Archive for December, 2010

Alcatel Basel: 700’000 Dollar für den Parfüm-Experten

Thursday, December 30th, 2010
Alcatel zahlt 137 Millionen Dollar, um eine Betrugsklage in den USA abzuwenden. Die Akten zeigen: Alcatel Basel stellte einen Parfüm-Distributor an, um das Informatik-Haus zu «beraten».

von Christian Bütikofer

Alcatel hatte in Lateinamerika und Asien Millionen an Schmiergeldern bezahlt, um an Aufträge zu kommen. Dies teilte die US-Börsenaufsicht SEC und das Justizministerium am Montag mit.

Der Telefonanbieter Alcatel-Lucent zahlt darum lieber mehr als 137 Millionen Dollar, als ein Betrugsverfahren zu riskieren. Heisst: 92 Millionen Dollar Strafzahlung und 45 Millionen, um Zivilverfahren abzuwenden.

Das Unternehmen gab zu, mindestens 48 Millionen Dollar durch Bestechung eingestrichen zu haben. Die Korruptionsfälle fanden statt, bevor Alcatel mit Lucent 2006 fusionierte.

Der Konzern zog unzählige Aufträge mit hunderten von Consultants an Land – ein System, das Korruption geradezu anzog. Die Firma gab zu, in Taiwan, Malaysia, Costa Rica und Honduras Bestechungsgelder bezahlt zu haben.

Die Basler Alcatel Standard setzte für Schwesterfirmen praktisch alle Verträge mit den weltweit tätigen Alcatel-Vertretern und Consultants auf, steht in den Gerichtsakten, die dieser Zeitung vorliegen. Alcatel Standard heisst seit 2007 Alcatel-Lucent Trade International, der Sitz blieb in Basel.

700’000 Dollar für Nullberatung

Die Akten zeigen Erstaunliches, etwa im Fall Honduras. So heuerte die Alcatel Standard einen ganz speziellen Berater an. Seine Qualifikation: Parfüm- und Kosmetik-Distribution, ohne irgend welche Telekommunikations-Erfahrung.

Die IT-Firma bezahlte ihn für seine Experten-Meinung und andere nebulösen Dienstleistungen. Der Parfüm-Experte kassierte zwischen drei und fünf Prozent für Verträge, die Alcatel an Land zog. Zwischen September 2004 und Juni 2006 zahlte das Unternehmen dem Honduraner über 700’000 Dollar.

Enthüllungen hatten keine Konsequenzen

Die Presse in Costa Rica deckte im Oktober 2004 diese Schmierengeschäfte bei den Vertragsvergaben auf, denn auch dort öffnete die Firma ihren Geldbeutel nach Kräften.

Doch was passierte bei Alcatel? Business as usual: Der Vertrag des Honduraner Püderchen-Experten mit den guten Beziehungen wurde nicht etwa aufgelöst. Im Gegenteil, die Geschäfte dauerten bis Juni 2006 an.

Europa-Reisli für die VIPs

Daneben zahlte Alcatel dem Geschäftsführer der Telekomfirma Hondutel ein Europa-Reisli – auch die Frau durfte mit. Später zog seine Tochter durch die Städte des alten Kontinents – wieder dank Alcatel.

Auch ein Anwalt von Hondutel kam nicht zu kurz: Er und seine Tochter wurden per Privatchauffeur durch Paris kutschiert.

Fürs grosse Geld nach Costa Rica

Von Dezember 2001 bis Oktober 2004 zahlten die Alcatel-Vertreter in Costa Rica mindestens sieben Millionen Dollar Bestechungsgelder, um drei Telefonservice-Verträge im Wert von 303 Millionen Dollar ins Trockene zu schaukeln.

Dazu bestach Alcatel die Beamten des Instituto Costaricense de Electricidad (ICE), die IT-Regulierungsbehörde des Landes. Alle Führungsmitglieder des ICE wurden vom Präsidenten persönlich und dem Regierungskabinett bestellt.

Verträge wurden blind unterzeichnet

Wieder winkte Alcatel Standard die Beraterverträge durch. Deren Mitarbeiter, die die spanischen Verträge hätten überprüfen müssen, verstanden zum Teil kein einziges Wort Spanisch.

Später musste Costa Ricas Präsident José Maria Figueres zugeben, er habe über 900’000 Dollar von Alcatel erhalten – für Consulting-Dienste.

Von Staatspräsidenten zum WEF-Direktor

Ein Skandal auf höchster Ebene bahnte sich an. Denn aufgrund seines bestimmenden Einflusses auf ICE lag der Verdacht nahe, auch beim Honorar Figueres’ handelte es sich um Bestechungsgelder.

Durch seinen Anwalt liess er ausrichten, die Gelder seien legal und nach seinem Präsidenten-Amt geflossen. 2004 wurde er mit einem Direktoren-Posten beim Schweizer World Economic Forum (WEF) belohnt.

Nicht die erste Alcatel-Affäre

Alcatel sorgte auch früher schon für Negativschlagzeilen. So musste sich deren französischer Verwaltungsratspräsident Pierre Suard 1997 vor Gericht verantworten. Er war verantwortlich, dass während der 90er-Jahre die damals noch staatliche France-Telecom mit überzogenen Rechnungen massiv übers Ohr gehauen wurde.

Zu den aktuellen Fällen streute ein Firmensprecher Asche auf sein Haupt: das Unternehmen bedaure die Vorkommnisse und trage die Konsequenzen. Alcatel-Lucent sei unterdessen eine völlig andere Firma geworden, die  gegenüber Bestechung eine Nulltoleranz-Politik verfolge.

© Aargauer Zeitung, 30.12.2010

Die Schweiz: seit 1970 eine internationale Drehscheibe für Atomschmuggel

Friday, December 24th, 2010

Die Tinners sollen illegal Atom-Technik an Pakistan verkauft haben. Doch sie sind bei weitem nicht die einzigen. Ohne Schweizer Firmen und die lange Jahre lasche Atom-Gesetzgebung Berns wäre das Land nie derart schnell zur Atommacht aufgestiegen. von Christian Bütikofer

Dem Vater Friedrich und seinen Söhnen Urs und Marco Tinner wirft der eidgenössische Untersuchungsrichter Andreas Müller vor, die Entwicklung von Atomwaffen gefördert zu haben. Er beantragt bei der Bundesanwaltschaft, die Angeschuldigten wegen Widerhandlung gegen das Kriegsmaterialgesetz anzuklagen.

Die Tinners sind kein Einzelfall. Seit den 70er-Jahren handelte sich die Schweiz immer wieder internationalen Ärger ein, weil sie als Drehscheibe für Technologie- und dazugehörige Finanztransfers galt. Die Geschichte von Pakistans erfolgreichem Aufstieg zur Atommacht zeigt dies exemplarisch.

Ausbildung in Europa als Grundlage

Pakistans Erzfeind Indien trat das Atomrüsten definitiv los, als das Land am 18. Mai 1974 unterirdisch seinen ersten Atomsprengsatz zündete. Pakistan versuchte schon vorher, zur Atommacht aufzusteigen, doch von diesem Zeitpunkt an wurde dieses Ziel zur obersten Staatssache erkoren – auch bei wechselnden Militärdiktaturen; die Bombe wollten alle Machthaber in Islamabad.

Ende 1975 kehrte der pakistanische Wissenschafter Abdul Kadir Khan von Europa in sein Heimatland zurück. In den 60er-Jahren hatte er in Deutschland und den Niederlanden studiert, bevor er 1972 Zugang zur europäischen Atomfabrik Urenco im holländischen Almelo erhielt.

Pläne in ziviler Uran-Anreicherungs-Firma geklaut

Dort wurde U-235 in tausenden Gaszentrifugen angereichert. Der Brennstoff U-235 ist im Natururan nur in einer Konzentration von 0,7 Prozent enthalten. Auf 90 Prozent angereichert, kann man damit bombenfähiges Material herstellen. Urenco reicherte U-235 aber höchstens auf fünf Prozent an, weil dies fürs Betreiben von Kernkraftwerken völlig ausreicht. An Urenco waren Unternehmen aus Holland, Deutschland und Grossbritannien beteiligt.

Khan klaute während seiner Zeit bei Urenco hochsensible Konstruktionsunterlagen und Listen von Zulieferern. Nach seiner Heimkehr wurde er sofort zum Chef des geheimen pakistanischen Atombomben-Projekts erkoren.

Geld-Drehscheibe Zürich

Während Jahren koordinierte die pakistanische Botschaft in der damaligen westdeutschen Hauptstadt Bonn die weltweiten – illegalen – Technik-Einkäufe fürs Atom-Projekt. Diverse europäische Studienkollegen Kahns fungierten als Zwischenhändler.

Eine Razzia der holländischen Wirtschaftskriminalitäts-Behörde Economische Controledienst (ECD) bei einem Niederländer zeigte, wie die finanziellen Fäden in Zürich zusammenliefen. Die Agenten verfügten regelmässig über Gelder, die von der Pakistanischen Botschaft auf ein Konto der OPAK Intertrade Ltd in Zürich überwiesen wurden.

Betreut wurde die OPAK von Steuerberater Leonard Jacob Stolk, der hier für diverse Firmen im Verwaltungsrat sass. Nach Recherchen des deutschen Journalisten Egmont R. Koch verwaltete der gebürtige Holländer Stolk die Gelder Pakistans für die Beschaffung von Technologie für eine von Kahns Atomfabriken.

Deutscher Konzern mit Vorlieben fürs Rheintal

Um Uran-235 im grossen Stil anzureichern, genügten Kahn die aus Holland gestohlenen Plänen nicht. Dafür konnte er auf die Hilfe des Kölner Industriekonzerns Leybold zählen. Als Zulieferer waren die Kölner über die geheimen Projekte der Urenco in den Niederlanden bestens informiert.

Die zwei Leybold-Direktoren Otto Heilingbrunner und Gotthard Lerch liessen nach geheimen Urenco-Plänen, in deren Besitz sie als Zulieferer gekommen waren, Anlagen für Pakistan in der Schweiz nachbauen.

Das zeigten Dokumente, die die Bundesanwaltschaft 1986 bei Gotthard Lerch in Buchs beschlagnahmte.

1983 tauchten die zwei Deutschen erstmals bei den Metallwerken Buchs auf. Das Unternehmen war damals im Besitz der Vaduzer Treuhänder der Präsidial-Anstalt. Für mehrere Millionen Franken sollten die Buchser darauf diverse Komponenten herstellen, die Pakistans Atombomben-Professor für sein Projekt benötigte.

Geheimpläne nach Liechtenstein verschoben

Doch 1984 gabs unerwartete Probleme: Ein deutscher Urenco-Teilhaber bemerkte, dass die Schweizer über einen Teil seiner Konstruktionspläne verfügten. Der österreichische Geschäftsführer der Präsidial-Anstalt, Helmut Eder, reagierte sofort. Er sammelte alle Pläne ein, verschob sie nach Liechtenstein und verdonnerte die Metallwerke-Mitarbeiter zu absolutem Stillschweigen. Dann traf er sich mit den Leybold-Direktoren.

