Identifier | Created | Classification | Origin |
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09KATHMANDU1153 | 2009-12-22 08:21:00 | CONFIDENTIAL | Embassy Kathmandu |
VZCZCXRO2480 PP RUEHCI DE RUEHKT #1153/01 3560821 ZNY CCCCC ZZH P 220821Z DEC 09 FM AMEMBASSY KATHMANDU TO RUEHC/SECSTATE WASHDC PRIORITY 1182 INFO RUEHBJ/AMEMBASSY BEIJING 7246 RUEHRL/AMEMBASSY BERLIN 0143 RUEHKA/AMEMBASSY DHAKA 2931 RUEHLO/AMEMBASSY LONDON 6724 RUEHNE/AMEMBASSY NEW DELHI 3399 RUEHFR/AMEMBASSY PARIS 0191 RUEHCI/AMCONSUL KOLKATA 4885 RUCPDOC/DEPT OF COMMERCE WASHINGTON DC RULSDMK/DEPT OF TRANSPORTATION WASHDC RUEATRS/DEPT OF TREASURY WASHINGTON DC RHHMUNA/HQ USPACOM HONOLULU HI//J2X/J2C/J2D/J2I// |
C O N F I D E N T I A L SECTION 01 OF 02 KATHMANDU 001153 |
1. (SBU) Finance Minister Surendra Pandey says he is "completely committed" to making sure the Nepal Airlines Corporation's (NAC's) decision to purchase aircraft from Airbus, instead of Boeing, was fully transparent before determining whether the government should provide the loan guarantee the national airline needs to complete the purchase. Pandey expressed his commitment to transparency during a December 17 meeting with the Charge, but it appears to be limited to ensuring that no illegal payments were involved. The meeting occurred three days after a government watchdog agency harshly criticized the NAC for flouting public procurement laws. Minister Underscores Commitment to Transparency -------------------------- -- 2. (SBU) During a December 17 meeting with the Charge, Finance Minister Pandey said he is "completely committed" to ensuring the NAC's decision to purchase two aircraft -- one wide-body jet and one narrow-body jet -- from Airbus was made in a fully transparent manner. He expressed his commitment to transparency several times after the Charge raised concerns about whether the NAC Board of Directors had been fully informed about the details of the competing bids before choosing the European aircraft manufacturer over Boeing. Pandey did not respond to these concerns, and instead focused on rumors illegal payments may have influenced the decision. 3. (C) Pandey noted he recently met with several European Union ambassadors and asked them to provide assurances that no independent agent has been involved in the USD 137-million deal. Minutes of the December 8 meeting sent to Emboff, apparently by mistake, indicate Pandey is concerned about reports that a local agent "received money without real services or added-value work" and this "extra money could be a way of giving bribes to decision-makers." 4. (SBU) The NAC has signed a memorandum of understanding (MOU) with Airbus and provided USD 750,000 to lock in the deal, but the purchase cannot be finalized until the government provides a loan guarantee demanded by the Employees' Provident Fund, which was agreed to provide financing to the NAC. The Ministry of Finance must submit its recommendation before the full Cabinet votes on the loan guarantee. Pandey assured the Charge his Ministry will not makes its recommendation until he is satisfied the NAC has acted transparently. Government Watchdog Criticizes NAC's Decision -------------------------- 5. (U) On December 14, the Public Procurement Monitoring Office (PPMO) harshly criticized the NAC for flouting the procurement laws governing public entities. The government's watchdog said its ongoing investigation showed the NAC's bid evaluation procedures were "ambiguous" and failed to adjust the bidding prices for fuel consumption, repairs, maintenance, and other costs over the life cycle of the aircraft. Boeing has argued that, while the initial cost of its narrow-body aircraft is higher, the NAC would actually save money because it is a newer generation aircraft that is more fuel efficient and requires less maintenance. 6. (U) Boeing declined to bid on the wide-body plane because it believed it would be financially imprudent for the NAC to purchase one. PPMO officials said the NAC's decision to purchase a wide-body plane violated public procurement law because it was made on the basis of a single bid. They have asked the NAC to provide additional information needed to complete their probe. Media Intensifies Scrutiny of Deal KATHMANDU 00001153 002 OF 002 -------------------------- 7. (C) In mid-November, Post provided a background briefing on the deal to a senior economic reporter with Kantipur Publications, which publishes the largest Nepali-language newspaper and an English-language sister publication. On November 18, the day after the NAC and Airbus announced their MOU, both newspapers ran front-page articles detailing the controversy surrounding the purchase. Since then, the reporter has written several follow-up pieces. The signing of the MOU and provision of lock-in money sparked both the print and electronic media to take a more aggressive approach in reporting on the deal, with prominent play being given to every new development. BERRY |