THE USG'S ANTI-CORRUPTION STRATEGY IN IRAQ:

UNCLAS BAGHDAD 001787

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: PGOV KCOR KDEM IZ
SUBJECT: THE USG'S ANTI-CORRUPTION STRATEGY IN IRAQ:
PROGRESS REPORT

REF: A. BAGHDAD 101

B. BAGHDAD 393

C. BAGHDAD 329

D. BAGHDAD 240

E. BAGHDAD 1235

F. BAGHDAD 1528

G. BAGHDAD 1495

H. BAGHDAD 1176 ET AL

SUMMARY
--------------


1. (SBU) Since the submission of our anti-corruption (AC)
strategy, aimed at strengthening Iraq's AC regime, an array
of USG agencies have continued to work to implement it. Our
dialog with the GOI on AC issues centers on promoting Iraq's
compliance with the United Nations Convention Against
Corruption (UNCAC),as does our assistance to the Commission
on Integrity (COI) and Council of Representatives (COR) to
reform Iraq's legal framework. USG capacity-building efforts
aimed at Iraq's AC institutions are extensive, and our
provincial-level engagement on AC is expanding. Our AC
efforts include numerous public diplomacy activities, while
USAID, under its Tatweer program, has taken the lead on
various AC-related capacity-building and economic reform
initiatives. Paras 16 - 19 contain metrics, along with
baselines and targets covering 2008-11, to be used in
assessing the impact of our AC efforts on Iraq's performance.
END SUMMARY.



OVERVIEW
--------------


2. (SBU) Ref A, submitted in January, outlines a long-term
USG strategy for supporting the GOI's efforts to develop the
capacity to combat effectively the widespread corruption
plaguing Iraq. The elements of that strategy center on two
broad objectives: (a) promoting Iraq's compliance with the
United Nations Convention Against Corruption (UNCAC),which
the GOI ratified in 2008 and which imposes on states-parties
the requirement to establish a strong, wide-ranging
anti-corruption regime, and (b) fostering economic reform so
as to reduce opportunities for corruption. The purpose of
this message is to provide a progress report on the
implementation of the twelve action items contained in our
anti-corruption (AC) strategy since its submission six months
ago.

PROMOTING COMPLIANCE WITH UNCAC
--------------


3. (SBU) ACTION ITEM: As part of our dialog with senior GOI
officials on AC issues, underscore the importance of
achieving compliance with UNCAC requirements. We also need
to highlight for the GOI at all levels USG efforts to combat
corruption by American officials and others to counter any
perceptions by Iraqis that the USG presses them on corruption
but ignores abuses by its own citizens and firms.

STATUS: ACCO has taken the lead on this item, using its
expanding contacts with the heads of the principal AC
institutions -- Commission on Integrity (COI),Board of
Supreme Audit (BSA),corps of Inspectors General (IGs) -- and
other senior officials to review highlights of the UNCAC and
urge compliance. Other elements of the U.S. Mission in
Baghdad, civilian and military, have also promoted UNCAC
compliance in their dialog with upper-echelon GOI officials.
To drive home to Iraqi contacts the USG's commitment to
bringing corrupt USG officials to account for corruption,
ACCO has widely distributed materials issued by the USG's
Special Inspector General for Iraq Reconstruction (SIGIR),in
particular, SIGIR's list of U.S. officials and others
convicted on corruption charges in U.S. courts as a result of
SIGIR's investigations into implementation of USG-funded
reconstruction projects in Iraq (see ref. B for GOI reaction
to SIGIR material).


4. (SBU) ACTION ITEM: Institute periodic consultations with
the Joint Anti-Corruption Council (JACC) and affiliated AC
bodies to identify UNCAC requirements and assess progress
toward compliance.

