Identifier
Created
Classification
Origin
08TUNIS1135
2008-11-03 16:13:00
CONFIDENTIAL
Embassy Tunis
Cable title:  

GOT QUESTIONS STATUS OF AMERICAN COMMMUNITY SCHOOL

Tags:  ASCH PREL PGOV TS 
pdf how-to read a cable
VZCZCXYZ0008
OO RUEHWEB

DE RUEHTU #1135/01 3081613
ZNY CCCCC ZZH
O 031613Z NOV 08
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5710
INFO RUCNMGH/MAGHREB COLLECTIVE PRIORITY
C O N F I D E N T I A L TUNIS 001135 

SIPDIS

E.O. 12958: DECL: 11/03/2018
TAGS: ASCH PREL PGOV TS
SUBJECT: GOT QUESTIONS STATUS OF AMERICAN COMMMUNITY SCHOOL

REF: TUNIS 1111

Classified By: Ambassador Robert F. Godec, reason 1.4(B)
and (d)

C O N F I D E N T I A L TUNIS 001135

SIPDIS

E.O. 12958: DECL: 11/03/2018
TAGS: ASCH PREL PGOV TS
SUBJECT: GOT QUESTIONS STATUS OF AMERICAN COMMMUNITY SCHOOL

REF: TUNIS 1111

Classified By: Ambassador Robert F. Godec, reason 1.4(B)
and (d)


1. (SBU) Summary: The MFA held a surprise meeting on
October 30 to review the status of the American Community
School of Tunis (ACST). In attendance were senior school and
Embassy officials. The Ministry wanted clarification for the
basis of the school's existence in Tunis since 1959 since it
did not fit under any current law. A Ministry of Finance
official stated that the school should be paying taxes on its
"results" while declining to answer questions on the
applicability to non-profit organizations. He asked
questions about required financial reports he said were
missing and alleged that payroll tax receipts were unusually
low. The Ministry of Education representative stated that
unless there is a bilateral agreement, the school is subject
to Tunisian law, without explaining the ramifications of his
statement. A 1963 agreement which has been the de facto
mechanism for the school's benefits does not in fact apply
the GOT officials said. Documents that partially address the
school's status, including a MFA diplomatic note from late
1983 that addresses the tax free status of the school's
personnel, were reviewed. The meeting closed with the Chief
of Protocol stating that a period of reflection should be
pursued by both sides to explore the status question. The
Ministry of Finance sent two officials the following day to
the school to announce an audit of the school's payroll for
the last ten years. The Embassy is seeking to have that
audit delayed on the grounds that the status issue has only
just been raised. End Summary.

American School Officials Convoked to the MFA
--------------


2. (SBU) Moncef Hajeri, Chief of Protocol at the Ministry of
Foreign Affairs convoked Patrick Meyer, the Director of ACST,
October 30 for a review of the school's legal and financial
status. A diplomatic note was sent mid-morning convoking
Meyer the same afternoon. At the meeting, Hajeri was
accompanied by Lohai Samir (phonetic),Director General of
Taxation in the Ministry of Finance, Mohamed Zoghlami
(phonetic),Director General for Private Instruction in the

Ministry of Education, MFA Director General for Legal Affairs
Mondher Dheraief, and the MFA Director for the Americas, Ms.
Holla Bachtobji. Meyer was accompanied by Matthew Long,
Chairman of the school's Board of Governors (and Embassy IO),
Faouzi Ben Sedrine, ACST Business Manager, and the DCM.


3. (SBU) The unusual meeting (neither Meyer nor Ben Sedrine
had ever been to the MFA) was opened by Hajeri, who said that
the MFA and he personally had been reviewing the status of
various institutions in Tunisia and that they were requesting
any documents the school had permitting it to provide
education in Tunisia; its overall legal and fiscal status;
the status of its teachers and other personnel. The purpose
was neither a witch hunt nor intended to put into question
the existence of the school. Hajeri noted that many
privileges accorded to the school were based on a cultural
exchange agreement between the two countries from 1963 but
that the school could not be covered in such an agreement
since it was established in 1959. Furthermore, the agreement
made no specific reference to the school.


4. (SBU) When asked why the sudden focus on ACST after 49
years of operation, Hajeri responded that the fact that there
had been no questions in the past did not mean there could
not be now. Hajeri claimed that the GOT was trying to model
its practices after more advanced nations. When asked
whether the goal was to clarify existing practices and find a
legal basis to continue them or to eliminate the benefits the
school currently enjoys, Hajeri dodged the question by
replying that governments only change things slowly.

Ministry of Finance Alleges Improprieties
--------------


5. (SBU) At this point, Samir began to allege improprieties
by the school. He said that the school has never paid taxes
on its activities and that it should pay taxes on its
"results". School officials noted that the organization is a
non-profit one and asked whether non-profit organizations
were taxed. Samir replied that "results" are taxed. Asked
whether there was a difference between a result and a profit,
he replied that companies are subject to taxation. Hajeri
interjected that there is a difference between a profit and
result but Samir gave no indication of agreement. Samir
further alleged that the total amount of withholding from
salaries was insufficient compared to the payroll and that
the school was failing to submit a required annual report on
staff earnings. Since the finance manager was not present,
school representatives noted the questions, but were unable
to answer in detail.


6. (SBU) Zoghlami said that Tunisian law had two categories
for schools that do not teach the Tunisian curriculum.
Either the school is covered by a bilateral agreement and
subject to its terms or it is subject to Tunisian law. He
said that there was no bilateral agreement covering ACST and
that the 1963 agreement did not cover the school. He gave no
indication as to the practical effect on the school that
there was no bilateral agreement. Dheraief followed by
asking a series of questions about the school's structure,
relationship to the Department of State and accreditation,
which were factually answered.

Both Sides Should Reflect on Status Issue
--------------


7. (SBU) Hajeri closed the meeting by saying there should
be a period of reflection by both sides and see what new
information might be brought forward on the status issue. In
answer to a question, he said that creating some form of a
bilateral agreement could be a possible solution to placing
the school in a proper legal framework.

Ministry of Finance Announces Audit the Next Day
-------------- ---


8. (SBU) Apparently not in agreement with Hajeri's closing
comment, on October 31 the Ministry of Finance sent two
officials to the school to deliver a letter announcing an
audit on November 17 of the school's payroll for the last ten
years. The school has referred the letter to its attorney.

Ministry of Finance Reportedly the Protagonist
-------------- -


9. (C) In a private discussion with the DCM, Hajeri said
that the Ministry of Finance was behind the current push on
status and that he did not know their motivation. He claimed
that a 1983 diplomatic note giving school employees tax
exempt status should be sufficient with respect to tax
issues, adding that the school had too many longstanding
benefits for them all to be taken away. The DCM followed up
as well on the recent removal of police security from ACST.
Hajeri had nothing new to add to the Foreign Minister's
commitment to raise it with the Minister of the Interior
(reftel).

Next Steps
--------------


10. (SBU) We are now engaged in further research of the
documents we have available on the history of ACST's presence
and the benefits it currently receives. We have record of an
attempt to create a formal agreement on the school's status
dating from late 2001, to which the GOT did not reply. We
believe it may be the appropriate time to resurrect that
approach. We are working with the Office of Overseas Schools
and L on the matter. In the meantime, we have asked the MFA
to slow down the Ministry of Finance on the grounds that the
discussion on status has just begun, and that not enough time
has been given to address the question.


GODEC