IICA SEEKS USG SUPPORT TO COUNTER BLAME ACCUSATIONS FOR

C O N F I D E N T I A L BOGOTA 000075 SIPDIS USOAS FOR GIANNI PAZ; WHA/AND E.O. 12958: DECL: 2020/01/22 TAGS: ECON EAGR PREL OAS PGOV CO SUBJECT: IICA SEEKS USG SUPPORT TO COUNTER BLAME ACCUSATIONS FOR COLOMBIAN AG SCANDAL REF: 09 Bogota 3611 CLASSIFIED BY: Brian A. Nichols, Charge d' Affairs; REASON: 1.4(B), (D) ¶1. (U) This message contains an action request. Please see paragraphs 2 and 9. ¶2. (SBU) SUMMARY AND ACTION REQUEST. Representatives of the Inter-American Institute for Cooperation on Agriculture (IICA),a branch of the OAS, met with Emboffs on January 21 to refute what they see as a Colombian Ministry of Agriculture campaign to make IICA the scapegoat in the Agro IngresoSeguro (AIS) agricultural subsidies scandal (reftel). IICA maintains it was only implementing irrigation and drainage projects in accordance with Colombian law and regulations, which did not prohibit awarding projects to prominent families or to subdivided land parcels. Investigations into IICA, the Ministry, and AIS beneficiaries are underway, and continue to adversely affect the presidential campaign of former minister Andres Felipe Arias. On December 23 the Ministry notified the issuer of a performance bond that IICA had failed to comply with its contractual obligations. IICA expressed concern that in a worst-case scenario, it would be forced to leave Colombia and asked for our help in: 1) ensuring due process in the investigations, 2) convincing the GOC that blaming IICA for the scandal is not productive, and 3) ensuring that any eventual arbitration is international, rather than Colombian. Post requests Department guidance on responding to this request. END SUMMARY AND ACTION REQUEST. IICA: "WE'RE JUST TECHNOCRATS FOLLOWING ORDERS" -------------- --- ¶3. (SBU) The media continues to cover the AIS scandal, which revolves around allegations that politically connected and wealthy landowners benefitted improperly from government agricultural development subsidies. IICA Deputy Director General Christopher Hansen and his team told us that IICA's function within AIS, as laid out by Colombian regulations and the technical cooperation agreements between the GOC and IICA, was to evaluate the technical viability of agricultural development project proposals, specifically those related to drainage and irrigation. They said the GOC-established rules of the program prevented IICA from rejecting projects based on the recipients being from prominent, wealthy families, or the subdivision of land parcels for the purpose of qualifying for more subsidies. These were the two main reasons that AIS became a national scandal. ¶4. (C) Furthermore, IICA pointed out that the Ministry of Agriculture had plenty of oversight over the program, and in fact made the final decisions on recipients. According to IICA, AIS funds were disbursed directly to the contractors doing the irrigation work, not to the beneficiaries, and there has been no evidence that money authorized for the projects was diverted to other purposes. For this reason, IICA considers the AIS program a success, the ensuing scandal a political red herring, and the Ministry's current attacks on IICA a product of Arias and current Minister Andres Fernandez painting themselves into a political corner. IICA's lawyer claimed that Minister Fernandez had requested IICA offer a "sacrificial employee" whom the Ministry could blame for the scandal. IICA refused. THREE ONGOING INVESTIGATIONS WILL STEER EVENTS -------------- - ¶5. (SBU) Three investigations into AIS are ongoing. The Fiscalia (Prosecutor General) is investigating the Ministry of Agriculture, AIS beneficiaries, and 19 IICA employees and contractors. According to IICA's local counsel, the Procuradoria (Inspector General),which is responsible for investigating government employee malfeasance, is no longer including IICA employees in its investigation. The Contraloria (GAO equivalent),on the other hand, has exonerated Ministry of Agriculture officials, and is instead concentrating its investigation on IICA. IICA has pledged to cooperate fully with all investigations and has already turned over some 20,000 AIS-related documents to authorities. ¶6. (SBU) Clearly, how these investigations evolve will impact all parties involved. For example, the press reported on January 21 that the Procuradoria would include in its investigation testimony from AIS beneficiaries that Arias had called them to coordinate their stories and versions of events to the media and investigators. Arias' terse denial of coordinating stories or obstructing justice ended with a defensive, "I'm not that stupid!" The AIS scandal has dropped Arias (a staunch supporter of President Uribe) to second in polls gauging the March 15, 2010 Conservative Party presidential primaries. AG MIN STEPS UP PRESSURE, MAY CALL PERFORMANCE BOND -------------- -------------- ¶7. (SBU) On December 23, the Ministry of Agriculture provided preliminary, non-specific notification of IICA's non-compliance to the issuer of a $20 million performance bond, Colombian insurance company "Confianza." IICA representatives told us that their contract with the Ministry requires that any allegations of non-compliance first be raised between the two parties, which in this case did not happen. For this reason, IICA speculated that the December 23 notification of non-compliance may in fact have been a bureaucratic scramble to show that the Ministry was taking some sort of action, rather than a serious, calculated effort to collect on the bond. IICA noted that efforts to call the bond, as well as suggestions that the GOC could disregard IICA's immunities as a public international organization, have forced IICA to consider a worst-case scenario where they would leave Colombia. Their departure would directly affect Embassy assistance programs, since the U.S. Department of Agriculture uses IICA to implement its sanitary and phytosanitary projects. COMMENT AND ACTION REQUEST -------------- ¶8. (SBU) COMMENT: The Colombian government's decision to contract IICA to implement its agricultural development programs was to ensure expertise and transparency, while avoiding the potential for corruption. It appears that IICA complied with the technical aspects of its contract, and probably could not have known that AIS funds were going to prominent families, against the spirit, if not the letter, of the law. As such, claims of IICA malfeasance appear specious. Rather, the bad optics of prominent, wealthy families subdividing land for the purpose of receiving greater benefits from a government subsidy program is more likely a result of the faulty design of the AIS program. END COMMENT. ¶9. (SBU) ACTION REQUEST: IICA asked us to communicate to President Uribe that we are following the case closely to ensure due process in the investigations, and that damaging the credibility of an international organization of technocrats would be of benefit to no one. IICA also asked for our support in helping ensure that any eventual arbitration between the GOC and IICA be international, rather than Colombian, since their contract does not specify the venue. IICA has also reached out for support to the Mexican and Canadian Governments, which, together with the USG, provide 84 percent of IICA's budget (including 59 percent from the United States). Post requests Department guidance on how to respond to IICA's request. END ACTION REQUEST. NICHOLS