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"

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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

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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

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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

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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