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DE RUEHBO #0075/01 0222317
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R 222317Z JAN 10
FM AMEMBASSY BOGOTA
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INFO RUEHBO/AMEMBASSY BOGOTA
RUEHBR/AMEMBASSY BRASILIA
RUEHC/DEPT OF AGRICULTURE WASHINGTON DC
RUEHCV/AMEMBASSY CARACAS
RUEHLP/AMEMBASSY LA PAZ
RUEHME/AMEMBASSY MEXICO
RUEHOT/AMEMBASSY OTTAWA
RUEHPE/AMEMBASSY LIMA
RUEHQT/AMEMBASSY QUITO
RUEHZP/AMEMBASSY PANAMA

C O N F I D E N T I A L BOGOTA 000075 

SIPDIS 
USOAS FOR GIANNI PAZ; WHA/AND 

E.O. 12958: DECL: 2020/01/22 
TAGS: ECON EAGR PREL OAS PGOV CO
SUBJECT: IICA SEEKS USG SUPPORT TO COUNTER BLAME ACCUSATIONS FOR 
COLOMBIAN AG SCANDAL 

REF: 09 Bogota 3611 

CLASSIFIED BY: Brian A. Nichols, Charge d' Affairs; REASON: 1.4(B), 
(D) 

¶1. (U)  This message contains an action request.  Please see 
paragraphs 2 and 9. 



¶2. (SBU)  SUMMARY AND ACTION REQUEST.  Representatives of the 
Inter-American Institute for Cooperation on Agriculture (IICA), a 
branch of the OAS, met with Emboffs on January 21 to refute what 
they see as a Colombian Ministry of Agriculture campaign to make 
IICA the scapegoat in the Agro IngresoSeguro (AIS) agricultural 
subsidies scandal (reftel).  IICA maintains it was only 
implementing irrigation and drainage projects in accordance with 
Colombian law and regulations, which did not prohibit awarding 
projects to prominent families or to subdivided land parcels. 
Investigations into IICA, the Ministry, and AIS beneficiaries are 
underway, and continue to adversely affect the presidential 
campaign of former minister Andres Felipe Arias.  On December 23 
the Ministry notified the issuer of a performance bond that IICA 
had failed to comply with its contractual obligations.  IICA 
expressed concern that in a worst-case scenario, it would be forced 
to leave Colombia and asked for our help in:  1) ensuring due 
process in the investigations, 2) convincing the GOC that blaming 
IICA for the scandal is not productive, and 3) ensuring that any 
eventual arbitration is international, rather than Colombian.  Post 
requests Department guidance on responding to this request.  END 
SUMMARY AND ACTION REQUEST.



IICA:  "WE'RE JUST TECHNOCRATS FOLLOWING ORDERS" 

--------------------------------------------- --- 



¶3. (SBU)  The media continues to cover the AIS scandal, which 
revolves around allegations that politically connected and wealthy 
landowners benefitted improperly from government agricultural 
development subsidies.  IICA Deputy Director General Christopher 
Hansen and his team told us that IICA's function within AIS, as 
laid out by Colombian regulations and the technical cooperation 
agreements between the GOC and IICA, was to evaluate the technical 
viability of agricultural development project proposals, 
specifically those related to drainage and irrigation.  They said 
the GOC-established rules of the program prevented IICA from 
rejecting projects based on the recipients being from prominent, 
wealthy families, or the subdivision of land parcels for the 
purpose of qualifying for more subsidies.  These were the two main 
reasons that AIS became a national scandal. 



¶4. (C)  Furthermore, IICA pointed out that the Ministry of 
Agriculture had plenty of oversight over the program, and in fact 
made the final decisions on recipients.  According to IICA, AIS 
funds were disbursed directly to the contractors doing the 
irrigation work, not to the beneficiaries, and there has been no 
evidence that money authorized for the projects was diverted to 
other purposes.  For this reason, IICA considers the AIS program a 
success, the ensuing scandal a political red herring, and the 
Ministry's current attacks on IICA a product of Arias and current 
Minister Andres Fernandez painting themselves into a political 
corner.  IICA's lawyer claimed that Minister Fernandez had 
requested IICA offer a "sacrificial employee" whom the Ministry 
could blame for the scandal.  IICA refused. 