Um die deutschen Urenco-Teilhaber zu täuschen, wurde flugs eine dritte Partei erfunden, die den Metallwerken diese Pläne habe zukommen lassen. Die Finte gelang, Eder, Heilingbrunner und Lerch liessen Gras über die Sache wachsen.

Aber bereits 1985 wurden sie wieder aktiv. Die honorige Präsidial-Anstalt verlegte das auch zu ihr gehörende und von Gotthard Lerch gegründete Unternehmen «AVE Apparate, Verfahren und Engineering AG» von Winterthur ebenfalls nach Buchs.

Eder und Leybold-Direktor Lerch übernahmen das Ruder und schafften die geheimen Pläne zurück in die Schweiz.

Sofort machten sich die Ingenieure der Buchser Metallwerke an den Bau der Anlagen für Kahns Atomprogramm.

Grosse Hektik an Weihnachten

Doch Ende 1985 gabs schon wieder Ärger: Der Nationalrat revidierte das Schweizer Atomgesetz – ab dem 1. Januar 1986 wurde jede Lieferung aus der Schweiz nach Pakistan illegal. In Sonderschichten fertigten die Buchser noch Ende Dezember 1985 einen Grossteil der Bestellung.

Bis zu dieser Gesetzesänderung war es aus der Schweiz völlig legal möglich, so genanntes «schweres Wasser» tonnenweise in Möchtegern-Atommächte zu exportieren.

Schweres Wasser unterscheidet sich äusserlich nicht von normalem Wasser, wird in seiner chemisch unterschiedlichen Zusammensetzung aber benötigt, um spaltbares Nuklearmaterial zu gewinnen. Das Endprodukt: waffenfähiges Plutonium.

Razzias der Bundesanwaltschaft

Anfang 1986 beschlagnahmte der Schweizer Zoll einige der Geräte. Wenige Tage später fuhr die Bundesanwaltschaft bei den Metallwerken ein und eröffnete Ermittlungsverfahren, auch gegen den damaligen Chef der Präsidial-Anstalt Peter Ritter.

Die Bundesanwaltschaft führte auch bei Otto Heilingbrunner eine Razzia durch – heute wird er von deutschen Hochschulen als verdienter Wissenschafter hofiert.

In seinen Unterlagen wurde klar, wie der Industriekonzern Leybold jahrelang in die pakistanischen Atombomben-Geschäfte verwickelt war: Schon 1978 flogen pakistanische Herkules-Transportflugzeuge unter den Augen der Schweizer Regierung wichtige Geräte nach Islamabad. Die Anlagen wurden im Auftrag der Kölner Leybold von der Buchser Vakuum Apparate Technik (VAT) hergestellt.

Nach Verurteilung gleich wieder frei

Die Hilfe aus Europa blieb nicht ohne Folgen. Am 28. Mai 1998 bestätigte Pakistan mit unterirdischen Tests den erfolgreichen Abschluss seines Atomprogramms. Abdul Kadir Khan gilt seither als Volksheld. Pakistan dürfte bereits seit Beginn der 80er-Jahre im Besitz von Kernwaffen sein.

Seit 1990 versuchte die deutsche Justiz Gotthard Lerch wegen Verstössen gegen das Kriegswaffenkontrollgesetz hinter Gitter zu bringen. Erst Ende 2008 wurde er deswegen verurteilt. Er musste seine fünfjährige Haftstrafe jedoch wegen der langen Dauer des Verfahrens und der internationalen Berichterstattung nicht antreten.

Der Deutsche kehrte als freier Mann nach Grabs zurück und geniesst seither die allabendlichen Umrisse der Ostschweizer Berggipfel.

© az Aargauer Zeitung, 24.12.2010

Schlimmer Verdacht: Über 1000 Opfer, 50 Millionen Euro Schaden, Briefkästen in der Schweiz

Thursday, December 23rd, 2010

Unglaubliche Renditen bei Investments in Rapsöl-betriebene Heizkraftwerke versprachen deutsche Geschäftsleute tausenden Kunden. Nun gabs Besuch der Kriminalpolizei. DerVerdacht: bandenmässiger Betrug im grossen Stil. von Christian Bütikofer

Im September feierte die Gesellschaft zur Förderung erneuerbarer Energien (GFE) aus Nürnberg noch in einer grossen Show mit Feuerschlucker, sexy Wassernixe und Trapezkünstler ihre fantastische Innovation: Rapsöl-betriebene Block-Heizkraftwerke.

Diese kompakten Anlagen, die man auch im Hinterhof aufstellen könne, sollten Strom erzeugen und dabei auch die Abwärme nutzen. Die Käufer hätten die Anlagen an die GFE rückvermieten und obendrauf den Strom verkaufen können. Obendrein tue man der Umwelt etwas Gutes, handle es sich doch bei Rapsöl um eine erneuerbare Energie.

Unzählige Vertriebler rechneten Interessenten vor, aus einem Einsatz von 40’000 Euro innerhalb von 20 Jahren 240’000Euro zu machen – eine beispiellose Rendite, natürlich ohne jedes Risiko.

28 Häuser durchsucht, 8 Personen festgenommen

Beispiellos war auch die Polizeiaktion diesen Dezember. 28 Häuser in Bayern und Baden-Württemberg liess die Staatsanwaltschaft durch über 150 Polizeibeamte durchsuchen. Die Führungsriege wurde sogleich festgesetzt, gegen 17 Personen wird ermittelt. Der Verdacht: bandenmässiger und gewerbsmässiger Betrug.

Wenig später wurde ein weiterer Hintermann in einem Luxushotel in Österreich festgenommen – er verbrachte dort gerade seine Skiferien. Nicht lange und auch in der Schweizklickten bei einer Person die Handschellen. Sie wurde verhaftet und sogleich nach Deutschland ausgeliefert, bestätigte Wolfgang Träg von der Staatsanwaltschaft Nürnberg-Fürth der «az Aargauer Zeitung».

«Potemkinsche Dörfer»

Die Staatsanwaltschaft spricht von «potemkinschen Dörfern», die die GFE erstellt habe: Von Anfang an seien nur gerade so viele Kraftwerke in Betrieb genommen worden, die nötig waren, um einen Geschäftsbetrieb vorzutäuschen. Darüber hinaus seien die angegebenen Leistungswerte der Kraftwerke falsch – deren Effizienz sei viel geringer, als von der GFE behauptet.

Die Staatsanwaltschaft schreibt dazu: «Es besteht derVerdacht, dass die von der Unternehmensgruppe vertriebenen Modelle weder unter technischen noch unter betriebswirtschaftlichen Aspekten realisierbar sind.» Und weiter: «Die von den Anlegern eingesammelten Gelder sollen die Beschuldigten überwiegend nicht zur Herstellung von Heizkraftwerken, sondern für eigene Zwecke und für Zwecke Dritter verbraucht haben.»

Auch Schweizer-Investoren betroffen

«Seit Januar 2010 sind über tausend Anleger auf dieses Rapsöl-Geschäftsmodell eingestiegen», berichtet Wolfgang Träg. Dabei befinden sich neben Deutschen auch Schweizer und Österreicher. Und noch immer meldeten sich neue Geschädigte, sagte Träg.

Der Schaden bewegt sich im mittleren zweistelligen Millionenbereich, meinte Wolfgang Träg gegenüber der «az Aargauer Zeitung». Aus ermittlungstaktischen Gründen wollte er nicht ausführen, ob in der Schweiz weitere Ermittlungen laufen.

«Keine unbeschriebenen Blätter»

Grund dazu hätten die Kripo wohl, denn Mitte 2010 wurde das GFE-Umfeld auch hier tätig. So gründeten die GFE-ler Horst Kirsten, Karlheinz Zumkeller und Claus-Jürgen Maier die FI Holding AG und siedelten sie an der Bahnhofstrasse in Herisau im Kanton Appenzell-Ausserrhoden an. Nicht lange und die GFE Energy AG wurde kreiert. Beide gehören zum Firmengeflecht der GFE in Deutschland.

Einige Beschuldigte seien in der Branche der erneuerbaren Energien keine unbeschriebenen Blätter, sagte Wolfgang Träg gegenüber dieser Zeitung. Einige lebten offenbar auf grossem Fuss, fuhren Bentley, Maserati oder Ferrari – gerne auch mit Schweizer Autonummer.

Pleitiers im Gründungsfieber

Ungeahnten Aktivismus legte Claus-Jürgen Maier an den Tag. So fungiert er etwa auch in der Suisse Vermögensverwaltung oder der Swiss Topinvest als Statthalter in der Schweiz, denn Schweizer Unternehmen müssen über eine Person verfügen, die hier ihren Wohnsitz hat. Weitere Firmen aus Maiers Umfeld wurden in der Ostschweiz parkiert.

Maiers Vermögensverwaltungs-Vorhaben erstaunen, denn 2008 war er pleite, gegen ihn wurde die Insolvenz eröffnet. Auch Karlheinz Zumkeller verfügt über einen wenig vertrauenserweckenden Hintergrund im Ingenieurwesen. Er war Maurermeister, ging 2000 mit seiner Firma pleite und ein Insolvenzverfahren gegen ihn wurde 2009 eingestellt – bei ihm gabs für die Gläubiger nichts mehr zu holen.

Erfinder aus der Esoterik-Szene

Zum Erfinder-Team des Rapsöl-Heizkraftwerks gehören laut dem Finanzdienst Gomopa ein Automechaniker und seine Frau, eine Heilpraktikerin. Beide wurden in Deutschland bekannt, als sie den «Zentralrat Souveräner Bürger» gründeten, der rechte Ideen mit Esoterik mischt.

Dessen Mitglieder sprechen etwa der Bundesrepublik das Recht auf Steuern ab und behaupten: «Von jeher wurde das Deutsche Volk unterdrückt, gejagt und verunglimpft aufgrund seiner Gesinnung nach Frieden, Gerechtigkeit, Barmherzigkeit, Wahrhaftigkeit, Ehrenhaftigkeit,  Respekt und Liebe zur Schöpfung, und Loyalität gegenüber anderen Völkern.»

GFE bestreitet alle Vorwürfe

Die GFE-Gruppe bestreitet auf ihrer Website sämtliche Vorwürfe: «Wir weisen darauf hin, dass die Staatsanwaltschaft lediglich Ermittlungen durchführt. Es gibt keine Anklage, die gegen die GFE Group erhoben worden wäre. Eine Chance zur Akteneinsicht haben wir bisher nicht erhalten. […] Den über die Medien verbreiteten Vorwurf der betrügerischen Absicht gegen Personen aus unserem Hause weist die GFE Group jedoch aufs Schärfste zurück! Es hat hier keine Vorspiegelung eines Geschäftsbetriebes gegeben. […] Die Produktion läuft weiter. Wir werden alles in unserer Macht stehende dafür tun, auch unter diesen erschwerten Bedingungen unsere Verpflichtungen zu erfüllen.»

Für eine Stellungnahme nahm bei den Schweizer Ablegern niemand Anrufe entgegen.

