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.
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Bush