SHAHRANI REFUTES CORRUPTION CHARGES

S E C R E T KABUL 004089 SIPDIS STATE FOR S/SRAP; SCA/FO AND SCA/A E.O. 12958: DECL: 12/21/2019 TAGS: ETRD PGOV AF SUBJECT: SHAHRANI REFUTES CORRUPTION CHARGES REF: KABUL 4056 Classified By: AMBASSADOR E. ANTHONY WAYNE FOR REASONS 1.4 (B) AND (D) ¶1. (S) Summary: As he awaited President Karzai's announcement of the cabinet, and his expected move from the Ministry of Commerce and Industry to Mines after the new year, Wahidullah Shahrani categorically denied the corruption rumors against him. Reports are circulating in Kabul that Shahrani was involved in a corrupt oil import deal. Shahrani told Ambassador Wayne in a December 15 meeting that the rumors originated with Marshall Fahim Khan's brother, who lost a bid on a lucrative oil contract when Shahrani was Deputy Finance Minister and had oversight responsibility for numerous procurement tenders. Shahrani claimed the Japanese Embassy and its development assistance arm, JICA, had conducted a transparent bidding process for the contract, and said that he could provide documentation to support his innocence. He believes the corruption rumors were designed to undermine his renomination as Minister of Commerce or elsewhere, and instead pave the way to nominate into office someone who could use it as a vehicle for patronage. (NB: The new Commerce Minister announced on December 19, Ghulam Muhammad Yaylaqi, was Central Bank Chairman in the 1990s and Chamber of Commerce President until 2008. He was allegedly accused of corruption involving counterfeit money in 2001. He was supported by Islamic Unity Party Chair Mohammed Mohaqqeq.) End Summary. ¶2. (S) In a quiet aside after discussing preparations for the next round of Af-Pak Transit Trade Agreement (APTTA) negotiations (reftel),Shahrani told Amb. Wayne it was possible he would no longer retain his post as Minister of Commerce in the new Cabinet. He said Islamic Party Chair Mohaqqeq and Uzbek warlord Dostum had both been lobbying for supporters to replace him as had Tajik leader Marshall Fahim Khan. Shahrani said Marshall Fahim Khan had sent an emissary to his office earlier in the afternoon asking Shahrani which other ministries he would like to work in other than Commerce. A day earlier, President Karzai had suggested a shift to the Ministry of Mines. Shahrani told Amb. Wayne he didn't believe he would be a good fit for Mines, but said it was clear that powerful lobbies wanted to get a hold of the Commerce Ministry in order to use it to collect kickbacks and bribes. ¶3. (S) Amb. Wayne asked about the rumors circulating that Shahrani was corrupt and had made millions of dollars in an oil deal. Shahrani emphatically denied any corruption allegations, and said that while he was Deputy Minister of Finance overseeing contracts and government tenders, First Vice President Marshall Fahim's brother was the unsuccessful bidder for a large petroleum tender. Shahrani said there was an open and transparent bidding process administered by the Japanese Embassy/Japan International Cooperation Agency (JICA). According to Shahrani, the brother of the current Minister of Women's Affairs and a member of the influential Ghazanfar family was awarded the contract. He added that this same person later donated twenty million dollars to the Karzai presidential campaign. ¶4. (S) Shahrani said Fahim Khan's brother and his partner and brother of the President, Mahmood Karzai, had accused Shahrani of being corrupt on the petroleum case, but Shahrani characterized these two as among the most corrupt in Afghanistan. He further alleged they control Kabul Bank and provided $80 million in unsecured loans to the Karzai presidential campaign. Shahrani believes that if the Kabul Bank were audited, it would fail. Note: Embassy Treasury Attache believes Fahim Khan and Mahmood Karzai benefit from an association with the Bank, but not clear to what extent they are shareholders or have a say in command and control. Embassy Kabul also believes if a reputable firm audited Kabul Bank it would find serious irregularities, illegal activities and broad non-compliance with international best practices. End note. ¶5. (S) Shahrani entreated Amb. Wayne to verify the facts of the petroleum case with the Japanese Embassy, noting they have the records. In a December 17 conversation with Amb. Wayne, Shahrani said he collected copies of all the records of deals during his time at the Finance Ministry. Shahrani added when he became Minister of Commerce he reviewed contracts at the Ministry and found one in which 300,000 metric tons of fuel were imported illegally by the above mentioned Ghazanfar oil trader. The Ministry seized then oil angering the oil trader and his political ally General Dostum. Amb. Wayne also questioned Minister Shahrani regarding rumors he never filed his asset statement. Shahrani refuted the rumors saying he had filed his statement months ago. ¶6. (S) Embassy Comment: Shahrani is clearly looking for the USG to be in his corner. If he is able to fully clear himself of corruption allegations and maintain his new Cabinet post, he would likely bring the same high energy, reformist attitudes, and cadre of dedicated Afghan civil servants he has implemented in the MOCI to the Ministry of Mines. An Afghan-American Deputy Minister told Ambassador Wayne and Treasury Attache December 19 that despite the allegations of wrong doing, Shahrani is a net plus for this government: he is a workaholic who has turned the Commerce Ministry around with a dedicated cadre of hard working young civil servants. Shahrani said President Karzai told him that he wants him at the Ministry of Mines to ensure that contracts are in proper order and benefit the country which has clearly not been the case up until now. Ambassadors Eikenberry and Wayne have offered Shahrani USAID support in getting technical advice, which the Minister-Designate is already pursuing even as he seeks Parliamentary approval for his new post. RICCIARDONE