© az Aargauer Zeitung 2010

BEIJING HUMAN RIGHTS WATCHERS DISCUSS DIALOGUES, BERN PROCESS, VATICAN, EXTRADITION TREATIES

Wednesday, December 22nd, 2010

C O N F I D E N T I A L SECTION 01 OF 03 BEIJING 002599

SIPDIS

SIPDIS

DEPT FOR DRL, EAP/CM

E.O. 12958: DECL: 04/18/2032

TAGS: PHUM, KIRF, PGOV, CH

SUBJECT: BEIJING HUMAN RIGHTS WATCHERS DISCUSS DIALOGUES, BERN PROCESS, VATICAN, EXTRADITION TREATIES

REF: A. BEIJING 02342

B. CHENGDU 00077

BEIJING 00002599 001.2 OF 003

Classified By: Political Internal Unit Chief Susan

Thornton. Reasons 1.4 (b) and (d).

Summary
——-
1. (C) Beijing-based human rights watchers reported
that:
— Chinese officials referred to the Nangpa La Pass shooting incident on the Nepal border as “an accident” during the recent UK-China human rights dialogue.
— Germany will host the 23rd round of the China-EU human rights dialogue in mid-May in Berlin.
— China is willing to resume a human rights dialogue with Japan if the dialogue avoids “internal domestic issues” and Japan does not participate in meetings of China´s human rights dialogue partners.
— The status of the Sino-Swiss human rights dialogue is unclear, though some Swiss rule of law projects are proceeding outside the scope of the dialogue.
— The EU plans to host the next meeting of China´s human rights dialogue partners (the former Bern Process) late this summer in Brussels, but MFA officials continue to warn that participation in Bern Process-type meetings will adversely impact human rights dialogues.
— The Vatican will participate in the 3rd ASEM Interfaith Dialogue set for June 19-21 in Nanjing and a SARA official said German-Vatican cooperation on bishop appointments would be an acceptable model for China.
–Japan and China will soon negotiate an extradition treaty. End Summary.

Human Rights Dialogues: Great Britain, EU, Japan, Switzerland and Canada
——————————————— ———
2. (C) British Embassy xxxx said at a recent human rights watchers meeting that the 15th round of the UK-China human rights dialogue went forward on February 5-6 in London. MFA IO Human Rights Special Representative/DDG Shen Yongxiang led the Chinese delegation, which also included a large delegation of representatives from the Ministry of Civil Affairs, the Ministry of Justice, the Supreme People´s Court and the State Council Information Office. MFA officials from both the IO and the European Affairs Departments attended, which xxxx said may presage a shift in responsibility for handling the human rights dialogue from IO to the European Affairs Department.

3. (C) British and Chinese officials discussed NGO registration procedures, the SPC´s reassumption of death penalty review powers and Internet freedom. The British agreed to provide information about NGO registration procedures in Great Britain. The SPC said procedures for death penalty cases are still evolving, and it may publish more about the procedures. Chinese officials, discussing Internet censorship, compared the Government´s role in regulating Internet content to that of an “industry watchdog.” Two All-China Lawyers Association defense attorneys, whose participation was funded by the British Embassy, led a “very technical” discussion of how Chinese criminal procedure law protects defendants´ rights. The Chinese side gave substantive responses to 35 of 45 cases on a prisoner list British Embassy officials passed to the MFA in early January, though Shen became defensive when asked about inaccuracies in the responses. Dr. Shen referred to the Nangpa Pass shooting incident as “an accidental incident.” (Note: In the most recent response to the Embassy on this incident, TAR authorities stated that the shooting was a matter of “illegal border crossers.” End note.) Chinese officials requested a reduction in the number of dialogue rounds from two per year to one per year, though no decision on this has been taken. xxxx said the dialogue was “tense at certain moments” but “cordial by the time it ended.”

4. (C) Germany will host the 23rd round of the China-EU human rights dialogue in mid-May in Berlin, according to Germany Embassy xxxx. The dialogue round will include a legal experts seminar on May 10-11 as well as dialogue sessions and a field trip on May 15-16. xxxx reported that the Chinese delegation, to be headed by IO Director General Wu Hailong, wants to discuss the EU´s participation in ongoing meetings of China´s human rights dialogue partners as an “off agenda” item.

5. (C) Japanese Embassy xxxx reported that China is willing to resume its human rights dialogue with Japan on condition that the dialogue will not include “internal domestic issues.” MFA IO xxxx clarified that, as a further prerequisite to discussions, Japan must agree not to participate in meetings of China´s human rights dialogue partners. Dong added that any country´s participation in the former Bern Process will have an adverse impact on that country´s bilateral relationship with China. “There will be different impacts,” xxxx said, “for different countries.”

6. (C) xxxx said Switzerland is still “unclear” about the status of its human rights dialogue with China following the Chinese Government´s demands in late 2006 that Switzerland forego a “leadership role” in the Bern Process. Swiss Embassy officials later told the MFA that Switzerland had complied with Chinese demands but Chinese officials then complained that Switzerland still operates the Bern Process´ secure website. The Sino-Swiss human rights dialogue remains on hold, but China has not made any clear statement indicating that Switzerland must make additional concessions. Some rule of law projects funded by the Swiss Government, which were previously suspended by the Chinese, are now moving forward outside the scope of the Sino-Swiss human rights dialogue. Chinese MPS officials interested in prison management are still planning an exchange visit to Switzerland in early 2007.

7. (C) Canadian Embassy xxxx said her office has had little productive exchange on human rights with Chinese officials since the MFA´s North American Division assumed responsibility for administering the Sino-Canadian human rights dialogue. xxxx said she was surprised by a statement appearing in an EU-drafted readout of the March 26 meeting of China´s human rights dialogue partners that the Sino-Canadian human rights dialogue has been suspended. Though no further rounds of dialogue have been scheduled, xxxx said her Embassy is not aware of any formal decision to suspend. The Canadian Government, xxxx said, has scheduled parliamentary hearings to discuss Canada´s engagement with China on human rights. xxxx previously told xxxx that if Canada wants China to give a high priority to its bilateral dialogue, it will have to give up participation in the Bern Process.

Next Meeting of China´s Human Rights Dialogue Partners
——————————————— ———

8. (C) EU representative xxxx said that the EU will host the next “non-meeting” of China´s human rights dialogue partners late this summer in Brussels, where there is “less exposure.” If the EU cannot host the meeting, Germany will host. Norway, xxxx said, is under pressure not to host a meeting. Norway Embassy representative xxxx confirmed that in early February an official attached to China´s UN Mission in Geneva encouraged Norway to “stay away” from the Bern Process. Norway has since decided that it cannot host a meeting of China´s human rights dialogue partners in 2007.

Vatican Participation In ASEM Interfaith Dialogue
——————————————— —–

9. (C) Italian Embassy representative xxxx said that the 3rd ASEM (Asia-Europe Meeting) Interfaith Dialogue will go forward June 19-21 in Nanjing. xxxx told poloff on April 16 that the Vatican confirmed its interest and availability in participating, following a suggestion from the Chinese that the Vatican join the dialogue. Italy and China are “co-chairing” the dialogue. Italian officials initially objected to inclusion of the word “harmony” in the title of the conference, given the “political meaning” of the term, but have since dropped this objection. Separately, xxxx reported that SARA Foreign Affairs Deputy Division Director Liu Jinguang recently referred approvingly to cooperation between Germany and the Vatican on selection of bishops. Liu said the German “model” would be “acceptable in China.”

Extradition Treaties: Japan and France
————————————–

10. (C) Japan´s xxxx reported that Japan and China will “soon” negotiate an extradition treaty as part of the joint cooperation announced during Premier Wen Jiabao´s recent visit to Japan. French Embassy representative xxxx said that France´s extradition treaty with China includes a provision requiring review of extradition proceedings both by police officials and by judicial authorities. The Chinese agreed to this provision only after protracted negotiations.

RANDT

http://www.aftenposten.no/spesial/wikileaksdokumenter/article3960168.ece

IN BARGAIN BASEMENT BID, SPANISH TO EXPAND PANAMA CANAL

Saturday, December 18th, 2010
ID
09PANAMA550
SUBJECT
IN BARGAIN BASEMENT BID, SPANISH TO EXPAND PANAMA
DATE
2009-07-09 21:09:00
CLASSIFICATION
CONFIDENTIAL//NOFORN
ORIGIN
Embassy Panama
TEXT
C O N F I D E N T I A L PANAMA 000550
SIPDIS
E.O. 12958: DECL: 07/07/2019TAGS: ECON EINV ETRD MARR PM EWWT PRELSUBJECT: IN BARGAIN BASEMENT BID, SPANISH TO EXPAND PANAMACANAL
REF: A. 2007 PANAMA 1899

¶B. 2008 PANAMA 320

¶C. 2008 PANAMA 732

¶D. 2008 PANAMA 820

¶E. 2008 PANAMA 851

¶F. 2009 PANAMA 195

¶G. 2009 PANAMA 519

¶H. 2009 STATE 69224

¶I. 2009 PANAMA 539

Classified By: Ambassador Stephenson for reasons 1.4 (b) and (d).

 

——-SUMMARY——-
¶1. (C) During a morning of high political theater, PresidentMartinelli, Panama’s senior government officials, consortiarepresentatives, diplomatic corps, and the public (throughlive TV and an internet broadcast) witnessed the presentationof the technical scores and the opening of the financial bidson July 8. After brief real-time calculations, the PanamaCanal Authority (ACP) announced that Sacyr’s consortium wonthe bid to build the third set of locks, centerpiece of the$5.25 billion Panama Canal Expansion. Bechtel believes Sacyrbroke EU anti-competiveness laws in obtaining its suretybonds and will protest if they find a smoking gun. The Sacyrwin signals expanding Spanish influence in Panama and apotential loss of American export opportunities for theproject (although much of the sourcing has not yet beendetermined).

———-SACYR WINS———-

¶2. (U) President Martinelli, Panama’s senior government andACP officials, consortia representatives, diplomatic corpsmembers, and the public (through live TV and an internetbroadcast) witnessed the awarding of the locks contract, thecenterpiece of the $5.25 billion Panama Canal Expansion, to aconsortium led by Sacyr Vallehermoso S.A.. The otherconsortia members are Impregilo S.P.A. (Italian), Jan de NulN.V. (Belgian), Constructora Urbana, S.A. (Panamanian and runby the first cousin of the Panama Canal Administrator),Montgomery Watson Harza (American), IV-Groep (Dutch), TetraTech (American), and Heerema Fabrication Group (Dutch).

———————————PROCESS FOR DETERMINING SACYR WON———————————

¶3. (C) The ACP declared Sacyr to have the “best value”proposal. Out of a possible 10,000 points, Sacyr obtained adominating 8089 points; Bechtel – 6770 points; and ACS – 6559points. The total point tally was composed from technicaland financial scores. Sacyr had the highest technical scorewith 4089 points (out of a possible 5500), ACS – 3974 points,and Bechtel – 3790 points. The technical points ranking was”shocking” to a representative of CH2MHill (anAmerican-firm), the Project Advisor for the expansionprogram. Previously, sources rated Bechtel’s and ACS’stechnical plans to be about equal and both superior toSacyr’s. See ref G. The pre-announcement conventionalwisdom on the technical plans was so prevalent that theaudience collectively gasped when the Sacyr high technicalscore was announced. During a post-announcment meeting withthe Ambassador, the subdued Bechtel reps speculated that thetechnical scoring committee was probably not comfortable withBechtel’s “innovative” design, because it did not fit neatlyinto the ACP’s specifications. Bechtel reps dismissedchallenging the technical evaluation process, noting frompast experience that these technical evaluations can behighly subjective.

