CAMEROON: HUNDREDS OF MILLIONS IN DEBT RELIEF HAVE

C O N F I D E N T I A L SECTION 01 OF 02 YAOUNDE 000731

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DEPT ALSO FOR AF/C, EB
LONDON AND PARIS FOR AFRICA ACTION OFFICERS
EUCOM FOR J5-A AFRICA DIVISION AND POLAD YATES

E.O. 12958: DECL: 06/03/2017
TAGS: EFIN KCOR PREL PGOV EAID CM
SUBJECT: CAMEROON: HUNDREDS OF MILLIONS IN DEBT RELIEF HAVE
HAD "NO IMPACT"


Classified By: Pol/Econ Officer Tad Brown for reasons 1.4 b and d.


1. (C) Summary. Seven years after the beginning of the
Heavily Indebted Poor Countries (HIPC) debt relief process,
the hundreds of millions of dollars specifically allocated
for pro-poor development projects have had "no impact"
according to the Cameroonian official charged with piloting
the program. In a May 31 meeting with Emboffs, Permanent
Secretary for the Committee for Consultation and the Tracking

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of HIPC funds Laurent Kouo Ngangue complained that high and
low level corruption have perverted a system that was
established to channel funds to worthy development projects.
Earlier reports of malfeasance at the center of the HIPC
process has disheartened us, but this is the first time we
have heard such scathing criticisms from such a high level
Government of Cameroon (GRC) official. If there is any
silver lining to the oppressive cloud of corruption in
Cameroon, it is that Ngangue and select others are still
working to reform the system. End Summary.

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HIPC Funds: The Good Money
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2. (U) Responding to donor pressure and conditionalities to
obtain the multibillion dollar debt relief offered through
the HIPC process, Cameroon began tracking certain budget
lines through a special committee called the Consultative
Committee for the Management and Tracking of HIPC Funds
(CCS-PPTE in the French acronym). The CCS-PPTE, comprising
representatives from the GRC, major donors, and civil
society, was established to ensure that PPTE funds were used
for pro-poor priority sectors like the construction of
schools and other infrastructure. Donors and other budget
watchers praised the HIPC process and the CCS-PPTE for giving
greater transparency into government spending and
prioritizing pro-poor expenditures. Ambassadors represented
on the CSS-PTTE include the French, German, Canadian,and
Japanese, as well as the UNDP Resident Representative. They
have been pushig hard for further audits and action as a
pre-condition to even holding the group's next meeting.

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We Knew Some of the Bad News
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3. (U) Post had received some audits on FY2003 and 2004
HIPC projects, and Dynamique Citoyenne, an NGO consortium
that has received U.S. Democracy and Human Rights funding,
had led well publicized verification missions that uncovered
projects that had been funded but never completed or only
partially completed. In addition, repeated budget analyses
(especially by the IMF) indicated that the GRC was
chronically under-spending (and sometimes under-funding) its
HIPC accounts. Ministry-by-ministry tracking of HIPC funding
revealed a disproportionate amount of funding went towards
international travel, office furniture and four-wheel drive
vehicles.

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But Nothing Like This
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4. (C) Laurent Kouo Ngangue, the Permanent Secretary of the
CCS-PPTE, requested a May 31 meeting with Emboffs, explaining
that he wanted to discuss Ambassador Marquardt's May 16
speech to Cameroon's leading business association citing the
Cameroonian public's growing disillusionment with the HIPC
fund process. Rather than defend his own agency, however,
Ngangue applauded the Ambassador's strong words and launched
into a condemnation of the manner in which hierarchical and
corrupt politics in the GRC had perverted the HIPC process.

5, (C) To illustrate his point, Ngangue pointed to a
HIPC-funded tobacco program run through the Ministry of
Agriculture in Cameroon's Eastern Province. Mt. Cameroon
Tobacco, an American investor in the sector, had contacted
Ambassador Marquardt, relaying suspicions that most of the
funds were being embezzled and complaining that those
managing the project were actively undermining the
substantial investments already made in the tobacco sector.
When the Ambassador conveyed these concerns to Prime Minister
Inoni, Ngangue was sent on a mission to investigate. Ngangue
said he found that Mt. Cameroon's complaints were fully
justified; the nominal implementers of the project had no
experience in the tobacco sector and were simply passing out

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cash to curry political favor for their project.
Additionally, substantial sums earmarked for the farmers were
embezzled before even leaving Yaounde.


6. (C) Ngangue's January 2007 report to Minister of Economy
and Finance Polycarpe Abah Abah recommended an immediate hold
be placed on all PPTE funds going to the project until an
audit could be conducted. Ngangue says he has yet to receive
a response from Abah Abah's office but that, immediately
after submitting the report, he began receiving threatening
phone calls demanding that he drop his investigation. When
Ngangue reported these threats to the police, an officer
instructed him to inform Minister Delegate Charged with the
Budget Essimi Menye and not/not to inform Abah Abah. Ngangue
explained that Abah Abah and Essimi Menye (who is generally
considered to be extremely competent and clean in contrast to
Abah Abah, who is generally considered to be highly competent
and the most corrupt official in the current cabinet) have a
barely disguised adversarial relationship.


7. (C) Ngangue went on to say that the tobacco program is
simply the most blatant case he has discovered, that the
CCS-PPTE structures have been completely corrupted by
committee experts (who are supposed to judge programs but
have instead set up private businesses through which they
submit reconstituted projects) and high level officials.
Ngangue beseeched the Embassy to continue its high profile
and frank criticisms of broken GRC systems, saying that the
system would degenerate even further if USG pressure was
perceived to slacken.

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Comment: Taking Solace in Cameroon's Own Reform Champions
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8. (C) We were as disheartened by Ngangue's revelations as
we were encouraged by his honest assessment and his efforts
to improve the system. If nothing else, we take solace in
the knowledge that individuals like Ngangue and Essimi Menye
continue to oppose the culture of corruption propagated by
Abah Abah and his minions. We will continue to speak out
against bad governance and to identify champions of reform
whom we can support -- as well as await the long-promised
reshuffle finally expelling Abah Abah from his powerful
position. End comment.
MARQUARDT