ERBIL RRT: DEPUTY ANTI-CORRUTION COORDINATOR VISITS

UNCLAS SECTION 01 OF 02 BAGHDAD 001039

SIPDIS
SENSITIVE BUT UNCLASSIFIED

E.O. 12958: N/A
TAGS: KCOR PGOV EFIN IZ
SUBJECT: ERBIL RRT: DEPUTY ANTI-CORRUTION COORDINATOR VISITS
KURDISTAN REGION

REFTELS: (a) 08 Baghdad 2731
(b) 09 Baghdad 796

This is an Erbil Regional Reconstruction Team cable.


1. (SBU) SUMMARY: Deputy Anti-Corruption Coordinator
(D/ACC) Lynn Gurian traveled to the Kurdistan Region (KR) to learn
more about the ways in which corruption manifests itself in the KR,
steps being taken to combat corruption, and determine best "next
steps" for USG-funded anti-corruption efforts in the KR. Chief among
concerns cited by interlocutors were alleged misdirection of public
funds, nepotism and cronyism in public sector hiring, government
interference in contracting and private commercial activities, and a
lack of transparency in public administration and budget execution,
all of which converge to provide an environment conducive to
corruption. Numerous ad hoc governmental committees have been
created to investigate corruption, but none of these are independent
from the executive branch of government. There is currently no USG
anti-corruption or budget execution assistance reaching the
Kurdistan Region. We believe that supporting a recently launched
UNDP budget execution project would be an effective means to improve
transparency and accountability in the region. END SUMMARY


2. (U) Regional Reconstruction Team Erbil (RRT) hosted
Embassy Baghdad Deputy Anti-Corruption Coordinator (D/ACC) Lynn
Gurian from April 4 - April 9. During her visit, D/ACC met with
government officials, businessmen, political party leaders and civil
society representatives to discuss perceptions of corruption in the
Kurdistan Region (KR) and learn what steps are being taken to combat
corruption.

WHERE CORRUPTION LIVES AND HOW IT MOVES
--------------



3. (SBU) With varying degrees of candor, contacts expressed the view
that corruption has permeated most aspects of life in the KR. Chief
among concerns cited by interlocutors were alleged misdirection of
public funds, nepotism and cronyism in public sector hiring,
government interference into contracting and private commercial
activities, and a general lack of transparency in public
administration and budget execution, all of which converge to
provide an environment hospitable to corruption. Contacts
highlighted the close connection of the two dominant political
parties, the Patriotic Union of Kurdistan (PUK) and the Democratic
Party of Kurdistan (KDP),to all aspects of the government and the
private sector, as a contributing factor to corruption.


4. (SBU) Independent journalists in the KR confirm that
they continue to face legal pressure and intimidation from the
Kurdistan Regional Government (KRG) for reporting on corruption and
asked for continued USG support of free media. Attorneys and civil
society organization leaders claim that no cases of corruption have
been brought before the courts because the populace is afraid to do
so and requested the USG work to strengthen the KRG judiciary.
Contacts in the private sector and minority political parties
admonished the USG for not having done more to pressure the KRG to
become more transparent. "Now is not the time to congratulate the
government. It is the time to push them to change," said Kamaran
Hussein, a member of the Kurdistan Businessmen's Association. "Just
as the U.S. military attacked terrorism, so should the U.S.
government attack corruption," said Salahaddin Bahaddin, Secretary
General of the Kurdistan Islamic Union.

Lack of independent anti-corruption institutions
-------------- ---


5. (U) Government contacts briefed D/ACC on government
oversight/audit institutions (none of which are independent from the
Qoversight/audit institutions (none of which are independent from the
executive branch). There are seven ad hoc anti-corruption
committees in the KR, including: a committee to follow up on
judicial issues, a committee for project management, a committee for
public administration reform, a committee on corruption in the
media, a committee to follow up on allegations of corruption and a
special committee to follow up on legislative affairs. Each of
these committees reports to the KRG Council of Ministers.


6. (SBU) In addition to these ad hoc committees, there are
two Bureaus of Supreme Audit in the KR (one for the KDP and one for
the PUK). Dr. Giorgis Hassan, president of the KDP-affiliated BSA,
reported to D/ACC that the BSA is currently unable to audit the
Office of the Prime Minister, the Ministry of Finance, public banks,
or customs checkpoints. In a separate meeting, Dr. Nouri Sinjari,
(Chief of Staff to KRG Prime Minister Nechirvan Barzani) told D/ACC
that once the KDP and PUK Ministries of Finance officially unite, so
too will the two BSAs, and that a recently-passed KRG audit law will
empower the BSA to audit all governmental entities - including the
Minister of Finance. (Comment: Why the recently-passed law - which
attaches the BSA to the Iraqi Kurdistan Parliament (IKP) and
provides the mandate for the BSA to conduct audits of all government
offices - including the Minister of Finance, customs checkpoints,

BAGHDAD 00001039 002 OF 002


etc - must wait for unification to be implemented is not clear. End
comment).


7. (U) D/ACC was also informed that a committee within the Ministry
of Finance (the Financial Inspection Committee) which reports to the
Minister of Finance has the authority to investigate all matters
pertaining to public finance.

HOW USG CAN HELP SUPPORT THE FIGHT
--------------

8.(SBU) In meetings with D/ACC, opinions varied on what, if
anything, can be done to effectively combat corruption in the KR.
Some contacts, notably Mala Bakthiar (PUK Politburo Director) and
Dr. Nouri Sinjari, called for long-term anti-corruption training for
government personnel. But contacts unaffiliated with the KRG
believe that any such efforts are will not be effective until there
is a definitive separation between the political parties and the
government and until there is transparency in KRG public
administration.

9.(U) Currently, there are no USG-funded anti-corruption initiatives
in the KR. The KRG has, on its own initiative, contracted with
private international companies (Price Waterhouse Coopers) and
international organizations (UNDP) to assess the current system of
public administration and provide some direction for future reform.
The preliminary PWC assessment is expected in the next month or so.
In February 2008, the UNDP rolled out a 54-page plan for "Budget
Execution Support" that will target the KRG Ministry of Finance, KRG
Ministry of Planning, Bureau of Supreme Audit, the Iraqi Kurdistan
Parliament (IKP),and the three provincial governors. This project
will be presented to donors for funding at an Erbil Donors'
Conference May 5-7.


10. (U) The UNDP project comprises a comprehensive series of
concrete steps designed to increase the efficacy and transparency of
public procurement procedures, increase the accountability of
payment and treasury operations, and "improve the efficiency of
non-wage recurrent and capital expenditures, by setting priorities
across key sectors and ensuring that spending within sectors is
efficient and reaches front-line service delivery units."


11. (SBU) COMMENT: The RRT believes that the UNDP project provides
an effective vehicle for USG-funded efforts to assist the
development of transparent, accountable government institutions in
the Kurdistan Region. This project is in line with USG priorities
for Iraq and consistent with Iraqi obligations under the UN
Convention against Corruption. We also strongly support high-level
outreach to the Kurdistan Region leadership, pressing them to:


-- enact a code of conduct for public employees;
-- provide greater disclosure of Ministerial salaries and
emoluments;
-- divulge information relating to public subsidies for political
parties; and
-- ensure a public tender process for government-funded projects.

The KRG should also be encouraged to publicize the results of the
PWC study and the findings of the ad hoc committees. And finally KR
leadership should also be urged to fully respect the mandates of the
independent non-executive branch anti-corruption bodies such as the
Bureau of Supreme Audit. END COMMENT

Butenis