¶4. (C) After the award ceremony started, ACP and consortiaofficials retrieved the price envelopes from a nearby bankvault. The audience watched via streaming video projected on
to giant screens, the OJ Simpson-esque drive to/from the bankand the “signing out” of the deposit box with the envelopes.The base price proposals were $3.1 billion for Sacyr, $4.2billion for Bechtel, and $6.0 for ACS, which led to financialpoint scores of 4000, 2980, and 2586, respectively. (Theprovisional prices were $103 million, $94 million, and $0,respectively.) The Sacyr base price elicited a cheer fromthe audience; many Panamanians are pleased that the locks maybe built for less money than expected. Sacyr supporterscheered, because their victory was almost assured with thebest technical score and lowest price.

¶5. (C) The spread on the bid prices is surprising. Sacyr wasexpected to be the low ball bid (due to its precariousfinancial situation and apparent financial backstop from theSpanish government), but both Bechtel and ACS reps had hintedto Embassy officials that their bids were just over $4billion. See ref G. However, the base price proposals linedup with the three bidding strategies outlined in ref D -lowball, value, or punt. The fact that ACS’s $6 billion bidwas almost double of Sacyr’s was not expected and isinterpreted by some as a punt. Bechtel reps state aconsortium cannot even “pour the concrete” for $3.1 billionand hinted even their $4.2 billion price was closer to alowball bid than a value bid. It is widely expected thatduring construction, Sacyr will attempt to renegotiate theprice with the ACP.

¶6. (C) After the ACP declared Sacyr the “best value” winner,the ACP opened the sealed envelope with the price ceiling (lapartida asignada) for the contract. Sacyr offered a baseprice below the ACP’s $3.5 billion ceiling; as a result,further negotiation on price between the ACP and Sacyr is notneeded. See ref G.

——————————-NEXT STEPS IN THE AWARD PROCESS——————————-

¶7. (C) The ACP Price Verification Board will now verify thatthe process complies with ACP requirements and the ACPContracting Officer will proceed to verify the contractor’squalifications. Both these steps should be pro forma, andthe ACP expects to officially award the contract in a fewbusiness days. Upon announcement of the award, the ACP willnotify all consortia members and allow the evaluationdocuments to be examined by all consortia. The winningconsortium must renew its surety bonds within twenty-eightdays. The losing consortia have three days to protest, oncethe five day notification period expires. The ACPProcurement Division must then adjudicate a protest withinthirty days. Whether or not the losing consortia agree withthe ACP decision, the ACP will proceed to sign the contractwith Sacyr. Without defining “work,” the ACP requires Sacyrto begin work seven days after the contract signing.

—————-BECHTEL PROTEST?—————-

¶8. (C) Bechtel reps informed the Ambassador that at this timethey only plan to protest the award if they can prove thatSacyr’s $400 million performance and $50 million paymentbonds (that must now by renewed from Zurich) arecounter-guaranteed by a European government and undisclosed.If the bonds are counter-guaranteed, then Bechtel repsbelieve Sacyr and the backing European government(s)(probably Spain) broke European Union anti-competitivenesslaws by not having this state aid declared. If true and ifthe potential remedy is significant, Bechtel might pursue thematter in court. However, counter-guaranteed surety bondsare not against the ACP bid rules. See ref H for backgroundon this issue. However, we can not rule out some other typeof Spanish government guarantee was provided to Sacyr(outside of the specific action of guaranteeing surety bonds)that would enable Sacyr access to the credit necessary tocomplete the project, preserve Spanish jobs, and prevent arumored shock to Spanish banking system that could ensue froma collapse of Sacyr.

¶9. (C) Bechtel reps were not alarmed over past press leaksfrom Impregilo of the Sacyr consortium forecasting Sacyr’shighest technical score and lowest price. They believe theleaks likely did not reflect undue access to insideinformation or skullduggery by the ACP. See ref G. Rather,the Bechtel rep opined, it was far more likely that Impregilowas engaging in puffery on the outcome in order to securevital new credit.

——————-PANAMANIAN REACTION——————-

¶10. (C) Overall, the ACP, President Martinelli, and thePanamanian public are clearly ecstatic about receiving aprima facie bargain basement price and that a Panamaniancompany (CUSA) is part of the Sacyr consortium. However, weunderstand there may be lingering doubts by some ACP BoardMembers and members of the government that the Sacyrconsortium does not have financial ability to complete theproject. Bechtel reported they had been called to a surprisemeeting with VP/FM Juan Carlos Varela, who was clearlyconcerned about the big price spread and suggested thecabinet needed to ask ACP Administrator Aleman to provide anexplanation.

————————CANAL EXPANSION OVERVIEW————————

¶11. (C) The Panamanian people approved the overall PanamaCanal Expansion project on October 22, 2006 in a NationalReferendum and the ACP broke ground on the first relatedexcavation project on September 3, 2007. The expansionconsists of three major components: construction of thelocks, widening and deepening of the navigational channels,and deepening Lake Gatun. Of the various major contracts tocomplete the expansion, there is now only one left – theestimated $400 million PAC 4 excavation that includes thebuilding of a dam. The ACP hopes to complete the expansionin 2014 for the 100th anniversary of the opening of thePanama Canal. Whether the expansion is completed on-time andon-budget may impact the 2014 Panamanian Presidential andNational Assembly elections.

——-COMMENT——-

¶12. (C) U.S. ECONOMIC IMPACT: Bechtel was expected topurchase $1.2 to $1.3 billion dollars worth of goods fromU.S. suppliers. Sacyr has not provided post with theirexpected U.S. purchases; however, due to Sacyr’s closerelationship with European suppliers, the amount of U.S.exports could be substantially affected. American companiesMontgomery Watson Harza (MWH) and Tetra Tech are minorpartners in Sacyr’s consortium; MWH and Tetra Tech have notrequested commercial advocacy.

¶13. (C) LONG TERM: For over a hundred years, the Panama Canalremained at the core of the United States/Panamanianrelationship. Two-thirds of all ships transiting the canalare traveling to/from a U.S. port and we retain a fundamentalinterest in the successful completion of the expansionproject. However, the Sacyr win marks an increased tide ofSpanish influence in Panama and – for now – injects anelement of uncertainty in to the future of the canalexpansion. What is undisputed, is the pride of Panamanianofficials in moving this project forward under theirsovereignty. See ref I.

STEPHENSON

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MADRID WEEKLY ECONOMIC UPDATE, SEPT. 15-19

Saturday, December 18th, 2010
ID
08MADRID1003
SUBJECT
MADRID WEEKLY ECONOMIC UPDATE, SEPT. 15-19
DATE
2008-09-22 05:05:00
CLASSIFICATION
CONFIDENTIAL
ORIGIN
Embassy Madrid
TEXT
C O N F I D E N T I A L SECTION 01 OF 02 MADRID 001003
SIPDIS
STATE FOR EUR/WE, EEB/IFD/OMACOMMERCE FOR 4212/DON CALVERTTREASURY FOR IA/OEE W.LINDQUIST
E.O. 12958: DECL: 09/19/2010TAGS: ECON ECPS EFIN ELAB ENRG EWWT KNNP SOCISUBJECT: MADRID WEEKLY ECONOMIC UPDATE, SEPT. 15-19
REF: MADRID 985
Classified By: Deputy Chief of Mission Arnold A. Chacon for Reason 1.4(b)
Contents:

EFIN: Reactions to U.S. Financial TurmoilEFIN: 2009 Budget to be AustereELAB/SOCI: Immigrant Return Incentive ApprovedENRG/EFIN: Energy Commission Fears Problems Unless GOSIncreases Electricity ChargesEWWT/KNNP: GOS on Track to Implement Radiation DetectionMaritime Portals by Late 2009ECPS: Vodafone Launches 670 Million Euro Suit AgainstTelefonicaEFIN: Sabadell Sells Half of Insurance Business for 750M Euros

Reactions to U.S. Financial Turmoil

¶1. (SBU) Spanish government officials and press followed theU.S. financial turmoil closely during the week. PresidentZapatero and Second Vice President and Economy and FinanceMinister Solbes reassured Spaniards that Spain’s financialsector was safe and its financial firms solvent. Zapateroclaimed that the turmoil proved that the U.S. subprimemortgage crisis was the origin of Spain’s difficulties.Solbes later acknowledged that Spain’s housing and inflationproblems predated the international credit crisis but saidthey would have been manageable without the credit crisis.Some of Zapatero’s political allies described USG actions asproving the inadequacy of unregulated markets and the valueof economic intervention.

¶2. (U) Solbes’ ministry announced that Spanish financialfirms had only limited direct exposure to Lehman Brothers.62 insurance companies had 281 million euros in exposure,0.2% of the sector’s total exposure. 45 pension funds hadexposure totaling 0.07% of assets, and investment funds had300 million euros in Lehman bonds or shares, 0.13% of thesector’s assets. Solbes and visiting European Commissionerfor Economic and Monetary Affairs Joaquin Almunia called formore centralized EU financial supervision. (All Media)

2009 Budget to be Austere

¶3. (U) Secretary of State for Treasury and Budget CarlosOcana announced September 18 that because oflower-than-expected growth, the 2009 budget will be morerestrictive than the GOS had anticipated in June. Pressreports suggest that the 2009 budget proposal the GOS isnegotiating with parliamentary groups will include a deficitof 2% of GDP. (Europa Press, 9/18; El Pais 9/17)

Immigrant Return Incentive Approved

¶4. (U) The Council of Ministers approved Labor MinisterCorbacho’s proposal to allow unemployed immigrants to obtainall of their unemployment benefit if they agree to leave thecountry and not return for three years. Immigrants from the19 non-EU countries that have Social Security agreements withSpain will be able to participate, receiving 40% of thebenefit in Spain and the remaining 60% a month later in theircountry of origin. Of the 165,000 immigrants registered asunemployed in July, over half were from either Ecuador orMorocco. The incentive must be reviewed by the Council ofState before it can take effect. (El Pais, 9/19; Council ofMinisters, 9/19)

Energy Commission Fears Problems Unless GOS IncreasesElectricity Charges

¶5. (U) According to the National Energy Commission (CNE), ifthe GOS does not drastically increase electricity tariffs,then it runs the risk of accruing an additional debt of up to5 billion euros in 2009 to add to the 9 billion it alreadyhas with electricity companies. Under Spain’s partiallyliberalized electricity price system, tariffs for the captivemarkets are set by the government. Companies that serve thisportion of the market often must sell electricity toconsumers below cost, producing a deficit that runs intobillions of euros which the GOS is obliged to reimburse.With a deficit of 9 billion (partially financed by privatebanks), the CNE fears that additional debt may incur seriousfinancial difficulties. Energy Secretary-General Pedro Marin told reporters that the next tariff increase would not takeplace until January. Comment: Given Spain,s economic woesand rising unemployment, the GOS will find it politicallydifficult to raise electricity prices by too much. The GOS,which has been under pressure from the European Commission toabolish regulated tariffs and from the CNE to raise tariffs,has said in the past that it needs several years to raiseregulated prices enough to bring them fully in line withcosts. Recent GOS tariff increases have been above the rateof inflation but below CNE requests. (Expansion, 9/18; ABC,9/17, Embassy)

