VZCZCXRO5604
RR RUEHMA RUEHPA
DE RUEHRY #1763/01 3381535
ZNR UUUUU ZZH
R 041535Z DEC 06
FM AMEMBASSY CONAKRY
TO RUEHC/SECSTATE WASHDC 0298
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHZK/ECOWAS COLLECTIVE

UNCLAS SECTION 01 OF 02 CONAKRY 001763 
 
SIPDIS 
 
SIPDIS 
 
SENSITIVE 
 
TREASURY FOR OFFICE OF AFRICAN NATIONS 
TREASURY FOR USED IMF AND USED WORLD BANK 
 
E.O. 12598:  N/A 
TAGS: EFIN ECON PGOV IMF GV
SUBJECT: SYLLA/FUTURLEC SAGA:  BLOCKING GUINEA'S PROGRESS TO A 
FUNDED IMF PROGRAM? 
 
REFS: (A) Conakry 1718, (B) Conakry 1446 
 
¶1.  (SBU) SUMMARY.  In the aftermath of the IMF's recent criticism 
of Guinea's monetary and economic performance (ref A), EconOff 
discussed Guinea's return to a funded program with IMF resident 
representative Alvin Hilaire.  In Guinea for less than two months, 
Hilaire echoed the donor community's fatigue of Guinea's inadequate 
economic reforms.  Hilaire said the private Central Bank accounts of 
Mamadou Sylla as well as relations between his holding company, 
Futurlec, and the central government remain the most conspicuous 
problems.  After three audits of Futurlec's transactions with the 
government, the matter remains unresolved.  The audits were the 
subject of much public speculation but, in the end, provided more 
questions than answers and highlighted Guinea's fiscal weaknesses. 
Hilaire believes holding Sylla responsible for his debts would be 
interpreted as proof of Guinea's will and ability to implement 
reforms, and would restore some confidence in the government.  End 
Summary. 
 
--------------------------------------------- 
Sylla and Futurlec Wearing Heavily On Guinea 
--------------------------------------------- 
 
¶2.  (SBU) The recent IMF technical team's assessment of Guinea's 
economic and monetary performance was critical (ref A).  As the 
government of Guinea analyzes the team's findings, EconOff asked 
Guinea's IMF resident representative, Alvin Hilare, what Guinea 
could and should do to reestablish a funded IMF program.  Hilaire 
said policy changes, while necessary, take time, but for immediate 
positive effect, Guinea must resolve the "fiasco" of Mamadou Sylla's 
overdrawn personal accounts at the Central Bank as well as unclear 
financial transactions between his company, Futurelec, and the 
national government. 
 
¶3.  (SBU) Initially one of the IMF's preconditions for return to a 
funded program, the Sylla/Futurlec problems remain the subject of 
much public speculation and provide fodder for critics of the 
government (ref B).  The third and most recent of the audits was to 
be the definitive accounting, but it raised more questions than 
answers.  The official audit results have not been widely published 
-- neither EconOff nor the IMF representative has seen the full 
report. 
 
------------- 
I WON! I WON! 
------------- 
 
¶4.  (SBU) Upon the conclusion of the audit, Sylla declared victory 
and circulated a redacted and heavily edited portion of what 
purports to be the definitive accounting.  Sylla's company, 
Futurlec, did and still does provide bonafide services to the 
government of Guinea.  Its current services are primarily supplying 
food and other provisions to the military.  Many of these 
transactions are considered "sovereign" and are not made public. 
The audit clearly stated that the findings "do not take into account 
any of the transactions linked to sovereign expenditures for which 
there exists no one set of justifying documentation."  Since the 
services are ongoing, it is most likely that the government of 
Guinea has outstanding debts to Futurlec. 
 
¶5.  (SBU) However, Sylla also had a personal account at the Central 
Bank, unrelated to services Futurlec provided to the government. 
That personal account was overdrawn by 6 million USD.  In their 
accounting, Sylla and his lawyers leverage the government of 
Guinea's contractual obligations to Futurlec against Sylla's 
personal debts.  In the accounting process, as in general discussion 
of the matter, separation of Sylla and Futurlec is nearly 
impossible.  At the Central Bank itself, the Sylla and Futurlec 
accounts were crossed at various points, with funds being 
transferred between the two.  The contradictory audit results are 
mired in the inability to determine where Sylla's account begins and 
Futurlec's ends. 
 
------------------ 
AND THE WINNER IS? 
------------------ 
 
¶6.  (SBU) The ambiguity of the audits fatigues the donor community. 
The "fiasco" to which Hilaire refers is both a reflection of 
presidential cronyism and the Central Bank's chaotic bookkeeping 
practices.  Although present in Guinea for less than two months, 
Hilaire already exhibits little patience for the host government's 
inadequate reforms. The Sylla/Futurlec affair is particularly 
egregious, and Hilaire refuses to allow the issue to be muddied. 
His stance on holding Sylla responsible mirrors that of the IMF 
technical team. 
 
CONAKRY 00001763  002 OF 002 
 
 
 
------- 
COMMENT 
------- 
 
¶7.  (SBU) COMMENT.  The lone bright spot in Guinea's economic 
picture is the series of budget reforms implemented for FY2007 and 
their attendant budget review and justification processes.  Those 
reforms, however, are largely the results of U.S. Treasury technical 
assistance and World Bank norms to which the government has agreed 
to conform.  Those steps, while admirable, do little to raise the 
public's confidence in the government or satisfy the donor 
community's desire for more immediate results.  It is clear that, in 
the eyes of the donor community, the Futurlec saga and Sylla himself 
are liabilities to Guinea. 
 
MCDONALD