STATUS: ACCO and other USG Reps -- MNSTC-I among them -- meet
QSTATUS: ACCO and other USG Reps -- MNSTC-I among them -- meet
regularly with representatives of the three AC bodies (COI,
BSA, IGs) represented in the JACC as well as with the
latter's chairman, Council of Ministers Secretary General Ali
Alaq; the UNCAC dossier is typically on the agenda in our
discussions (see ref. C for sample report of our
consultations). ACCO has also attended workshops and

conferences designed to familiarize Iraqi AC officials with
UNCAC requirements; UNDP and UNODC have organized these
gatherings under an ACCO-funded program. To promote
AC-related cooperation under the bilateral Strategic
Framework Agreement, ACCO has proposed to the JACC chairman,
Ali Alaq, the establishment of a joint JACC/ACCO working
group; Alaq has our request under consideration.


5. (SBU) ACTION ITEM: Assist the COI and Council of
Representatives (COR -- parliament) in reforming Iraq's
existing legal framework -- including repeal of Article
136(b) of the Iraqi Criminal Procedure Code -- so that it is
fully compliant with UNCAC requirements. The COI is mandated
to develop AC-related draft legislation for the COR's action,
and hence both institutions should be the focus of our
intervention in this respect.

STATUS: ACCO has used its periodic consultations with the COI
and the COR's Integrity Committee chairman, Sheikh Sabah
Al-Saidi, to promote reform of Iraq's AC-related legal
framework as required under UNCAC -- including, inter alia,
repeal of Article 136(b),the controversial Criminal Code
provision that authorizes a Minister to block the prosecution
of officials in his Ministry for corruption and other crimes
(see, for example, ref. D). In addition, ACCO, working
through POL/CLA, has funded a project, implemented by the
University of Utah, that involves, inter alia, providing
legislative drafting assistance to the COR on UNCAC-related
measures. At present, though, prospects for the COR's early
passage of various pending AC-related bills (i.e., omnibus AC
law, reform of COI, BSA, IGs, upgrading of Iraq's anti-money
laundering (AML) are uncertain, as are prospects for repeal
of 136(b). The uncertain prospects are due in large part to
the slow pace of the legislative process generally; in the
case of 136(b) repeal, a key factor is opposition within the
Council of Ministers to relinquishing the powers granted by
this provision. However, in a positive development,
knowledgeable sources recently claimed to us that Prime
Minister Nouri Al-Maliki had prevented now-resigned Trade
Minister Abdel Falah Al-Sudani from using 136(b) to prevent
prosecution of senior officials in his Ministry on corruption
charges (ref. E).


6. (SBU) ACTION ITEM: Engage in capacity-building with the
COI's three principal AC bodies (BSA, COI, IGs),the JACC,
the judiciary, the Central Bank of Iraq (CI),and the COR's
Integrity Committee so that they are capable of implementing
an effective AC regime as provided for under UNCAC.

STATUS: An array of USG agencies are engaged in AC-related
capacity building efforts, i.e., identification of needs,
technical assistance, mentoring, exchanges, and workshops
(see ref. F for overview of AC Programs). Among these
agencies, USAID, under its Tatweer program, continues to
provide extensive training to IGs and their staffs; in 2008,
nearly 2,000 IG personnel received training, and in 2009 the
ongoing USAID/Tatweer training features increasingly complex
courses in such areas as Advance Auditing, Procurement, and
Human Resources. Other 2009 innovations in the USAID/Tatweer
program include, inter alia, working with the Association of
Inspectors General (AIG) to launch an IG website with a
public site generating public support for AC efforts, and a
secure site for use by IGs thereby providing them with a
professional audit management tool. USAID/Tatweer also plans
to introduce a "train the trainer" component for IG
personnel.