GOS on Track to Implement Radiation Detection MaritimePortals by Late 2009

¶6. (C) Spanish Customs officials told a DOE Megaportsvisiting team and Emboff September 15 that the GOS was onschedule to install radiation detection portals at themaritime ports of Valencia and Barcelona by late 2009. TheGOS will shortly solicit bids from companies interested inundertaking this Megaports project at each port. The biddingand award process is expected to take 6 months, followed bythe construction and installation, which is expected to takeup to 9 months. The visiting DOE Megaports team was inMadrid September 15 to add final technical suggestions to theRFP document prepared by Spanish Customs. Comment: The onlyobstacle the GOS may face in implementing Megaports may bethe upcoming year,s budget, which is expected to be strainedgiven the current economic woes. (Embassy)

Vodafone Launches 670 Million Euro Suit Against TelefonicaSubsidiary

¶7. (U) Vodafone has filed suit against Telefonica Moviles deEspana in Spanish court (1st instance court in Madrid)demanding reparation in the amount of 670 million euros.Vodafone asserts that Telefonica abused its dominant positionin the mobile phone market between 1995-1999, blockingVodafone,s Airtel from gaining access to its network andultimately blocking Airtel from hundreds of millions of eurosin profits. According to the Spanish press, Vodafone,s suitbuilds on the 2006 Supreme Tribunal,s decision thatdetermined that between 1996-1999, Telefonica engaged inconduct that blocked or hindered Airtel,s access to thenetwork, conduct which did not comply with Spain,s lawagainst anti-competitive practices (Ley de Defensa deCompetencia).This is the largest judicial suit presented inSpain against a Spanish multinational company. (El Pais, 9/15)

Sabadell Sells Half of Insurance Business for 750M Euros

¶8. (U) Banco Sabadell, Spain’s sixth largest bankinginstitution, will sell half of its insurance business toZurich Vida for 750 million euros plus the possibility of upto another 150 million euros over ten years, depending on theevolution of future business. Sabadell is following otherSpanish banks that have sold or are studying selling part oftheir insurance business to raise funds. Comment: Spain’sfinancial press gave this action very little coverage, whichsuggests that it was not a panic sale. Sabadell’s stockprice is down 40% from its peak of last year, but that isactually less of a drop than most Spanish banks havesuffered. (Expansion, 9/19)

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COUNCIL OF EUROPE: MORE EFFECTIVE AROUND THE EDGES THAN AT ITS CORE

Friday, December 17th, 2010
ID
09STRASBOURG6
SUBJECT
COUNCIL OF EUROPE: MORE EFFECTIVE AROUND THE EDGES THAN AT
DATE
2009-03-10 10:10:00
CLASSIFICATION
CONFIDENTIAL
ORIGIN
Consulate Strasbourg
TEXT
Tuesday, 10 March 2009, 10:51

C O N F I D E N T I A L SECTION 01 OF 02 STRASBOURG 000006

SIPDIS

DEPT ALSO FOR EUR/ERA

EO 12958 DECL: 3/9/2019

TAGS PREL, COE, FR

SUBJECT: COUNCIL OF EUROPE: MORE EFFECTIVE AROUND THE EDGES THAN AT ITS CORE

STRASBOURG 00000006 001.2 OF 002

CLASSIFIED BY: Vincent Carver, CG, Strasbourg, State. REASON: 1.4 (b), (d)

¶1. (C) SUMMARY: The Council of Europe (COE) likes to portray itself as a bastion of democracy, a promoter of human rights, and the last best hope for defending the rule of law in Europe – and beyond. It is an organization with an inferiority complex and, simultaneously, an overambitious agenda. In effect, it is at its best in providing technical assistance to member-states and at its worst in tackling geo-political crises. The following is a brief overview of the COE for the Department’s use in preparing for COE Secretary General Terry Davis’ talks in Washington March 17-20. End summary.

¶2. (C) The current COE Secretary General, Terry Davis (UK), leaves office this summer, after a five-year term that has been, according to many sources, devoid of vision. Davis is known as a micromanager and will not be missed by many of his staff as well as by many resident ambassadors. In addition to having an unpopular lame duck at its helm, the COE suffers from a large and entrenched secretariat that bristles at direction from member-states. It also (particularly under the current Chair – Spain) suffers from an attempt to proceed only with full consensus. Finally, the COE receives (rightfully, in our view) neither the level of funding nor the attention from member-states that other regional organizations, such as the EU and the OSCE receive. The next Secretary General will have to address these factors if the COE is to fulfill its limited – yet important – potential (septel addresses the four candidates running to replace Davis).

¶3. (SBU) On the eve of Secretary General Davis’ meetings in Washington, we outline some of the COE’s “value added” while note some of its serious shortcomings. The COE can provide valuable services, such as training EU monitors in protecting human rights in Georgia and in arranging for prisoner exchanges in the aftermath of the August war there. The COE’s European Commission for Democracy Through Law (commonly known as the “Venice Commission”) advises governments on national legislation on constitutional law, electoral codes, and fundamental freedoms. Its Group of States Against Corruption (GRECO – of which the U.S. is a formal member and a major financial contributor) investigates and reports on individual countries’ efforts to root out systematic corruption. Various COE bodies also exchange information on money laundering and cyber crime (the U.S. is a party to the COE Convention on Cybercr8me, as well as the conventions on Transfer of Sentenced Persons and on Mutual Administrative Assistance in Tax Matters).

¶4. (SBU) One of the COE’s bodies with the widest reach is the European Court of Human Rights (ECHR). The ECHR serves as the court of final appeal for member-states’ citizens who have exhausted all legal appeals in their own country and whose case pertains to an area covered by the European Convention on Human Rights. All member-states are required to respect and implement the ECHR’s decisions. The Court currently has a backlog of almost 100,000 cases (Russia is blocking a mechanism – Protocol 14 – that has been ratified by every other COE member-state that would reduce the number of judges required to process routine cases – one critical example of how consensus can work against COE efficacy). The ECHR will block the extradition of prisoners to non-COE countries if it believes they would be subject to the death penalty or torture. It has also requested more information on pending British extradition cases to the U.S. where it believes the prisoners might be sentenced in the U.S. to life imprisonment with no possible appeal or automatic judicial review of the life sentence.

¶5. (C) While the COE can be effective in the various important tasks as noted above, on key geostrategic questions, it muddles through at best. The most recent – and serious – example is the COE’s approach on the Georgia-Russia conflict. The Parliamentary Assembly (PACE) strongly condemned Russia’s actions against Georgia and called on member-states – and other countries – not to recognize the breakaway “republics,” the decision-making Council of Ministers (and their deputies – the 47 resident ambassadors in Strasbourg) did little to promote a meaningful action plan regarding Georgia. This was partially due to the chronic “consensus at any price” approach of some delegations – including those of some EU member-states – that basically provided Moscow a veto on meaningful COE action. It is also indicative of the current Council of Ministers’ Chair – Spain – which takes a much more collegial approach to discussions than the previous Chair – Sweden. In any case, if the EU’s 27 member-states are not unified on an issue, the COE will not be, either.

¶6. C) Two other illustrations of the COE’s reach extending far beyond its influence is the omnipresent agenda item of “the situation in Cyprus.” COE discussions on this issue amount to little more than an undiplomatic volley of mutual recriminations between the Cypriot and Turkish ambassadors. Still, behind the scenes, the COE is promoting limited programs such as the use of “neutral” history text books in both countries. We also note that the COE has had little success in pressuring Belarus to meet COE criteria so that it can resume its application process for full COE membership.

¶7. C) Finally, we turn to one issue where the COE has been both an irritant and, more recently, somewhat of a champion – Guantanamo. Dick Marty, a member of the Swiss delegation to the PACE, conducted an investigation into renditions and “secret prisons” in Europe connected to the U.S. war on terrorism. His work created a great deal of controversy and anti-U.S. sentiment in the COE. More recently, however, SecGen Davis and COE Human Rights Commissioner Hammarberg have called on COE member-states to work with the U.S. and consider accepting detainees from Guantanamo to help the U.S. shut down the detention facility there.

CARVER

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ALGERIA: DIRECTORS OF NATIONAL OIL COMPANY INVESTIGATED FOR CORRUPTION

Thursday, December 16th, 2010
ID
10ALGIERS111
SUBJECT
ALGERIA: DIRECTORS OF NATIONAL OIL COMPANY
DATE
2010-02-08 16:04:00
CLASSIFICATION
CONFIDENTIAL//NOFORN
ORIGIN
Embassy Algiers
TEXT
C O N F I D E N T I A L ALGIERS 000111 

NOFORN
SIPDIS

DEPT FOR NEA/MAG – NARDI

E.O. 12958: DECL: 02/08/2020
TAGS: PGOV ENRG ECON ETRD KCRM PINS AG
SUBJECT: ALGERIA: DIRECTORS OF NATIONAL OIL COMPANY INVESTIGATED FOR CORRUPTION

Classified By: Ambassador David D. Pearce. Reasons: 1.4 (b), (d)

Summary
——-

¶1. (C/NF) Eight directors, including the CEO, of Algeria’s national oil company Sonatrach are under investigation for corruption and have been fired and replaced. Industry insiders fear company operations will soon be affected. Algeria’s intelligence services are leading the investigation. This scandal is the latest in a dramatically escalating series of investigations and prosecutions that we have seen since last year involving Algerian government ministries and public enterprises. Significantly, many of the ministries affected are headed by ministers considered close to Algerian President Bouteflika, including Energy /Mines Minister Chekib Khelil. Speculation is rife that political infighting between civilian and military leadership lies behind the case, but we have no hard evidence. Bouteflika’s determined silence is only fueling the uncertainty. End summary.

Eight Senior Officials Implicated
———————————

¶2. (U) A corruption scandal has broken involving Algeria’s largest company, the state oil and gas monopoly Sonatrach. The press first reported on January 14 that an examining magistrate ordered Sonatrach’s CEO Mohamed Meziane, VP for pipelines Benamar Zenasni, VP for upstream activity Boumediene Belkacem, and five other company executives to answer questions concerning allegations of irregularities in the awarding of contracts to two consulting firms owned by Meziane’s sons and a supplier of security equipment. They were questioned for twenty hours.

