TAX AUTHORITIES SEIZE REMAINING MERCY CORPS ASSETS

C O N F I D E N T I A L TASHKENT 001264 SIPDIS SIPDIS E.O. 12958: DECL: 07/10/2017 TAGS: PGOV EAID UZ SUBJECT: TAX AUTHORITIES SEIZE REMAINING MERCY CORPS ASSETS REF: A. TASHKENT 515 AND PREVIOUS ¶B. TASHKENT 1151 Classified By: CDA Brad Hanson for reasons 1.4 (b) and (d). ¶1. (C) Mercy Corps' remaining assets have been seized by Uzbek tax authorities to partially satisfy financial penalties imposed on the organization for alleged violations of Uzbek law (ref A). Igor Pakan, ABN-AMRO Bank Uzbekistan Country Representative, told Charge July 10 that the tax authorities presented a court order directing the bank to breach Mercy Corps' time deposit account and transfer funds from this account to the Uzbek treasury. (Comment: Mercy Corps had transferred virtually all of its cash assets held in Uzbek soum to this deposit account to protect them from immediate seizure when tax authorities froze the organization's regular bank account in late 2006. To the best of our knowledge, there was no USG money in this account. End Comment.) Pakan said that ABN-AMRO disregarded the court order for several weeks to protect its client's assets as long as possible. The bank complied, however, after being warned by the General Prosecutor's Office that both ABN-AMRO and its Tashkent management team would face criminal prosecution if the funds were not transferred. Pakan said that the transfer, totaling about 700 million soum ($560,000),was made on July 1. ¶2. (C) Comment: Mercy Corps' case has now reached its logical conclusion with the only real surprise being that it took the tax authorities so long to seize the time deposit account. The organization lost its final appeal several months ago, and has since closed its Tashkent office and departed the country. Absent the agreement in principle on USG microfinance assistance funds (ref B),the Foundation for International Community Assistance's (FINCA) time deposit account, also held by ABN-AMRO, probably would suffer a similar fate. HANSON