THREE ONGOING INVESTIGATIONS WILL STEER EVENTS 

--------------------------------------------- - 



¶5. (SBU)  Three investigations into AIS are ongoing.  The Fiscalia
(Prosecutor General) is investigating the Ministry of Agriculture, 
AIS beneficiaries, and 19 IICA employees and contractors.
According to IICA's local counsel, the Procuradoria (Inspector 
General), which is responsible for investigating government 
employee malfeasance, is no longer including IICA employees in its 
investigation.  The Contraloria (GAO equivalent), on the other 
hand, has exonerated Ministry of Agriculture officials, and is 
instead concentrating its investigation on IICA.  IICA has pledged 
to cooperate fully with all investigations and has already turned 
over some 20,000 AIS-related documents to authorities. 



¶6. (SBU)  Clearly, how these investigations evolve will impact all 
parties involved.  For example, the press reported on January 21 
that the Procuradoria would include in its investigation testimony 
from AIS beneficiaries that Arias had called them to coordinate 
their stories and versions of events to the media and 
investigators.  Arias' terse denial of coordinating stories or 
obstructing justice ended with a defensive, "I'm not that stupid!" 
The AIS scandal has dropped Arias (a staunch supporter of President 
Uribe) to second in polls gauging the March 15, 2010 Conservative 
Party presidential primaries.



AG MIN STEPS UP PRESSURE, MAY CALL PERFORMANCE BOND 

--------------------------------------------- ------ 



¶7. (SBU)  On December 23, the Ministry of Agriculture provided 
preliminary, non-specific notification of IICA's non-compliance to 
the issuer of a $20 million performance bond, Colombian insurance 
company "Confianza."  IICA representatives told us that their 
contract with the Ministry requires that any allegations of 
non-compliance first be raised between the two parties, which in 
this case did not happen.  For this reason, IICA speculated that 
the December 23 notification of non-compliance may in fact have 
been a bureaucratic scramble to show that the Ministry was taking 
some sort of action, rather than a serious, calculated effort to 
collect on the bond.  IICA noted that efforts to call the bond, as 
well as suggestions that the GOC could disregard IICA's immunities 
as a public international organization, have forced IICA to 
consider a worst-case scenario where they would leave Colombia. 
Their departure would directly affect Embassy assistance programs, 
since the U.S. Department of Agriculture uses IICA to implement its 
sanitary and phytosanitary projects. 



COMMENT AND ACTION REQUEST 

-------------------------- 



¶8. (SBU)  COMMENT:  The Colombian government's decision to contract 
IICA to implement its agricultural development programs was to 
ensure expertise and transparency, while avoiding the potential for 
corruption.  It appears that IICA complied with the technical 
aspects of its contract, and probably could not have known that AIS 
funds were going to prominent families, against the spirit, if not 
the letter, of the law.  As such, claims of IICA malfeasance appear 
specious.  Rather, the bad optics of prominent, wealthy families 
subdividing land for the purpose of receiving greater benefits from 
a government subsidy program is more likely a result of the faulty 
design of the AIS program.  END COMMENT. 



¶9.       (SBU)  ACTION REQUEST:  IICA asked us to communicate to 
President Uribe that we are following the case closely to ensure 
due process in the investigations, and that damaging the 
credibility of an international organization of technocrats would 
be of benefit to no one.  IICA also asked for our support in 
helping ensure that any eventual arbitration between the GOC and 
IICA be international, rather than Colombian, since their contract 
does not specify the venue.  IICA has also reached out for support 
to the Mexican and Canadian Governments, which, together with the 
USG, provide 84 percent of IICA's budget (including 59 percent from 
the United States).  Post requests Department guidance on how to 
respond to IICA's request.  END ACTION REQUEST. 
NICHOLS