REQUEST FOR GUIDANCE ON ADVOCACY REQUEST BY U.S.

UNCLAS RABAT 000447 SIPDIS SENSITIVE SIPDIS DEPARTMENT FOR CA/OCS/PRI, L/CA AND L/CID USDOC FOR OGC, THOFFMAN/ITA/MAC/AMESA/OME/MCLORY, AND 3131//USFCS/OIO/RD/ANESA/HVINEYARD/GLITMAN/ST AUHIDI E.O. 12958: N/A TAGS: ECON EINV BEXP MA SUBJECT: REQUEST FOR GUIDANCE ON ADVOCACY REQUEST BY U.S. COMPANY REF: 7 FAM 670 This message is Senstive but Unclassified. Contains company proprietary information. Not for internet distribution. ¶1. (SBU) Summary and Action Request: Embassy requests L guidance on how to respond to a request from U.S. investor IAG Manufacturing, a bankrupt manufacturer of body armor, for USG assistance in addressing the "injustice" it claims it has suffered as a result of the Moroccan legal system's failure to prevent its dismissed former manager from filing a series of "baseless" claims against its local subsidiary. Those claims have kept the company from enjoying clean title to its remaining buildings and property in Tangier, Morocco, and made it impossible for it to sell those assets and liquidate its business in Morocco. The company also claims that its former lawyer is improperly attempting to force sale of that land and building to settle an alleged debt of 6,000 USD, when in fact he has already enforced liens on 200,000 USD in equipment in payment of the 45,000 USD the company owed him after his dismissal. The Embassy had earlier indicated that the company should seek resolution of the dispute through the Moroccan courts; the company now alleges that the Moroccan justice system has shown that it is incapable of providing such resolution. End Summary and action request. ¶2. (SBU) IAG Manufacturing, a Moroccan subsidiary of Second Chance Armor (which we understand is the subject of USG litigation in the United States),has sought Embassy and USG support for several years. The company alleges a protracted campaign of legal harassment against it by its former manager, whom it dismissed for fraud several years ago. The company has emerged victorious in each case at significant expense, but once one case is resolved, a new case is filed against it, forcing it again to go through time-consuming and expensive litigation. IAG notes that when it sought to reach a negotiated settlement with its former manager in which he would drop all his cases against the company, if it dropped its cases against him, he agreed, provided the company also made an additional 50,000 USD payment. The company demurred, believing it had already paid him more than they should have. Adding to IAG's difficulties is the fact that it also had a falling out with its attorney, and dismissed him in 2005. Thereafter, according to the company, the lawyer, who it concedes was still owed 45,000 USD, was successful in placing a lien on and seizing equipment worth 200,000 USD to cover the debt. IAG now indicates that the lawyer is seeking to seize its remaining land and building to cover an alleged additional debt of 6,000 USD. ¶3. (SBU) Over the years, FCS has tried to assist the company, providing counseling on resolving the matter without directly intervening in the legal dispute. This led to some early successes, as a number of the intial court cases were won. As the legal process has dragged on, however, the company has renewed its request for more direct Embassy advocacy, arguing that the Moroccan legal system has shown that it is manifestly incapable of providing it with due process or preventing a campaign of frivolous legal harassment against it. It has also requested that its former lawyer be removed from the Consulate's list of lawyers. We have rebuffed the latter request, noting that such action is only possible if he has been disbarred or otherwise censured by either Moroccan courts or the Moroccan bar association. The company has expressed unhappiness with this decision, and continues to press for Embassy support against the legal "injustice" it faces. ¶4. (SBU) Comment and action request: Like the Moroccan bureaucracy, the Moroccan legal system can be convoluted and difficult. Lawyers we have spoken to about the system generally concede that it does not provide an effective mechanism for winnowing out cases and dismissing those that are without merit at an early stage. Hence when confronted with a determined opponent, a foreign company (or indeed any company) can be forced into protracted and costly litigation. Given the charges and the countercharges that are flying between IAG and its former partners and lawyer, we remain steadfast in our reluctance to become involved in the substance of the case. Our question regards instead L's view of whether it is possible to make a broader representation to the Moroccan government about the troubling pattern that is apparent in the Moroccan courts' inability to provide final resolution to the dispute. End comment and action request. ****************************************** Visit Embassy Rabat's Classified Website; http://www.state.sgov.gov/p/nea/rabat ****************************************** Bush