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
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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
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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
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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