MOZAMBIQUE FIGHTING CORRUPTION WITH SMOKE AND

C O N F I D E N T I A L SECTION 01 OF 04 MAPUTO 000502 SIPDIS E.O. 12958: DECL: 05/30/2018 TAGS: KCOR KCRM PGOV PHUM MZ SUBJECT: MOZAMBIQUE FIGHTING CORRUPTION WITH SMOKE AND MIRRORS MAPUTO 00000502 001.2 OF 004 Classified By: Classified By: Charge d,Affaires Todd Chapman for Reason s 1.4 (b) and (d) -------------- SUMMARY -------------- ¶1. (C) More than three years after a new administration was elected on an anticorruption platform, the Government of Mozambique (GRM) has shown little success in the fight against corruption. International NGOs, most donors, and some small but dedicated elements of civil society express constant frustration regarding the lack of progress in fighting corruption. While the GRM continues its strong rhetoric and "checking the box" strategy, no high-level cases of corruption have been prosecuted, while petty corruption also appears to continue unabated. Many analysts have concluded there is no political will to fight corruption and GRM actions are little more than an effort to keep aid money flowing. The Embassy is providing technical assistance to the Attorney General's anti-corruption office, but requests additional resources to fight corruption as part of our overall Democracy and Governance program. Among other areas, our programs would focus on supporting civil society groups, the media, and targeted government agencies in their anti-corruption efforts. -------------- THE VIEW FROM THE OUTSIDE -------------- ¶2. (U) Mozambique's score on the NGO Transparency International's 2007 Corruption Perception Index remained 2.8 for the fourth consecutive year ) one measure of a lack of progress in combating corruption. A score of less than three indicates that corruption is perceived as "rampant." Mozambique's score compares with countries such as Ukraine, Mali, the Dominican Republic, and Georgia, but is significantly lower than Southern African countries such as Namibia (4.5),South Africa (5.1),and Botswana (5.4). ¶3. (U) The "Joint Review," an annual assessment released in early 2008 by the 19 donors and funding agencies (known as the G-19 and does not include the USG) which contribute directly to the GRM state budget, noted that implementation of the GRM's anti-corruption programs should be sped up "bearing in mind the concern of the private sector that corruption is one of the main constraints weighing on its performance, and the development of the business sector in general." The report points to specific examples of corruption at all levels- from police demanding bribes at checkpoints and bureaucrats looking for tips in order to speed up permit applications- to high-level corruption within the national government. The review also urged the GRM to "show greater effort in the fight against corruption" and expressed concern that statistics from the autonomous Central Office for the Fight Against Corruption (GCCC) continue to show that not a single case of corruption has been heard by the courts. Several European embassy officials expressed dissatisfaction with the GRM's efforts against corruption, particularly as no high-level person has been convicted of corruption during Guebuza's presidency. Despite these concerns, the G-19 continue to provide, indeed to increase, direct budget assistance, an indication to the GRM of tacit approval of its governance activities and overall progress in fighting corruption. Several European Ambassadors (Irish, Swiss, Swedish, and German) have commented privately that their governments are reconsidering their budget support levels in Mozambique, largely due to domestic parliamentary pressure about the reports of official Mozambican corruption. -------------- AND THE INSIDE -------------- ¶4. (SBU) Civil society and the media continue to play a crucial role as watchdogs; their efforts to unmask incidents of corruption have likely constrained its proliferation. Even so, a list released earlier this year showed that seven of the ten richest Mozambicans were either current government officials, or had recently retired from office*and President Guebuza was ranked first on the list. Off the record, some in the private sector have dubbed the President with the nickname "Gue-business." Although few NGOs actively follow the issue, the Center for Public Integrity (CIP),run by MAPUTO 00000502 002.2 OF 004 former investigative journalist Marcelo Mosse, is an organized, efficient research and dissemination organization. Mosse is a frequent source for media dealing with corruption. He believes despite well-publicized rhetoric by the government, there is no political will to fight corruption, particularly because the political and economic elites are extremely interconnected and have too much to lose. Other NGOs following the issue include the Human Rights League and the Confederation of Mozambique Business Associations (CTA). ¶5. (U) Journalists are frequent critics of corruption cases and serve as the primary source of information on such issues. The media continue to investigate and provide significant coverage of government initiatives, USAID initiatives (such as the report on corruption released in mid-2006),and several long-standing, unresolved cases of corruption. Journalists play a strong role by publicizing high-level, unresolved cases, such as the privatization of the Banco Austral and investigations of the former Minister of Interior. Both cases have had little success in navigating the judicial system. -------------- - RHETORIC, CHECKED BOXES MAY NOT EQUAL PROGRESS -------------- - ¶6. (U) President Guebuza was elected in 2004 on an anti-corruption platform, and the issue remains a main theme in his political speeches. The government's declared commitment to curb petty corruption has paid some dividends, with several reports of punished or fired civil servants leading to better quality health and education services. In addition, corruption-related murder has ceased, the last being the murders of journalist Carlos Cardoso (November 2000) and central banker Antonio Siba-Siba (August 2001). ¶7. (U) Conerning medium level corruption, there have been some promising outcomes: for example the public sector is weeding out "ghost workers" (fictitious or deceased employees) collecting salaries, and the Civil Service Ministry expelled nearly 400 public servants during 2007 for petty corruption and other irregularities. The GRM can also claim to have "checked the boxes" with respect to several initiatives and targets recommended by donors, such as passing an Anticorruption law (August 2004),signing the UN Convention Against Corruption (April 2004),launching a 5-year Anticorruption Strategy (April 2006),and creating a National Anticorruption forum (March 2007) with civil society participation. At higher levels, however, the Guebuza government continues to facilitate corruption through the empowerment of state-owned businesses and the manipulation of state resources (including awarding large tracts of land) to ensure that well-connected Mozambicans participate in large, lucrative outside investments. ¶8. (SBU) These accomplishments appear to be enough to placate most of the donor community, but have not produced sufficient results to significantly change a continuing corrupt system. A UN Convention on corruption was signed, but has not been ratified; an official report by the donors noted that since its inception no progress had been made implementing the Anticorruption Strategy; the National Anticorruption Forum was dominated by FRELIMO during its short existence and was ultimately abolished in December 2007 after the legality of its creation was questioned by the Constitutional Court; and the Anticorruption law establishing the Central Office for the Fight Against Corruption (GCCC) is full of loopholes. Some judges have claimed the GCCC does not have the legal authority to charge or prosecute, and a CIP legal expert told Poloff that the only solution was to modify the law to specifically provide these powers. Some 370 corruption cases (of which only 19 involved charges) have been handled by the GCCC since its establishment in 2005, but not one has been settled in the courts. In September 2007, the Attorney General and his entire staff of deputies (including the GCCC director) were replaced, ostensibly because they had not done enough to root out corruption. New Attorney General Augusto Paulino is well-respected and related to Emboffs that his marching orders were specifically to tackle corruption. In the nine months since he became Attorney General, however, rhetoric has not translated into concrete action. -------------- USG EFFORTS AND THE EFFECT OF THE MCC SIGNING -------------- MAPUTO 00000502 003.2 OF 004 ¶9. (C) USG efforts were fairly robust through 2007. USAID provided technical assistance to the GCCC and the CTA, helped establish the NGO Ethics Mozambique, coordinated the intermittent placement since 2001 of a legal advisor in the GCCC, and funded an extensive study in 2006 of corruption in Mozambique. The judicial developments limiting the scope of the GCCC, coupled with a December 2007 announcement by the Attorney General that the GCCC would no longer have the authority to handle cases of forgery, swindles, murder, and theft however, cast considerable doubt regarding its mandate. CTA's efforts to simplify procedures have reduced some opportunities for bureaucratic corruption related to starting and operating a business in Mozambique. Ethics Mozambique no longer exists. The October 2007 and May 2008 placement of a US legal advisor in the GCCC was again well-received. The advisor reported receiving full access to the Attorney General's office and noted Paulino's desire to strengthen the office's capacity to fight corruption. USAID's corruption report received unprecedented coverage following its release in 2006. Overall, Mosse believes USG efforts have had mixed results, but noticed that since early 2007 the USG has not been as noticeably vocal as in the past. (Note: the USAID DG officer following corruption issues left post in February 2007 and has not been replaced due to cuts in program funding. As funding increases again, so will staffing. End Note). ¶10. (SBU) The signing of the MCC Compact in 2007 sent a signal to the GRM concerning how the USG views the GRM's progress on democracy and governance issues. Of the major donors in Mozambique, only Japan and the USG do not provide direct financial budget support. This has not gone unnoticed by the GRM. Following the signing of the compact, President Guebuza successfully spun the event as a reward for his administration's policies. The media wondered why the USG was suddenly providing such a large sum of money directly to the GRM. Mosse commented to Poloff that the public viewed the signing as a strong signal of approval and hoped the USG would ensure mechanisms were in place to guarantee transparency. ¶11. (SBU) As a check against this concern, MCC's assistance ties disbursement eligibility to several indicators, including transparency and public control of corruption, rule of law, predictability in regulatory and legal procedures, the enforceability of contracts, and the protection of intellectual property rights. If performance against any of these indicators deteriorates, the GRM would then be required to submit a performance improvement plan specifying how it would improve its performance in the specific areas, and could lose eligibility for a second five-year program if there were no improvement. In addition, the MCC program obtained an agreement from the GRM that all Compact-related procurements will not be subject to inefficient and cumbersome government systems and internal approvals. Instead, the MCC program will use the MCC approved procurement guidelines, fiscal accountability plan, and approval procedures as defined in the Compact. -------------- COMMENT -------------- ¶12. (C) In the near term the GRM will continue to speak forcefully while taking baby steps, especially on petty corruption. It is also likely that despite AG Paulino's stature and stated marching orders, the GRM will continue to have difficulties tackling high-level corruption, particularly considering the legal jurisdiction of the GCCC and the inter-connected nature of the political and economic elite. Look for a continued unofficial policy of shadowboxing to maintain the flow of international financial aid. However, as the largest single donor in the country, the USG has a role to play and the Embassy has devised a strategy to engage the GRM and civil society on corruption issues. ¶13. (C) In this environment, the USG approach is to (1) fund the activities of civil society groups that directly or indirectly address corruption and to commission an update to the 2006 study on corruption, (2) implement programs for and work more closely with the media to improve the quality of investigative reporting while speaking out more vocally in the press and civil society on corruption issues; (3) support efforts to combat petty corruption, especially where we have MAPUTO 00000502 004.2 OF 004 extensive activities, such as HIV/AIDS and other health programs; (4) support efforts to implement laws and strengthen systems that ensure transparency in major procurement actions by the government and, (5) look to augment existing programs with government agencies charged with anti-corruption efforts. ¶14. (U) In the 2008 Mission Strategic Plan, the Embassy elevated Democracy and Governance issues from third to top priority for the Mission. Concurrently we submitted a request for a significant increase in the Democracy and Government budget of only US$500,000 now available to Post. A Democracy and Governance Assessment Mission is currently in-country from USAID Washington assisting Post to design a more robust Democracy program, in which anti-corruption efforts will figure prominently. Chapman