FIGHTING CORRUPTION AND DELAYS AT HAITI'S PORTS --

C O N F I D E N T I A L SECTION 01 OF 03 PORT AU PRINCE 000457 SIPDIS SIPDIS STATE FOR WHA/EX AND WHA/CAR STATE PASS AID FOR LAC/CAR STATE PASS DHS FOR U.S. CUSTOMS AND BORDER PROTECTION TREASURY FOR SARA GRAY E.O. 12958: DECL: 03/19/2018 TAGS: PREL PGOV ECON EFIN HA SUBJECT: FIGHTING CORRUPTION AND DELAYS AT HAITI'S PORTS -- NO SIMPLE FIX REF: A. PORT AU PRINCE 425 ¶B. PORT AU PRINCE 423 Classified By: Charge d'Affaires Thomas C. Tighe for reasons 1.5(b) and (d). Summary -------------- ¶1. (U) Haitian officials deny recent media reports that port and customs officials are turning a blind eye to food spoilage at the Cap Haitien port in the northern region. They say the reports overlook efforts to counter corruption and contraband trafficking (especially drugs),modernize port and customs procedures and ensure exporters and importers adhere to laws and procedures governing accurate identification of container contents. GoH representatives assert that changes in customs procedures are required to support President Preval's mandate to fight contraband and corruption, as well as meet the GoH's fiscal responsibility to capture more revenue that Haiti desperately needs for domestic spending. End summary. GoH on Customs Delays: Shippers and Importers Do Not Help -------------- -------------- ¶2. (U) Reacting to newspaper reports that delays in clearing cargo in Cap Haitien is forcing Haitians to go hungry, Ministry of Economy and Finance Chief of Staff Jacques Nelson told Econoff March 18 that customs officials are simply trying to enforce laws that have been "on the books" for ten years, but not enforced by customs officials nor honored by shipping companies and importers. ¶3. (U) Nelson emphasized that many shipping companies simply ignore regulations and bypass customs requirements. The former "modus operandi" is over. Many containers arriving from the U.S. do not have accurate bills of lading or manifests that reflect actual cargo on-board. This impedes the verification of goods transported and the tracking of contraband. Humanitarian and Non-Governmental Organizations ¶4. (U) Nelson disagreed that customs and port officials make it difficult for humanitarian organizations to bring in supplies for the needy due to inefficiencies and corruption. On the contrary, officials attempt to facilitate the entry of goods and merchandise brought in by non-governmental organizations. He listed established procedures governing their entry and requirements for NGO legal status. ¶5. (U) Nelson said many NGOs have valid status but do not follow required procedures. In some cases, however, the importer is not a valid NGO and seeks to circumvent the law to avoid taxes and/or bring in contraband. (Comment: An NGO is not required to have legal status in Haiti in order to operate, but requires that status if the NGO claims exemption from certain taxes and duties. Per Haitian regulations, documentation -- including a list of donated goods )- is initially sent to the responsible ministry, for example, the Ministry of Public Health for donated medical supplies. The lead ministry then forwards its approval to the Ministry of Economy and Finance, which transmits authorization to the General Customs Adminstration (AGD). End comment.) Port Trouble -------------- Cap Haitien ¶6. (U) Nelson said he traveled to Cap Haitien March 15-16 to assess the situation at the port. He did not witness "tons of food rotting". He said he had previously visited the area with Customs Director General Jean Jacques Valentin subsequent to the December labor strike at the port. Nelson admitted that the December port labor strikes compounded delays in receipt of cargo, but insisted a good portion of blame lay with some of the larger importers and shippers who do not abide by new customs requirements and want to conduct "business as usual". He noted that inspection of some cargo in Cap Haitien uncovered weapons and other contraband. PORT AU PR 00000457 002 OF 003 ¶7. (C) National Port Authority (APN) Director Evens Charles told Econoff March 11 that Cap Haitien Port Director Jean Renel Latortue has been placed on temporary leave and will be replaced. Cap Haitien Deputy Director Claude Lamothe will not be removed. Charles said the origin of the December strikes stemmed not only from port worker wage grievances, but also from "pure politics". (Note: As noted in ref A, disagreements over wages, staffing, and political patronage were at the root of pressure )- supported by Cap Haitien Mayor Saint Croix, a Lavalas loyalist -- to fire Latortue and perhaps replace him with a political crony. MINUSTAH Civilian Affairs Chief in Cap Haitien Heiner Rosendahl told Poloff in late February that patronage in port hiring had involved not only securing jobs for Lavalas supporters, but also securing Lavalas control over the port,s large security force )- which rivals the local Haitian National