BERISHA FAMILY LINKED WITH WORLD BANK CONSTRUCTION

UNCLAS TIRANA 000092 SIPDIS E.O. 12958: N/A TAGS: ECON EIND EINV PGOV AL SUBJECT: BERISHA FAMILY LINKED WITH WORLD BANK CONSTRUCTION SCANDAL ¶1. (SBU) SUMMARY. In late-January 2009 the Albanian parliament and press began accusing the Government of Albania (GOA),and specifically Prime Minister Sali Berisha's son-in-law, Jamarber Malltezi, of misusing World Bank (WB) project funds for personal interest. The WB halted the project and is now investigating the scandal, which centers around the destruction of several residences in 2007 against WB policies of forced displacement. The WB allegedly plans to review the findings of the investigation in mid-February ¶2009. END SUMMARY. WORLD BANK INVESTIGATION -------------- ¶2. (SBU) Local media recently obtained copies of a World Bank Inspection Panel investigation into the affair in early-February 2009, calling it "one of the most difficult investigations it has undertaken in the last fourteen years". The scandal centers around the WB "South Coast Development Plan," directed by Berisha's son-in-law, Malltezi along the southern coast of Albania. According to WB policy, a development project must not result in "involuntary resettlement". In the case of resettlement, the project must provide the residents affected with means to obtain the same standard of living they previously had. The World Bank allegedly agreed to finance the development project after receiving assurances from the Berisha government that "no building would be destroyed until the procedures and criteria to assist affected residents are established." ¶3. (SBU) However, on 26 March 2007, Malltezi sent a letter to all relevant government authorities, including the General Director of the Construction Police, complaining about "illegal construction on the (southern) coast" of Albania in Jala. Attached were two CDs with aerial photos of the coast. The letter stated that the "photos were financed by the project". Malltezi requested that appropriate measures be taken as soon as possible. Less then a week later, on April 3, police notified affected residents that their houses were to be destroyed. They were given five days to appeal the decision to local courts, which they did. However, before the courts had heard the appeals, about one week later, bulldozers began destroying the houses and destruction was complete by April 17. In a subsequent request, Malltezi promised the Construction Police that his office "has obtained the necessary equipment for the Construction Police to control the situation on the terrain. Such equipment includes digital cameras, computers, GPS, etc." He concluded the letter by saying "the continuation of construction without permit along the coast puts in question the continuity of the project financed by the WB and its donors." ¶4. (SBU) The speed and implementation of the decision-making and destruction was unprecedented. Additionally, only buildings specifically hindering the WB project's goals were selected for destruction. To date, no compensation or financial assistance has been given the affected residents. PUBLIC REACTION -------------- ¶5. (SBU) Critics and opposition party members have claimed that the WB project was abused for Malltezi's personal gain and have called on the Prosecutor's Office to put Malltezi under investigation. For his part, Berisha has accused the WB investigative panel of mud-slinging and slandering the GOA for their report on the accusations of misconduct. Deputy Chair of the opposition Socialist Party Erion Brace told reporters at a recent press conference, "This is a filthy story of abuse and corruption, as a function of the criminal economic system of Sali Berisha." The WB Board of Executive Directors plans to review the findings of the investigation in mid-February 2009. COMMENT -------------- ¶6. (SBU) Just five months before national elections, the addition of yet another corruption scandal (on top of Gerdec, the Durres-Kukes Road project, and business deals with shady Bosnian businessman Damir Fazlic),further tarnishes Berisha's anti-corruption image and only adds to the public perception that the PM, his family and inner circle are using official power to enrich themselves. Perhaps more interesting, however, will be watching to see how much political hay the opposition will seek to make out of the scandal. Official corruption and abuse of office are certainly hot-button issues for voters, but are a bit of a double-edged sword for the opposition, given their own current and past business dealings. WITHERS