¶3. (U) All eight Sonatrach officials were then placed under formal investigation (“judicial control”) which requires a person to report periodically to police and not leave the country). Some were detained. Meziane himself was placed under judicial control; the two Sonatrach VPs were detained in Serkadji prison. An additional Sonatrach senior official, VP for commercialization Chawki Rahal, was placed under judicial control. Four Sonatrach directors (for social affairs, exploration, pipelines and transport, and commercialization) were placed under judicial control. Meziane’s two sons were detained — some stories say, for being major shareholders in companies to which the Sonatrach contracts were awarded. All efforts by defense lawyers to lift the detentions and judicial control have been rejected. Outside Sonatrach, former CEO of the bank Credit Populaire d’Algerie Hachemi Meghaoui and his son were ordered detained.

¶4. (U) Abdelhafid Feghouli, VP for downstream operations, was immediately appointed acting Sonatrach CEO. The three other VPs under suspicion have been replaced. Energy/Mines Minister Dr. Chakib Khelil, whose ministry has responsibility for Sonatrach, claimed in a January 17 press conference that the investigation had caught him unawares and that all he knew was what had been reported in the press. He has since refused to discuss the allegations or take responsibility for the affair, saying February 2 that he had no details of the charges and that he would not resign. Khelil pleaded that he was responsible for the entire energy sector but not for managing Sonatrach or any of the some 50 other state energy companies under his ministry’s purview. He assured the press soon after the affair broke that Sonatrach’s production would not be affected and that the company would continue to carry out all projects underway. The week of January 24, the press reported that Sonatrach lawyers would not defend the suspects, since Sonatrach was a victim of the fraud they are suspected of committing.

Foreign Producers Worried
————————-

¶5. (C/NF) Ambassador on January 27 met XXXXXXXXXXXX. Meziane XXXXXXXXXXXX sources tell him the issue under investigation is Sonatrach’s granting of sole-source contracts. Sonatrach’s regulations specify strict conditionsfor this type of contract (“procedure R-115”). Only CEO Meziane would have had authority to authorize and approve them.

¶6. (C/NF) XXXXXXXXXXXX had heard that 1,600 such contracts were under investigation. Some of these contracts reportedly went through Meziane’s sons. A few years earlier, Sonatrach had pressed Anadarko to enter into one such contract jointly with the U.S.-Algerian joint venture BRC (Brown and Root-Condor) to develop the el-Merk oilfield. XXXXXXXXXXXX, the contract was never carried out, BRC was liquidated, and Sonatrach in 2008 awarded the el-Merk contract to Anadarko. XXXXXXXXXXXX stated that this contract was not/not one of those under investigation. (Comment: BRC, nonetheless, figures in the list of ongoing investigations cited in the press. End comment)

¶7. (C/NF) XXXXXXXXXXXX noted that Abdelhafid Ferghouli, former VP for downstream operations now appointed interim CEO, is the one (now former) Sonatrach VP with whom Anadarko was not acquainted. XXXXXXXXXXXX doubted he would last long or beeffective in the top position. No one expects the Sonatrach executives under investigation to return to their previous positions.

Continuity of Sonatrach Operations
———————————-

¶8. (C/NF) Energy/Mines Minister Khelil’s Jan. 17 assurances that company operations would be unaffected have not gone unchallenged. Several press reports sourced to industry insiders and experts say that fear has paralyzed Sonatrach upper ranks, who are all afraid to make a decision. XXXXXXXXXXXX view paralleled this assessment, and we have heard similar views from French — quite concerned about Sonatrach because of the French oil company Total’s exposure here — and other diplomats. He said that all senior executives, at least in the upstream end of operations he is familiar with, are looking over their shoulders and afraid to make decisions or sign anything. The company would not sign amendments to XXXXXXXXXXXX insurance contracts on oil production necessitated by the 2009 budget amendments (Complementary Finance Law) — contracts for which former VP for Upstream Operations Belkacem was responsible. Sonatrach had contracted foreign insurance companies to provide this insurance. Now these companies were not getting paid. Before long, they would cease insuring XXXXXXXXXXXX production operations. If that happened, work would stop. XXXXXXXXXXXX said XXXXXXXXXXXX fields are the largest upstream project with foreign participation in Algeria.

Leading Role of Algeria’s Intelligence Services
——————————————— —

¶9. (C) All papers report that Algeria’s equivalent to the DNI, the Departement du Renseignement et de la Securite (DRS), which is no longer under the Ministry of National Defense, carried out the investigation. Although DRS’ move out of the shadows and into the limelight has been unprecedented, its special investigative service for internal corruption has been active for years (i.e., even as far back  as the Boumedienne era). The magazine “Jeune Afrique” recently claimed, for example, that DRS had investigated 1650 elected Algerian local officials (or about one out of ten) since 2002 for corruption. XXXXXXXXXXXX was well aware of DRS’ involvement in the Sonatrach case and related that former VP Belkacem, in many meetings with XXXXXXXXXXXX, had been extremely careful in what he said when others, even company waiters, were present. He was very guarded over the telephone. XXXXXXXXXXXX imputed this behavior to concern over DRS surveillance. XXXXXXXXXXXX confided that DRS has interviewed many of XXXXXXXXXXXX company’s local staff.

Political Ramifications
———————–

¶10. (C/NF) XXXXXXXXXXXX noted that no one believe Energy/Mines Minister Khelil’s claims to know nothing of the investigation. Most believe Khelil exercised a guiding hand over Sonatrach operations. XXXXXXXXXXXX noted that his conversations with industry insiders had pointed to a cousin of the minister known only as Hemche who was a close adviser to former CEO Meziane. His sources believed Hemche was a key decision-maker, although Meziane did the signing. Early last December, Hemche reportedly abruptly retired and took up residence in LUGANO, Switzerland.

¶11. (C) Ambassador noted that Algiers is swirling with speculation about the political background of this and other scandals affecting several government ministries and public enterprises. Some believed it was a logical outcome of President Bouteflika’s oft-stated commitment to attack corruption. Most, however, interpret the DRS move against high-level Sonatrach officials — who all owed their jobs to Bouteflika-confidant Khelil — as the military’s retaliation via the DRS against the civilian control over it that Bouteflika had imposed since his reelection to a second term in 2004.

Comment
——-

¶12. (C) The investigation against the leadership of the company that finances over half the country’s budget and produces 98 percent of its export revenue has shocked the country and generated rampant speculation about the political motivations behind it. In a country where power relationships and processes are opaque, speculation is as rife as hard evidence is scarce. A visiting analyst of a leading U.S. risk analysis firm told Poloff the week of January 31, for example, that all his contacts believe the DRS shaped the investigation to send a message to Bouteflika, either that he should allow relatives of leading generals a greater slice of the economic pie, or that Bouteflika’s western Algerian “clan” should cede power back to the military (which many regard as dominated by eastern Algerians), or simply that the civilian-dominated authority should restore more behind-the-scenes influence to the military. Despite this theory and others we have heard, we see no hard evidence for any particular political interpretation. What is certain is that the alleged infraction and sums involved in this corruption case may only represent the tip of an iceberg — which was precisely the point of an open letter to the DRS published by a former Sonatrach VP January 30 in the French language daily “El Watan.” That article urged the DRS to look into a long list of much large Sonatrach operations, including spot market sales to a handful of select customers connected to senior members of the power structure. The U.S. risk analyst’s sources were certain the DRS planted this article as a further warning to civilian authority.

¶13. (C) This case is the latest in a series of corruption investigations that started to surface with increasing frequency since last spring and which are now competing with indignation over TSA measures and Algeria’s failed bid to win the African Cup of Nations football tournament for the main headlines in the daily press. Two of the larger cases already underway are alleged wrongdoing in the construction of the East-West Highway and in the awarding of fishing licenses to Turkish companies. Others involve state-controlled telephone operator Algerie Telecom, BRC (mentioned previously), and the National Bank of Algeria. Few cases have yet produced a trial or conviction, helping harden the widespread view that leading public officials continue to enrich themselves with impunity at public expense. With DRS “commissars” believed present in virtually every public company or ministry front office, senior officials are said to be worried that every visitor, especially non-Algerians, is duly noted and reported. DRS files, already swollen with decades of political and personal financial dirt on practically all notable Algerians, are said to be growing fatter with information on suspicious business dealings or allegations of special favors. The big question no one can answer definitively is whether Bouteflika is orchestrating this anti-corruption blitz, as PM Ouyahia has publicly claimed and as would be consistent with Bouteflika’s longstanding intention, or is its ultimate target. His silence, noted by the press, has only fueled the speculation.

PEARCE

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POLITKOVSKAYA’S DEATH SENDS SHOCK WAVES THROUGH MOSCOW; PROSECUTOR GENERAL TAKES PERSONAL CONTROL OF INVESTIGATION

Wednesday, December 15th, 2010
ID
06MOSCOW11316
SUBJECT
POLITKOVSKAYA’S DEATH SENDS SHOCK WAVES THROUGH
DATE
2006-10-09 11:11:00
CLASSIFICATION
CONFIDENTIAL
ORIGIN
Embassy Moscow
TEXT
Monday, 09 October 2006, 11:14
C O N F I D E N T I A L SECTION 01 OF 03 MOSCOW 011316
SIPDIS
SIPDIS
DEPT FOR EUR/RUS
EO 12958 DECL: 10/09/2016
TAGS PGOV, KDEM, PHUM, PREL, RS
SUBJECT: POLITKOVSKAYA’S DEATH SENDS SHOCK WAVES THROUGH MOSCOW; PROSECUTOR GENERAL TAKES PERSONAL CONTROL OF INVESTIGATION
Classified By: Ambassador William J. Burns. Reasons: 1.4 (b) and (d).
——-
Summary
——-
¶1. (C) The October 7 murder of internationally-known investigative journalist Anna Politkovskaya has sent shock waves through Moscow. A public demonstration has been held, the co-owner of Novaya Gazeta, the newspaper where Politkovksaya had worked since 1999, is offering a 25 million ruble reward for information leading to the arrest of the culprit(s), the GOR Prosecutor General has taken personal charge of the investigation, and prominent media and political personalities have condemned the murder. Motives are plentiful. Politkovskaya’s intrepid work in Chechnya, Beslan, and elsewhere in the North Caucasus earned her many enemies, and commentators here have been quick to point the finger at figures ranging from Chechnya’s Prime Minister Ramzan KADYROV to those interested in seeing President Putin remain at the helm after 2008. The Ambassador has expressed strong U.S. concerns about the case to First Deputy Foreign Minister Denisov and Presidential Human Rights Commissioner Pamfilova and will continue to press the case with the GOR. End summary.

—————-
OCTOBER 7 MURDER
—————-

¶2. (U) Moscow media report that internationally-known investigative journalist Anna Politkovskaya was assassinated late-afternoon October 7 just after entering her apartment building near Belorusskiy train station in Moscow. (Politkovskaya was known for uncompromising work highlighting corruption and human rights violations in the Chechnya war, the Beslan siege, and the Moscow Nord-Ost theater siege.) The lone assassin fired four shots, and dropped the pistol before fleeing the scene. A security camera reportedly caught the blurry image of a man, his face largely concealed by a baseball cap. No one has claimed responsibility. Immediately after the killing, the area surrounding the apartment was cordoned off and key items from Politikovskaya’s apartment were removed for analysis for investigators.

