Identifier
Created
Classification
Origin
07TASHKENT515
2007-03-30 11:06:00
CONFIDENTIAL
Embassy Tashkent
Cable title:  

COURT REJECTS MERCY CORPS AND FINCA APPEALS IN TAX

Tags:  PGOV PREL EAID UZ 
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VZCZCXRO1652
PP RUEHDBU
DE RUEHNT #0515 0891106
ZNY CCCCC ZZH ZDK ZUI HCB6628
P 301106Z MAR 07
FM AMEMBASSY TASHKENT
TO RUEHC/SECSTATE WASHDC PRIORITY 7309
INFO RUEHAH/AMEMBASSY ASHGABAT 2643
RUEHTA/AMEMBASSY ASTANA 8739
RUEHEK/AMEMBASSY BISHKEK 3237
RUEHDBU/AMEMBASSY DUSHANBE 3110
RUEHVEN/USMISSION USOSCE 1961
C O N F I D E N T I A L TASHKENT 000515 

SIPDIS

SIPDIS

DEPARTMENT FOR SCA/CEN AND EUR/ACE
ASTANA ALSO FOR USAID

E.O. 12958: DECL: 03/30/2017
TAGS: PGOV PREL EAID UZ
SUBJECT: COURT REJECTS MERCY CORPS AND FINCA APPEALS IN TAX
CASES

REF: A. TASHKENT 203


B. 06 TASHKENT 2402

Classified By: Amb. Jon R. Purnell for reasons 1.4 (b) and (d).

C O N F I D E N T I A L TASHKENT 000515

SIPDIS

SIPDIS

DEPARTMENT FOR SCA/CEN AND EUR/ACE
ASTANA ALSO FOR USAID

E.O. 12958: DECL: 03/30/2017
TAGS: PGOV PREL EAID UZ
SUBJECT: COURT REJECTS MERCY CORPS AND FINCA APPEALS IN TAX
CASES

REF: A. TASHKENT 203


B. 06 TASHKENT 2402

Classified By: Amb. Jon R. Purnell for reasons 1.4 (b) and (d).


1. (SBU) The same Tashkent City Economic Court appeals panel
rejected presentations by Mercy Corps and the Foundation for
International Community Assistance (FINCA) on March 29. The
organizations had appealed lower court rulings from January
29 and February 5, respectively, that allowed tax authorities
to impose penalties against them for alleged violations of
Uzbekistan's tax code (ref A). In back-to-back hearings
lasting less than two hours each, the appeals court found
that the tax inspections had been carried out in accordance
with applicable law, that the organizations' alleged actions
were in violation of the law, and that tax authorities had
correctly calculated the penalties imposed against each.


2. (SBU) Comment: The lower court rulings will enter into
legal force with the publication of the appeals court
decision, probably early the week of April 2. Mercy Corps
and FINCA immediately will be liable to pay the full amount
of the imposed fines of approximately $570,000 and $2.1
million respectively. As a next step, tax authorities likely
will seek court orders allowing the seizure of funds held in
the organizations' certificate deposit accounts. Neither
Mercy Corps nor FINCA has enough in those accounts to pay the
entire amount owed. Eventually, both probably will be
declared bankrupt and have their physical assets liquidated
by the court. End comment.


3. (C) FINCA had attempted to protect the funds in its
certificate deposit account by transferring them to a trust
account established by Post. According to local
representative Olga Sadyk, several transfers totaling
approximately $65,000 were completed, but FINCA's
intermediate bank canceled its agreement without prior
notice. Subsequently, the bank informed Sadyk that it had
"mistakenly" listed FINCA rather than the Embassy as the
recipient on the transfers, and that it was reversing the
transfers. As of March 30, approximately $60,000 had been
removed from the Embassy account, immediately transferred to
FINCA's frozen operating account, and confiscated by tax
authorities. Sadyk said, that when informing her of the
decision to reverse the transfers, the bank director told her
that the move had been ordered in a phone call by an
unspecified official in the Presidential Apparat. When added
to the amount that taken from the operating account when it
was frozen, this latest action brings the total amount of USG
funds seized from FINCA by the tax authorities to about
$80,000.
PURNELL