The DOJ, under its INL-funded ICITAP program, continues to
train COI personnel in areas ranging from development of a
Qtrain COI personnel in areas ranging from development of a
national training plan to the conduct of polygraph testing to
the establishment of a computerized system for tracking
casework (GOCASE system). BSA personnel have benefited from
GAO training programs in the U.S. On the military side,
MNSTC-I maintains robust capacity-building programs for the
Defense and Interior Ministries' Inspectors General and
staffs. The Embassy's Rule of Law office oversees various
programs, administered by DOJ/ICITAP, in particular, designed
to develop the capacity of the judiciary to process
corruption-related and other cases. USAID/Tatweer, in
support of the USAID Legislative Strengthening Project, plan
an initiative with the COR's Integrity Committee aimed at
developing its oversight capacity of the Ministries. This
project will also stregthen COR compliance with disclosure
and transparency laws. At present, there are no USG programs
targeting the JACC as such; the Council itself has only a
miniscule executive staff (three employees) and serves
primarily as a framework for consultations by the constituent
organizations listed above.

Combating money laundering is a crucial element of any
state's AC regime, and Treasury, through its cooperation with
the CBI and COI as well as private banks, is playing a
growing role in promoting Iraq's AML capacity. Among the
initiatives by Treasury: providing technical assistance to
the CBI's Money Laundering Reporting Office MLRO) and
conducting workshops on AML for COI investigators and
investigating judges. The Embassy's Treasury Attache has
arranged a visit to Iraq, tentatively scheduled for late
July, by a USG Financial Sector Assessment Team (FSAT) to
consult with the CBI on its AML regime. (Ref G provides an
update on the GOI's AML-related cooperation with other donors
-- UNODC, in particular.)


7. (SBU) ACTION ITEM: Promote AC efforts at the provincial
and local levels, maintaining contact with sub-national
offices of BSA, COI, and IG as well as with local
authorities, ensuring that local government plans feature an
AC component. UNCAC calls for a vigorous nationwide AC
effort, with authorities at all levels fully engaged.

STATUS: Provincial and local governments enjoy increased
authority under the federalism scheme enshrined in the
Provincial Powers Law (PPL) of 2008, and USG assistance --
spearheaded by the PRT's and their military counterparts --
is expanding accordingly so as to enable sub-national
authorities to use their enhanced powers effectively. In
June, USAID/Tatweer launched a new provincial-level program,
initiating AC training programs in provincial ministerial
offices in four provinces. As this initiative develops, it
will cover all 18 provinces and feature six training teams
working with not only provincial ministerial offices but also
the Provincial Councils (legislative bodies) elected in
January. USAID's Local Governance Project is supporting
improved transparency and accountability at the provincial
level through the roll-out of the Governorate Accounting and
Provincial Tracking System (GAPTIS). This system helps
provincial governments track progress on projects from
feasibility, to payment of contractors and on to the final
acceptance of the project. Indicative of the growing
commitment to AC by sub-national authorities, various
Councils have established Integrity Committees. The
ACCO-funded UNDP/UNODC program cited above includes a
provincial capacity-building component. In addition, ACCO
has submitted a proposal for another sub-national AC project,
including, inter alia, assistance to each Provincial Council
to establish the official gazette mandated by the PPL. As
part of its provincial outreach effort, ACCO has also
submitted proposals under MNF-I's CERP program to provide
badly-needed office equipment to COI's provincial offices.


8. (SBU) ACTION ITEM: Conduct a multi-pronged public
diplomacy effort to raise Iraqis' awareness of corruption's
negative impact on the country's politics, economy, and
society, and also assist the GOI in developing public
outreach programs. UNCAC envisages an active public
awareness campaign by governments to build popular support
for AC initiatives.

STATUS: The Embassy's Public Affairs Section (PAS),in
coordination with ACCO, has undertaken numerous initiatives,
among them: organizing AC investigative training for
journalists and GAO presentation to IG personnel, working
jointly with Mission Information Support Team (MIST) to
assist the COI's public affairs unit, e.g. providing AC
materials for television spots, and arranging local and
Western media interviews for ACCO. PAS and ACCO will
collaborate on an AC conference for Iraqi NGO's planned for
August/September. ACCO routinely distributes to Iraqi
contacts AC-related public diplomacy materials in Arabic,
e.g., items contained in the America.gov website. ACCO has
Qe.g., items contained in the America.gov website. ACCO has
expanded its public speaking activities, recently giving
presentations at a conference hosted by the Defense
Ministry's IG, a workshop for Iraqi contractors hosted by
MNF-I, and USAID/Tatweer-sponsored senior leader AC seminar.
ACCO also addressed a recent AC conference for Iraqi security
force IG personnel hosted by MNSTC-I. The ACCO-funded
UNDP/UNODC program cited above includes assistance to Iraq's
anti-corruption bodies in mounting a sustained public
awareness campaign on AC. As instructed by the Commanding
General, MNF-I is developing material for an AC public
outreach initiative.