¶3. (U) Prosecutor General Yuriy Chayka has announced that he personally will take control of the investigation because of its importance. Representatives of the Prosecutor’s office have removed for analysis Politikovskaya’s computer and other items from her office at Novaya Gazeta, where she had worked since 1999. Embassy understands that a number of journalists XXXXXXXXXXXX have already been questioned by the PG’s office. To date, no statement has been made about the progress of the investigation. Some of the news media, as of the morning of October 9, were reporting that there had been no progress in identifying the Politkovskaya’s assassin. Others reported that fingerprints and other evidence had been found.

¶4. (SBU) Politkovskaya’s assassination has prompted an outpouring of grief and rage in Moscow and elsewhere in Russia. An October 8 demonstration, originally scheduled to protest retributions against Georgians in the wake of the spy scandal in Tbilisi became as well a commemoration to Politkovskaya. (Demonstrations were held in St. Petersburg and Samara, as well.) A crowd of about one thousand attended. Although there were no speeches, prominent human rights and political figures gave interviews to the international and domestic press. XXXXXXXXXXXX. XXXXXXXXXXXX. described the assassination, which occurred on President Putin’s 54th birthday, a “direct challenge to the President.” XXXXXXXXXXXX saw the killing as a turning point, in which all must choose sides; either to cooperate with the “fascists” or fight against “such scum.” There were similarly strong words from XXXXXXXXXXXX and XXXXXXXXXXXX. Among the signs carried by demonstrators: “Politkovskaya is our Gongadze,” “The cannibalistic people in power killed Anna,” “Politkovskaya – a great daughter of Russia.”

¶5. (U) Other comments:
— Moscow Mayor Yuriy Luzhkov released a statement saying he was “deeply outraged and shocked by the fact that an honest journalist, who was also a woman and a mother, had been killed”;
— XXXXXXXXXXXX: “The death of (Politikovskaya) is connected with her work in Chechnya…”
— Chechnya’s Prime Minister Ramzan KADYROV said he was shocked by Politikovskaya’s death, and rejected the assertion that the murder has Chechen fingerprints on it.
— XXXXXXXXXXXX: “Politikovskaya was number one in political journalism. . .the murder of such a person is a very symbolic event for Russia…”
— XXXXXXXXXXXX: “The fact that (the murder) occurred on the birthday of President Putin makes it a complicated political provocation. . .It is not clear if it was done by an enemy of Putin, or one of his supporters.”
— XXXXXXXXXXXX in a conversation with Embassy XXXXXXXXXXXX paid tribute to Politkovskaya, “a hero who cannot be replaced.”
— XXXXXXXXXXXX have launched their own investigation of the murder. XXXXXXXXXXXX Duma Deputy Aleksandr Lebedev has offered a 25 million ruble award for information leading to the rest of the killer;
— XXXXXXXXXXXX: “conversations about freedom of speech are still just conversations. . .This cynical crime is an echo of the turbulent 90s”;
— XXXXXXXXXXXX: “The (murder) is a political provocation, which may be followed by the murders of other well-known people. . .”;
— XXXXXXXXXXXX: “Politkovskaya was an icon who, we believed, had reached the point where she had transcended danger. XXXXXXXXXXXX guessed that reporters working on Chechnya will be even less likely to report frankly than they have in the past;
— XXXXXXXXXXXX reported that Moscow-based human rights organizations would be convening soon for a strategy session in the wake of Politkovskaya’s murder.
¶6. (SBU) The mailbox in front of Politkovskaya’s apartment on a busy street has been turned into an informal shrine, with flowers and a picture of the journalist. A basket of flowers hangs on the railing in the lobby where Politikovskaya was killed.

——————
WHY POLITKOVSKAYA?
——————

¶7. (C) The assassination of one of Russia’s most outspoken journalists and the absence to date of any leads has generated much speculation about possible perpetrators here. Embassy contacts note that Politkovskaya’s work had won her many enemies. XXXXXXXXXXXX told Embassy October 8 that the late journalist “constantly” received threats –”by telephone, letter, by e-mail, by SMS.” Politkovskaya had become inured to the threats. According to XXXXXXXXXXXX, “she had accepted the possibility that she could be killed at any time, and talked about it very little.” The most frequent threats, XXXXXXXXXXXX said, had come from Chechnya Prime Minister “KADYROV’s people” (not necessarily with KADYROV’s knowledge) and the Russian Special Forces, whose brutalities in Chechnya had been exposed by Politkovskaya.

¶8. (C) There have been at least two criminal cases opened against people who have threatened Politkovskaya in the past, and she was prominent on an “enemies” list maintained by Russian nationalists. In addition, an effort was allegedly made to poison her as she flew to the North Caucasus as the Beslan tragedy was unfolding in 2004. Immediately after Politkovskaya’s murder, there was a flurry of speculation that the assassination was linked to an article on the use of torture in Chechnya by troops loyal to Ramzan KADYROV that Politkovskaya was to have turned over to Novaya Gazeta on October 8. XXXXXXXXXXXX

¶9. (C) Among the other, highly speculative theories making the rounds here:
— according to XXXXXXXXXXXXX (and others), the assassination is a “poisoned gift” for President Putin. It will be used by some to argue that there is a state of emergency, and that the President cannot leave when his term ends in 2008.
— others theorize that Politkovskaya’s death was tied not to Putin’s birthday, but to the thirtieth birthday of Chechnya’s Premier Ramzan KADYROV. Politikovskaya’s trenchant articles on the conduct of the war in Chechnya had angered KADYROV and his confederates, the theory has it, and rumors that the pro-Moscow Chechen leadership was to be fingered in the article that was to appear this week had caused someone to intervene. A corollary speculation has it that the assassination might have been engineered by Chechnya’s President Alu Alkhanov in order to implicate, and neutralize KADYROV. A third possibility is that those in Chechnya opposed to KADYROV’s pro-Moscow regime were attempting to use Politkovskaya in order to marginalize KADYROV.

¶10. (C) In the more implausible category:
— others argue that the assassination will be used, like journalist Georgiy Gongadze’s death in Ukraine, as a reference point in an effort to foment a Russian “orange” revolution. Still others suggest that her death, which follows on the heels of the assassination of Bank Deputy Chairman Andrey Kozlov, will provide a pretext for still tighter controls in an effort to restore order.
——————-
THE U.S. CONNECTION
——————-
¶11. (SBU) Politikovskaya was a U.S. citizen by birth and U.S. passport holder, although she spent most of her adult life in Russia.
————
GOR REACTION
————
¶12. (C) As noted above, Prosecutor General Yuriy Chayka has taken personal charge of the investigation, and it appears that the authorities are moving quickly to gather evidence. Ambassador has been told (septel) by First Deputy Foreign Minister Denisov that the GOR will issue a statement on October 9.

BURNS

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ROSUKRENERGO (RUE) CO-OWNER DMYTRO FIRTASH TALKS

Wednesday, December 15th, 2010
ID
08KYIV2414
SUBJECT
DATE
2008-12-10 07:07:00
CLASSIFICATION
SECRET
ORIGIN
Embassy Kyiv
TEXT
S E C R E T KYIV 002414 SIPDIS DEPT FOR EUR/UMB EEB/ESC/IEC FOR SGALLOGLY AND LWRIGHT DOE FOR LEKIMOFF, CCALIENDO, RBOUDREAU USDOC FOR 4231/ITA/OEENIS/NISD/CLUCYK E.O. 12958: DECL: 12/10/2018 TAGS: EINV ENRG EPET PINR PREL POL UP

¶1. (S) Summary and Comment: Controversial Ukrainian oligarch Dmytro Firtash, best known as co-owner of gas intermediary RosUkrEnergo (RUE), called upon the Ambassador on December 8. Firtash did not explicitly state why he requested the meeting, nor did he ask the USG for anything, but he spoke at length about his business and politics in a visible effort to improve his image with the USG. The soft-spoken billionaire, arguably one of Ukraine’s most powerful people, expressed strong support for President Yushchenko and equally strong contempt for Prime Minister Tymoshenko. He claimed that he had thwarted a coalition between BYuT and the Party of Regions (PoR) at the last minute, and was now working to build a coalition between Yushchenko’s supporters and the PoR. In a lengthy monolog, Firtash described his evolution as a businessman from his beginnings as a food trader to the creation of RUE. Firtash claimed that Tymoshenko was working with Russia to eliminate RUE, and cited examples meant to prove that she was making political concessions to Russia to gain its support to do so. He acknowledged ties to Russian organized crime figure Seymon Mogilevich, stating he needed Mogilevich’s approval to get into business in the first place. He was adamant that he had not committed a single crime when building his business empire, and argued that outsiders still failed to understand the period of lawlessness that reigned in Ukraine after the collapse of the Soviet Union. He said he cared truly about Ukraine, and saw Russian business interests overtaking the economy as the biggest threat to the country’s security. Comment: Firtash’s arguments and allegations are clearly self-interested; he sees Tymoshenko as a clear threat to his business. End summary and comment.

Firtash Seeks to Improve His Image ———————————-

¶2. (C) Ukrainian billionaire Dmytro Firtash, best known as co-owner of controversial gas intermediary RUE, sought a meeting with the Ambassador on December 8. Accompanying Firtash to the meeting was political consultant and AmCit Zev Furst, and Andras Knopp, the Hungarian-born number two at RUE. Firtash never specifically stated why he had sought the meeting, nor did he extend any specific requests to the Ambassador, but in the course of the conversation it was clear he tried to use the meeting to portray a positive image of himself. Furst said he was attending as a “friend and advisor” to Firtash and during the course of the meeting stated that the USG might have misperceptions about Firtash. At one point during the meeting, Firtash began to talk about “mistakes he might have made,” but diverted the conversation when Furst waved him off.

Firtash’s Support for President Yushchenko… ———————————————

¶3. (C) In the meeting, which lasted two and a half hours, Firtash told the Ambassador that he was not a public person, but had recently been pulled deeper into Ukrainian politics. He admitted that he has “loyally served” as an unofficial advisor to President Yushchenko during tense gas negotiations with Russia and political crises dating back to the Orange Revolution in 2004. He reported that he met with the Yushchenko at his dacha (cottage residence) three times in the last week at the President’s request. He described himself as a close friend and confidante of the President — someone the President can trust totally. In his view, Yushchenko made a possibly fatal political error during the Orange Revolution in that he and Tymoshenko propagated the concept of two Ukraines — an orange, more democratic Ukraine, and a blue Ukraine represented by the Party of Regions (PoR) and more focused towards the status quo. He added that this divisiveness throughout Ukraine is exactly what Russia hoped to cultivate in order to control Ukraine. Firtash felt the only way to unify Ukraine during the current political and economic crises was to form a coalition between the President’s supporters and the PoR in order to stop what he termed, “Tymoshenko’s plans to offer up the country to Russia on a silver platter.” (Note: On the evening of December 9, BYuT, Our Ukraine/People’s Self Defense Party, and the Lytvyn Block formed a coalition, keeping Tymoshenko in power and rebuffing Firtash’s hopes for a coalition between the President’s supporters and the PoR. End note.)

