GABON: ALI BONGO ARRESTS KEY PLAYERS IN REGIONAL BANK

UNCLAS SECTION 01 OF 02 LIBREVILLE 000467 C O R R E C T E D C O P Y (PARA 2 NAME CORRECTION HUGHES ALEXANDRE BARRO CHAMBRIER) SIPDIS SENSITIVE DEPARTMENT FOR AF/C KORTE E.O. 12958: N/A TAGS: PGOV PHUM KCOR GB SUBJECT: GABON: ALI BONGO ARRESTS KEY PLAYERS IN REGIONAL BANK SCANDAL LIBREVILLE 00000467 001.3 OF 002 ¶1. (SBU) Summary: Newly installed Gabonese President Ali Bongo Ondimba recalled Philibert Andzembe, the Governor of the Central Bank of Central African States (BEAC),who is Gabonese, in the wake of revelations about the $82 million financial scandal. Press sources are reporting that two other Gabonese officials implicated in the scandal and closely tied to former President Omar Bongo, were arrested in Libreville on October 20. Bongo's swift action against the corrupt officials sent a clear signal that he intends to implement changes at home and maintain Gabon's stature in the region. End Summary. - - - - - - - - - - - - - - - - - - - - - - IMMEDIATE ACTION AGAINST CORRUPT OFFICIALS - - - - - - - - - - - - - - - - - - - - - - ¶2. (U) President Ali Bongo's first Council of Ministers meeting resulted in the announcement of a number of significant changes in how government business will be conducted. The most immediate and visible action taken was the recall of Philibert Andzembe, the current BEAC Governor, who is Gabonese. Bongo has since announced his replacement, Hughes Alexandre Barro Chambrier, who previously served at the International Monetary Fund and was deputy minister for forestry. Gabon also announced it would facilitate the ongoing investigation into the role of Gabonese officials in $82 million scandal, including QVhuQscandal, Armand Brice Ndazamba and Maurice Moutsinga were reportedly arrested in Libreville, according to press sources. - - - - - - BACKGROUND - - - - - - ¶3. (U) The BEAC, headquartered in Yaounde, Cameroon administers the Central African economic zone. Gabon, Cameroon, Chad, Equatorial Guinea, the Republic of Congo, and Central African Republic use a French-backed currency (F CFA) pegged to the Euro. Since its inception, the Governor of the BEAC has always been a Gabonese citizen, in large part because Gabon had held the largest reserves in the bank. ¶4. (U) In 2009, a BEAC audit discovered losses of an estimated $43 million in poor investments and $39 million in the diversions through its external office in Paris between 2004 and 2008. The diversion of funds was traced to fraudulent checks, wire transfers, and use of pension funds to make property investments in Gabon and France. Armand Brice Nzamba, a Gabonese official at BEAC's external office in Paris allegedly signed over 300 checks and deposited them at the Champs d'Elysees branch of Societe Generale Bank, a prominent French bank. Maurice Moutsinga, the former Director of Accounting and Budgetary Control at BEAC's Yaounde headquarters, covered up the transfers through false accounting. Many other senior bank officials from other member states have also been implicated in the scandal. The French Government also announced its own investigation. ¶5. (U) In April 2009, in response to the audit, the regional heads of state suspended all investment operations until further notice as a "protective measure." The summit communiqu did not mention the losses incurred, but stated that steps were being taken to "to protect the credibility and stability of the Central Bank." ¶6. (U) On September 13, a Jeune Afrique article entitled "Hold Up at the BEAC" exposed BEAC's problematic management under Philibert Andzembe and the embezzlement of funds by numerous officials, including prominent Gabonese. In late September, Andzembe publicly admitted that the information in the article was partially true. He expressed concern that some of the findings of the ongoing investigation were leaked prior to its completion. Several investigations into individual officials were launched and many of the BEAC employees involved were suspended, dismissed, or have resigned. They could face criminal prosecution. ¶7. (U) Andzembe, who became BEAC Governor in July 2007 only acknowledged the diversion of funds that occurred prior to his taking office. However, Andzembe is also under scrutiny for poor investment decisions that were made without the consultation of member states during his tenure. Andzembe's predecessor, Jean-Felix Mamalepot's role in the diversion is also being investigated. ¶8. (SBU) Andzembe's recall and the two arrests come at a time when other countries are questioning Gabonese management of the BEAC. Equatorial Guinea, which is now the largest depositor in the BEAC, with 52% of its holdings, is reportedly interested in taking over leadership of the bank. Gabonese mismanagement of the BEAC could open the door to another country taking over the top slot at the LIBREVILLE 00000467 002.2 OF 002 next BEAC summit in Bangui at the end of November. - - - - COMMENT - - - - ¶9. (SBU) Ali Bongo's quick action against Gabonese BEAC officials surprised some observers because those implicated were close to his father. However, Bongo promised to fight corruption and the BEAC scandal was undermining Gabon's regional stature. Bongo also may have felt he had to act quickly to control the scandal's damage ahead of the November heads of state summit in Bangui. REDDICK