select a demining organization, sign the contract,
monitor the work, and certify that the project area is clear
of mines. They repeatedly said that ITF has documentation of
everything it has done, though they did not seem to always

document problem areas that ITF has dealt with previously or
the corrective actions that ITF has made to improve its
process. Gacnik talked generally about ITF's responses to
difficulties in the Bosnian demining sector in the past,
specifically citing demining organizations that "discovered"
additional mined areas while in the process of demining and
organizations that were mistreating their demining employees,
among others. Gacnik said that ITF had fought the former
problem, noting that it was one reason that the World Bank
demining programs were discontinued. He said that ITF had
signed some annexes after tenders were awarded, but that it
was "very rare...maybe two with USG money in the past few
years" and said that the preference of ITF, if demining
organizations find additional mined areas, is always to
develop and fund a completely new project with a new tender.
Kidd encouraged Gacnik and ITF staff to prepare a more
thorough timeline of ITF's work over the past ten years that
highlights the problems the organization has faced, how it
has dealt with these problems to improve the process, and
also provides documentation to prove these efforts took place.

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MFA Offers Clear Message: Maximum Cooperation, Maximum
Transparency
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7. (SBU) ITF Supervisory Board Member and MFA Security Policy
Department Director Stanislav Vidovic offered the strongest
message about ITF on February 6. He said that accusations
had initially been pushed aside this past fall as a dredging
up of old issues, but that the GoS is now taking a second,
serious look, and that concern and engagement on the issue is
taking place at the highest levels of Slovenian government
(mentioning the direct engagement of a member of the Prime
Minister's cabinet). He acknowledged ITF's work involves
large sums of money (and that USG donations have been vital
to ITF),but said that even more importantly in his eyes, the
allegations have the potential to tarnish Slovenia's
reputation and its most prominent and critical success story
in the region. He said the GoS supported whatever efforts
are necessary to determine if allegations are true or false,
and that if corruption is found within the ITF, the
perpetrators must and will pay.


8. (SBU) Vidovic said that the MFA's message to Goran Gacnik
has been consistent: "be open, share all documents, and give
maximum cooperation" because transparency is the only way to
prove allegations false and ensure the good name of the
organization. Likewise, he said that the MFA is ready and
willing to give any assistance possible to investigators. He
also said that he hoped the investigators would be able to
keep the discussion objective and keep out any politics.
Vidovic concluded on ITF by stating that the GoS feels that
demining work in Bosnia must continue, that ITF currently
contributes over half of the demining funding support in
Bosnia, and that other organizations simply cannot compete
with the results that ITF has accomplished through its work
there.


9. (SBU) Tursic, Gacnik, and Vidovic all speculated about the
roots of recent allegations and offered up a variety of
potential causes, including: a newly empowered Bosnian
government looking to shake things up, an effort to hunt down
millionaires who had grown rich partially through tax fraud,
an increasing focus on taxes and tax fraud with the recent
passage of a Value Added Tax in Bosnia, the increasing
involvement of international banks in the Bosnian banking
sector, the fact that ITF is one of the few institutions (and
potentially the only one) with reliable financial data and
records for the Bosnian demining sector, and finally,
retribution from the increasing number of companies that the
ITF is being asked to exclude from tender decisions. Tursic
said that he felt the allegations were mostly the same old
story from five, six, or even seven years ago in the demining
community, specifically citing allegations relative to the
Kojic case, and pointing out that ITF (on the advice of
Embassy Sarajevo) had thrown companies associated with Kojic
out of the bidding process altogether. Tursic repeated
comments he has made in previous meetings, saying that "what
companies do with the money (after they've cleared the
minefields) is not our problem...we aren't the financial
police or investigators."

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The Future of ITF: Short and Long Term
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10. (U) Both meetings at ITF and the MFA also covered GoS
interest in hosting a Mine Action Support Network meeting in
Slovenia in May, with organizers planning one day at ITF
headquarters in Ig and another, less formal day at a retreat
location in the Julian Alps. Kidd encouraged GoS officials
to schedule the meeting for late May and to consider whether
ITF is willing and prepared to engage the group about the
allegations in Bosnia and about what ITF is doing to fight
them. If ITF is not ready to publicly discuss the
allegations and its response, Kidd recommended they hold off
on hosting the meeting until a later date.


11. (U) In meetings at the MFA, Vidovic brought up the future
of ITF, noting that he expected USG donations to decrease
over the long-term and saying that ITF needed to begin
thinking about what it would do three to five years from now.
He pointed out that ITF has several options, including: (1)
searching for new major donors, (2) expanding its scope into
other regions afflicted by mines, and/or (3) expanding its
work beyond demining to other small arms and light weapons
issues. Vidovic presented modest progress on the first
option, noting that Spain had recently signed on to ITF for
demining work for the first time, but lamented that an EU
funding stream is particularly tricky given ITF's status as a
quasi-governmental institution and not an outright NGO. He
expressed doubts about his second option of working outside
the region, rhetorically asking if Slovenia's relevance (and
the value add it brings to ITF's work in the Balkans) is
obvious in a place like Central Asia or the Caucuses. Kidd
confirmed Vidovic's comments that funding for small arms and
light weapons projects is increasing more rapidly and
prompted the GoS to think creatively about how ITF could play
a role in this portfolio as well. In meetings at ITF
headquarters, talks on the future of ITF were less strategic,
with personnel outlining ITF engagement outside of
Southeastern Europe, including in Colombia, Jordan, Sudan,
Egypt, and Tajikistan, as well as plans to host a regional
conference for Central Asia and Afghanistan in Kazahkstan
later this year.


12. (C) COMMENT. Both ITF headquarters and the Slovenian MFA
seem increasingly engaged on the importance of addressing
allegations of malfeasance in the Bosnian demining sector and
rooting out problems if the ITF wants to retain its good
reputation and the support of its international donors.
Nevertheless, ITF personnel seem to lack the strategic
chutzpah to get out in front of the allegations, take them on
directly, and make a sound case that ITF is not just another
pawn (or worse, an active participant) in the allegedly
corrupt world of Bosnian demining. The key to ITF's short
term success will be its ability to make this case to
investigators, and ultimately the USG and other donors, in
spite of its natural inclination to shrug off allegations as
false rumors, demur that they are not financial
investigators, and expect the benefit of the doubt. Likewise
for the long term, ITF will have to begin to think
strategically about what role it can play outside the region
and/or outside its current purview of demining if it hopes to
continue to be a relevant and successful institution.

Office Director Richard Kidd has cleared on this cable.
ROBERTSON