…And Contempt for Tymoshenko
——————————

¶4. (C) Firtash defined Tymoshenko as an accomplished oligarch who had made deals with Moscow that would leave Ukraine vulnerable to Russian oligarchs in the future — something neither he nor Ukrainian billionaire and PoR backer Rinat Akhmetov could stand by and watch happen. Firtash referred to Tymoshenko’s title of “gas princess” as a misnomer; he explained that Tymoshenko did make lots of money off of a corrupt, perpetual gas debt scheme during the 1990s, but she knew nothing about the gas business. He added that Tymoshenko hid her wealth in property and investments in the U.K. to give the false impression that she was not actively involved in business. He believed that Tymoshenko’s hatred for him stems from Tymoshenko’s missed opportunity to develop her own RUE back in 2005, when she was Prime Minister for the first time.

¶5. (C) Firtash stated that he felt Russia was strongly supporting a BYuT and PoR coalition and that such a coalition was about to be finalized on December 7, with only Regions leader Viktor Yanukovych needing to sign. He claimed that he torpedoed the coalition at the last moment by convincing Yanukovych that an alliance with Tymoshenko would never last. Firtash recounted that on December 6, Tymoshenko was on nearly every Ukrainian TV channel and in every newspaper, prophesying that a BYuT and PoR coalition agreement would be signed on the evening of December 7. Firtash was visibly delighted as he recounted how he used his television station INTER to air an interview in which Yanukovych refuted Tymoshenko’s claim that a BYuT and PoR coalition was a done deal (Ref A). Responding to a question by the Ambassador on whether he worked with Akhmetov to derail a BYuT/PoR coalition, Firtash said that they had worked separately, even if they were pursuing the same goal.

¶6. (C) Firtash said he and Akhmetov both wanted a coalition between the President’s supporters and the PoR. He claimed that he had brokered a subsequent meeting between Yanukovych and Yushchenko for the evening of December 8. He was not sure if Yanukovych and Yushchenko could form a new coalition, but saw it as the only way out of Ukraine’s prolonged political strife.

From Humble Beginnings…
————————-

¶7. (C) Firtash described himself as a simple person who grew up in the village of Synkiv in the Ternopil oblast in Western Ukraine. Firtash explained he had very humble beginnings — his father taught driver education and his mother worked in a sugar factory. He added that since his parents hated communism, they did not benefit from valuable contacts that could have helped him get into a university, which was his childhood dream. Firtash said he shared his parents’ disdain for the Communist party and only agreed to join the Communist youth movement Komsomol after being locked in a party member’s office for two days without food or water.

¶8. (C) Firtash told the Ambassador he attended an occupational institute before be drafted into the army in 1986 and studied to become a fireman after completing his military service. In 1991, when the Soviet Union collapsed, Firtash stated his parents thought it was the end of the world and he was concerned about making a living during unpredictable times. He added that he felt he was “between two countries — one that had ended and one that was beginning.” He described his future as unknown, stating he was “living in a country with no laws and no taxes.” Firtash also described himself as a “natural businessman” without a university education who “had a nose” for business opportunities, and who would make the best of the uncertainty.

¶9. (C) (Note: The Ukrainian newspaper “Ukrainska Pravda” researched Firtash’s life and reported that Firtash was not highly educated, but was a highly decorated soldier who had used his contacts to build a canned goods and dry milk business which shipped goods first to Uzbekistan. According to press reports, Firtash’s first wife and business partner Mariya Kalinovska was given credit for Firtash’s first business success. This business then turned into a profitable canned goods production factory and a transportation company registered in Germany. Firtash and Kalinovska were married from 2002-2005, with Kalinovska reportedly receiving a large divorce settlement, despite efforts by former Fuel and Energy Minister Yuriy Boyko to misrepresent the true scale of Firtash’s wealth. End note.)

…To Powerful Oligarch
———————–

¶10. (C) Firtash gave a detailed account of how he got into the gas business. Firtash explained that his food and commodities business, which he started in Chernivtsi in Western Ukraine with his wife Mariya, was first called KMIL, and later expanded into High Rock Holdings. Due to his commodities business, he became acquainted with several powerful business figures from the former Soviet Union. Firtash said he met Ukrainian businessman Igor Bakai in Turkmenistan who was selling cars in Ashgabat, but had bigger plans. According to Firtash, Bakai convinced then Ukrainian President Kravchuk to give him permission to buy gas exclusively for the Ukrainian market in Turkmenistan. Firtash noted that Bakai’s success also sparked Firtash’s interest in the gas business. (Note: In 1993 Bakai then formed the Respublika company, which later became Intergas, which set the precedent for profitable gas trading between Turkmenistan and Ukraine. Bakai would go on to be the first Head of Ukraine’s state oil and gas company Naftohaz from 1998-2001. End note.)

¶11. (S) Firtash also described the gas business in Ukraine during the mid 1990s as particularly dangerous. Firtash said that then Prime Minister Pavel Lazarenko had hired criminals to run the Ukrainian government and used his position as Prime Minister for corruption. He added that Tymoshenko headed Ukrainian Energy Systems, where she earned her fortune. Firtash claimed that Lazarenko, Tymoshenko, and Lazarenko’s Assistant Igor Fisherman divided and conquered the Ukrainian gas market. He stated that Lazarenko ordered the killings of Donetsk Governor Yevgen Scherban in 1996 and the head of Itera in Kyiv for not sharing Lazarenko’s gas business philosophy. (Note: Igor Fisherman was known in the Ukrainian press as Mogilevich’s right hand man who was also High Rock Holding’s financial director during the late 1990s. End note.)

¶12. (C) Another such businessman was Igor Makarov, who founded the Itera gas trading company in 1992, which provided Turkmen gas to former Soviet republics. Firtash claimed that Makarov hired a former KGB head as his security chief to direct Makarov’s gas trading empire in Central Asia. Firtash recounted that he gave Itera food commodities through High Rock Holdings, which Itera used to buy gas in-kind from Turkmenistan. Makarov then paid Firtash in cash with the proceeds of his gas sales. According to Firtash, Makarov refused to pay Firtash $50 million in 2001, which drove Firtash to explore his own gas trading business, ousting Makarov at the same time.

¶13. (C) According to Firtash, he hired Hungarian-born businessman Andras Knopp to negotiate new gas trading deals with Kazakhstan, Turkmenistan and Uzbekistan. Since these Central Asian countries trusted Firtash as a reputable businessman, they agreed to sign with Firtash’s EuroTransGas (ETG) company, leaving Makarov’s business in ruins.

¶14. (S) Firtash also recounted that Makarov invited him to dinner in Kyiv in January 2002, shortly after Firtash had signed the gas deals with Central Asia. Firtash added he went to that dinner not knowing if he would be beaten up or even killed for having taken Makarov’s business from him. According to Firtash, Makarov was there with his head of security, Semyon Mogilevich, Sergei Mikhas, from the Solnstevo Brotherhood, and a Mr. Overin when Makarov told Firtash he would regain his gas business as easily as Firtash had taken it away. Firtash walked away from the meeting alive, and credited his ability to keep his life and his gas business to his good reputation among Central Asian leaders.

¶15. (C) According to Firtash, by 2002, ETG was the sole transporter of Turkmen gas to Ukraine. (Note: According to media reports, by 2005 Firtash had already created a gas trading empire that allowed him to easily transition into RUE. In addition, Firtash owns majority shares in companies in Ukraine, Estonia, Russia, Germany, Switzerland, Italy, Tajikistan, and Austria all under the umbrella of the Group DF which he formed in 2007 (Ref B). He also owns 61% of the Ukrainian Inter Media Group which owns or co-owns 7 television channels and the Ukrainian News Agency. By 2006, Firtash’s estimated worth was over $5 billion, but most experts believe that Firtash had low-balled his true worth and estimated it was in the tens of billions. In his conversation with the Ambassador, Firtash gave no indication of the scope of his wealth. End note).

The Future of RosUkrEnergo (RUE) ——————————–

¶16. (C) When asked about Tymoshenko’s promise to rid Ukraine of RUE, Firtash responded by making a link between Tymoshenko and Russia. He argued that the Prime Minister was seeking Russian support to get rid of RUE, and was making concessions to Russia to accomplish this goal. He specifically cited what he said was her silence on the August events in Georgia, her avoidance of a stand on the Holodomor and the issue of the Black Sea Fleet in Crimea, as examples of the political concessions she was making to Moscow. Firtash acknowledged that he was having more and more problems with Russia. He alleged that the Russians had already excused a $600 million debt that she owed from her previous gas business that could be used as pressure to get concessions from her. If Moscow really wanted to get rid of RUE, Firtash added, it could do so as long as Tymoshenko was at the helm.

¶17. (C) Responding to the Ambassador’s question, Firtash said Ukraine’s current gas debt to RUE was near $3 billion, adding that the debt was owed directly to RUE and not to Gazprom. In his view, Ukraine could only clear the debt to RUE in gas since it didn’t have enough cash to pay outright. He added that according to the RUE charter with Gazprom, any shipments or supplies of gas to RUE must be confirmed by two signatures on a gas transfer document — one signature from Gazprom — the other from RUE (Firtash). Firtash argued that if he does not sign the gas transfer document, then legally there is no proof that gas has been supplied to RUE or Ukraine, so Gazprom forfeits its ability to demand payment from RUE, thus keeping RUE in the gas arrangement for some time. He estimated that Ukraine would have to pay RUE 12 billion cubic meters (bcm) of gas to settle the debt. This could be done by transferring Ukrainian gas already in storage to RUE, bringing RUE’s reserves in storage in Ukraine up to 23.5 bcm, since RUE already has 11.5 bcm in storage (Ukraine’s maximum storage capacity is 34 bcm). The gas would normally be exported to Europe at market prices, which despite falling world gas prices would still be very profitable. Firtash hinted that if RUE was removed with Russian approval, Ukraine would most likely attempt to take or steal all of RUE’s gas in storage.

Ties to Russian Organized Crime
——————————-

¶18. (S) The Ambassador asked Firtash to address his alleged ties to Russian organized crime bosses like Semyon Mogilievich. Firtash answered that many Westerners do not understand what Ukraine was like after the break up of the Soviet Union, adding that when a government cannot rule effectively, the country is ruled by “the laws of the streets.” He noted that it was impossible to approach a government official for any reason without also meeting with an organized crime member at the same time. Firtash acknowledged that he needed, and received, permission from Mogilievich when he established various businesses, but he denied any close relationship to him.

¶19. (S) Firtash’s bottom line was that he did not deny having links to those associated with organized crime. Instead, he argued that he was forced into dealing with organized crime members including Mogilevich or he would never have been able to build a business. If he needed a permit from the government, for example, he would invariably need permission from the appropriate “businessman” who worked with the government official who issued that particular permit. He also claimed that although he knows several businessmen who are linked to organized crime, including members of the Solntsevo Brotherhood, he was not implicated in their alleged illegal dealings. He maintained that the era of the “law of the street” had passed and businesses could now be run legitimately in Ukraine. He underscored the importance of unifying Ukraine politically in order to reduce the influence of Russian organized crime bosses on Ukrainian businesses.

TAYLOR

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http://www.wikileaks.ch/cable/2008/12/08KYIV2414.html