9. (SBU) ACTION ITEM: Promote the introduction of an AC
component in Iraqi schools at all levels and assist the
Ministry of Education and the COI in devising an AC element
for schools. UNCAC envisages that states, as part of their
public awareness campaigns on AC, will include AC material in
schools' curricula.

STATUS: The COI's Education and Public Affairs Office has the
lead in promoting AC in Iraqi schools, but so far has made
limited progress due to lack of coordination with the

Education Ministry; a recent meeting of COI and Ministry
officials, attended by ACCO, suggests the two sides'
recognition of the need for improved collaboration. PAS and
ACCO have consulted in the past with COI on possible
assistance in this area and plan follow-up discussions with
both COI and the Education Ministry in order to crystallize a
project proposal.

PROMOTING ECONOMIC REFORM
--------------


10. (SBU) ACTION ITEM: Assist the GOI in standardizing and
making transparent the tender and procurement process for all
spending ministries.

STATUS: USAID/Tatweer has taken the lead on this item,
working with officials at the Oil Ministry's State Company
for Oil Projects (SCOP) to upgrade procurement and
contracting processes in accordance with best international
practices. As part of its effort, USAID/Tatweer is advising
SCOP officials on development of a SOP manual for procurement
procedures. It is also working with other offices in the Oil
Ministry to reform procurement practices. The Ministry of
Planning with USAID/Tatweer assistance has developed a
Contractor Classification Application (CCA) that is a
web-based software application that allows private firms to
register on-line and submit a contractor application so that
they may do business with the Government of Iraq. The new
Contractor Classification Application will help in reducing
corruption through issuing contractor identifications by the
CCA which are virtually impossible to forge. Another USG
actor in this area is DOD, whose Task Force for Business
Support Operations (TFBSO) assists GOI institutions as well
as local private firms on procurement and contracting
operations.


11. (SBU) ACTION ITEM: Assist the GOI in improving management
of the Public Distribution System (PDS) and the Social Safety
Net (SSN) programs.

STATUS: These two nationwide social welfare programs -- one
involving food allotments supplied by the Trade Ministry
(PBS) and the other payments by the Labor and Social Affairs
Ministry (SSN) -- are generally regarded as rife with
corruption. The Embassy, led by the Economic Section,
continues to urge reform of the PDS in its consultations with
Iraqi officials in the Agriculture and Trade and Investment
Working Groups established under the Strategic Framework
Agreement. The Economic Section and USDA representatives, in
particular, have used a recent corruption scandal over PDS at
the Trade Ministry to reinforce our push for PDS reform (see
ref. H for background on scandal). The Embassy is also
supporting an initiative by the World Food Program (WFP) to
get the GOI to allow the WFP to take over PDS procurement for
the most vulnerable Iraqi recipients. Under this scheme, the
WFP would take responsibility for as much as 30 percent of
the offshore procurement of key commodities in an effort to
reduce siphoning off of PDS resources due to corruption and
ensure that the poorest Iraqis actually receive their
rations. To date, however, the GOI has been largely
resistant to our and other donors' lobbying on PDS reform.

As for the SSN program, USAID/Tatweer has taken the lead,
working with the Labor and Social Affairs Ministry (MOLSA) to
install a new electronic system that would improve management
of the program's data base of beneficiaries so as to reduce
fraudulent and duplicate payments. The World Bank estimates
that, under MOLSA's current SSN payment system, 30 percent or
more of SSN benefits are siphoned off through irregularities.