Police contingent in numbers and firepower. End note.) Both Charles and Nelson separately expressed concern about the precedent of terminating Latortue because "his employees do not like him,8 especially, Charles remarked, if the workers are motivated by a political agenda. ¶8. (U) Customs Director of Administration Reynald Eugene said that in addition to more stringent enforcement procedures being implemented and new paperwork requirements, the Cap Haitien Customs Office is under-staffed and under-trained. To address this, Eugene said two missions have been detached from Port-au-Prince to provide support to Cap Customs so that more agents are available to clear goods. Cap agents and importers will also be trained on the new customs regulations. Dealing with Bloated Port Authority Staffing ¶9. (C) Charles said he is working daily with President Preval to improve efficiency in Haiti's port system. He announced that APN will soon reduce staff by 72 percent at ports throughout the country. Out of 1,863 port workers currently on the payroll, 1,300 to 1,400 will be laid off. Inefficiencies and the weight of salaries have taken a toll on APN effectiveness and competitiveness. There is a critical need to reorganize and increase efficiency. (Note: As noted in ref B, the GoH anticipates opening the Port Authority, along with other key revenue-generating entities, to private participation. End note.) ¶10. (C) To avoid a political backlash, APN is putting together a package that will provide 1-2 years pay for workers based on length of service and pay scale, health insurance for one year, and training to ease their transition into the job market (entrepreneurial or skills training). In addition, APN, which currently is both the national port regulator and the operator of the Port of Port-au-Prince, will remove itself from port operations and turn them over to a new, private operator. (Note: This was a primary recommendation that resulted from the USAID port security program. End note.) Charles said the search for a port operator is underway. Enhancing Customs Efficiency and Countering Corruption: Donors Weigh In -------------- -------------- ¶11. (U) The Customs Administration (AGD) has been frequently accused of inefficiency and corruption. In a January annual address to Parliament, President Preval said Haiti is losing badly needed revenue by allowing contraband to infiltrate its borders, while also charging some of the highest fees in the region to legal importers, which discourages investment. Results from a January 2007 report on governance and corruption in Haiti, overseen by the Anti-Corruption Unit (ULCC),ranked the Customs Administration as one of the most corrupt public institutions -) ranked second by households and NGOs and fourth by the private sector. International donor efforts have concentrated on helping Customs increase revenue collection by modernizing its operation as well as instilling better control procedures in order to prevent corrupt practices. ¶12. (U) USAID recently concluded a Maritime Security project which focused on helping Haiti meet international security standards pursuant to the International Ship and Port Facility Security Codes (ISPS). The project led to PORT AU PR 00000457 003 OF 003 certification of Haiti's three principal international ports )- Cap Haitien, Port-au-Prince and St. Marc. USAID's I-TRADE program will work with the Port and Customs Authorities to: provide on-going training to ensure retention of ISPS certification; strengthen public/private dialogue on port security; and ensure Customs Authority compliance with international standards related to the movement of goods. USAID also plans to fund a U.S. Customs and Border Protection training program for customs agents that focuses on enforcement and anti-corruption, beginning in July. ¶13. (U) The Inter-American Development Bank (IDB) has funded an economic governance program to improve public revenue management by assisting Customs with implementing the new Customs Code and improving its customs infrastructure. IDB has also introduced an automated customs management system. Comment -------------- ¶14. (U) While reports that widespread food spoilage is occurring at the Cap Haitien port appear exaggerated, delays in customs clearance are real. GoH officials are seriously trying to address the delays, especially those that negatively affect NGOs that offer humanitarian assistance, at the same time as they crack down on corruption and modernize port management. GoH officials, especially at the Ministry of Economy and Finance )- which oversees the Port and Customs authorities -- ask for patience as they attempt to modernize both entities, eliminate corrupt practices, prevent contraband trafficking, collect appropriate taxes and fees from importers, and facilitate international commerce. It is a difficult balance, they argue, and one that will take time to realize. End comment. TIGHE