ANTIGUA GOVT HOLDS TRUMP CARD OVER CORRUPT

C O N F I D E N T I A L BRIDGETOWN 000377

SIPDIS

DEPT FOR WHA/CAR AND CA/VO

E.O. 12958: DECL: PUBLIC RELEASE OF DOUGHTY STREET CHAMBERS REPORT
TAGS: PGOV KCRM CVIS XL
SUBJECT: ANTIGUA GOVT HOLDS TRUMP CARD OVER CORRUPT
OPPOSITION LEADERS

Classified By: Charge d'Affaires, a.i. D. Brent Hardt, reasons 1.4 (b,d
)

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


1. (c) On June 22, UK High Commissioner Duncan Taylor
passed to the Charge a copy of a "confidential opinion" from
a law firm hired by the Government of Antigua and Barbuda to
investigate possible corrupt activities by the previous
government with regards to repayment of a development loan.
The report names former PM Lester Bird and opposition MP Asot
Michael as key players in a scheme to bilk Antigua's budget
out of some $14 million in a rigged loan financing operation.
While the report is not yet ready for release, there is
probably enough damning information in it to give the ruling
UPP the leverage it needs to forestall any concerted effort
by the opposition to challenge the UPP's slim parliamentary
majority and force new elections. When the report is
complete, Post will assess whether it would be appropriate to
pursue visa ineligibilities under section 212(f) for
individuals implicated in the investigation. End summary.


2. (c) On June 22, UK High Commissioner Duncan Taylor shared
with the Charge a draft "confidential opinion" from an
independent law firm hired by the GOAB to investigate a
potential multi-million dollar fraud perpetrated by senior
mebers of the Lester Bird government in the 1990s. Note:
Opinion passed to WHA/CAR via email; classiication is not a
USG classification, but requesthandling as such as it was
provided in confidenc by HMG to the USG. End note.) The
36-page docment outlines in significant detail a scheme by
overnment ministers and officials to skim money from
gasoline taxes collected by the GOAB and allocaed to finance
a loan taken out from a Japanese cmpany to finance
construction of a desalination lant. The report outlines
how, by setting up a eries of shell companies, granting
non-transparent concessions to collect revenue from public
soures, and over-reporting the size of the loan itself a
number of senior members of government were able to funnel
some $14 million into their own pockets.


3. (c) The list of malefactors in the case is a veritable
who's who from the Lester Bird government - Bird himself,
senior party MP Asot Michael, former Antiguan High
Commissioner to the UK Ronald Sanders, Finance Minister John
St. Luce, Treasury chief Keith Hurst, Public Utilities
Minister Robin Yearwood, and Antiguan Ambassador to Russia
and Israel Bruce Rappaport, along with some minor officials
and ancillary characters. The firm's findings are still
preliminary pending interviews with both the original lender
(Ishikawajima-Harima Heavy Industries (IHI) Japan) and some
of the accused, but the documentary and interview evidence
obtained so far - including from a raid on Asot Michael's
personal files - appears to be compelling for at least
several of the key players.

--------------
COMMENT
--------------


4. (c) The findings could not have come at a better time for
the ruling UPP. Spencer's party holds the slimmest of
parliamentary majorities - one seat, and that only with a
sort of informal coalition agreement with a local winner on
the sparsely populated island of Barbuda. That MP, Trevor
Walker, is being wooed by the opposition ALP, while another
senior MP in the ruling party - Deputy PM Willmoth Daniel -
has an on-again, off-again resignation drama unfolding as a
result of a falling out with PM Spencer. Add to this
mischief an attempt by the ALP to challenge in court the
results from five constituencies from January's elections,
where delays in opening polling stations led to accusations
of election fraud, and the ruling party's position has
appeared precarious from the outset. To counter the threats,
Spencer has made it clear that any challenge to specific
constituencies would force him to call new general elections,
so as not to allow the opposition to "cherry pick"
constituencies. At the same time, UPP leaders have made it
known that they have damaging evidence against Bird et al.,
and are prepared to release it if need be prior to any new
elections. In such a scenario, moving forward aggressively
against the government carries a much higher degree of risk
for Bird, as the ALP could actually lose seats on the heels
of corruption findings and even possible indictments among
its senior leadership.
HARDT