12. (SBU) ACTION ITEM: Complete the installation of a
financial management information system (IFMIS).
Qfinancial management information system (IFMIS).

STATUS: USAID's Economic Growth has the lead on the
installation of IFMIS, a web-based system designed to
modernize budget execution by the GOI's over 250 "spending
units," i.e., elements of the GOI (e.g., an office in a given
ministry) identified in the GOI's overall budget. Treasury
has also provided IFMIS-related technical assistance to the
ministries. IFMIS, which replaced an out-of-date manual
system, is now essentially installed within the GOI's
ministries and other institutions. While some elements in
the GOI have expressed reservations in the past about IFMIS,
in January the Finance Minister issued an instruction
requiring all GOI institutions to use the system.


13. (SBU) ACTION ITEM: Work to ensure the GOI installs
functioning oil meters and automated accounting systems at
all critical production and distribution points within Iraq.

STATUS: With assistance from USAID/Tatweer, the Oil Ministry

has made progress on this item, as meters and automated
accounting systems are being installed at most oil production
and distribution points within Iraq. The installation of such
equipment is a key factor in the declining level of
corruption in the oil sector, with reduced opportunities for
officials to engage in corrupt practices, e.g., permitting
oil smuggling in return for bribes.


14. (SBU) ACTION ITEM: Encourage laws and regulations that
bring transparency to the distribution of revenues from
Iraq's natural resources.

STATUS: Various elements of the U.S. mission in Iraq, the
Economic section, in particular, provide such encouragement
to the GOI. With USG support, Iraq has applied to join the
Extractive Industry Transparency Initiative (EITI) and
attends EITI meetings. The GOI will require technical
assistance to achieve compliance with the obligations imposed
on full-fledged EITI members in terms of developing a
transparent system for the management and expenditure of the
country's oil-based revenues.


MEASURING THE IMPACT OF OUR AC EFFORTS ON IRAQ'S PERFORMANCE
-------------- --------------


15. (SBU) In an effort to assess the impact of the USG's AC
efforts in Iraq, this message concludes by proposing four
metrics with baselines and targets for 2008-11. These
metrics include an overall yardstick to measure Iraq's
progress -- compliance with UNCAC -- plus ones covering the
three basic elements of anti-corruption efforts:
accountability (existence of laws against corrupt practices),
enforcement (sanctioning violations of laws),and
transparency (public's access to information regarding
government's actions).


16. (SBU) Metric 1: Overall: Compliance with UNCAC (adopted
from Embassy's Mission Strategic Plan).
2008 Baseline: GOI ratifies UNCAC.
2009 Target: GOI issues updated AC strategy, consistent with
UNCAC.
2010 Target: GOI in compliance with at least half the
requirements of UNCAC.
2011 Target: GOI in compliance with all major provisions of
UNCAC.


17. (SBU) Metric 2: Accountability: Status of Iraq's
AC-Related Legal Framework.
2008 Baseline: Iraq's legal framework contains numerous
gaps.
2009 Target: Draft AC laws are finalized.
2010 Target: Omnibus AC law and Long-pending laws to
strengthen COI, BSA, IG are enacted.
2011 Target: Additional AC laws (e.g., new AML measure)
enacted and 136(b) is either repealed or amended to limit its
use; no major remaining gaps in legal framework.


18. (SBU) Metric 3: Enforcement: Number of Convictions
(Cases) Nationwide for Corruption.
2008 Baseline: 97 Convictions (per COI's annual report for
2008).
2009 Target: 120-150 Convictions.
2010 Target: 200 Convictions.
2011 Target: 250 Convictions.


19. (SBU) Metric 4: Transparency: Public's Access to
Government Information.
2008 Baseline: Iraqi public's access to government
information is severely limited.
2009 Target: The GOI's revised national AC strategy
enshrines enhanced public access to government information as
a key objective.
2010 Target: All new laws and regulations are gazetted at
national or provincial levels, as applicable.
2011 Target: Enactment of a Freedom of Information Act.




HILL