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Viewing cable 06USUNNEWYORK2211, UN REITERATES PLEA FOR U.S. HELP TO RELEASE

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Reference ID Created Released Classification Origin
06USUNNEWYORK2211 2006-12-04 22:45 2011-08-30 01:44 UNCLASSIFIED USUN New York
VZCZCXYZ0003
PP RUEHWEB

DE RUCNDT #2211/01 3382245
ZNR UUUUU ZZH
P 042245Z DEC 06
FM USMISSION USUN NEW YORK
TO RUEHC/SECSTATE WASHDC PRIORITY 0860
INFO RUEHKO/AMEMBASSY TOKYO PRIORITY 8248
RUEAWJB/DEPT OF JUSTICE WASHDC PRIORITY
UNCLAS USUN NEW YORK 002211 
 
SIPDIS 
 
SIPDIS 
 
FOR IO/UNP:CEDMONDSON AND L/DL:CLIGHT 
 
E.O. 12958: N/A 
TAGS: OFDP UN WE JA
SUBJECT: UN REITERATES PLEA FOR U.S. HELP TO RELEASE 
BLOCKED FUNDS 
 
REF: A. BROWN/WILCOX EMAIL--11/07/06 
     B. WILCOX/LIGHT/BROWN EMAIL--11/07/06 
     C. STATE 7911 
     D. BROWN/WILCOX/LIGHT EMAILS--10/19/06 
     E. WILCOX/EDMONDSON EMAIL--09/11/06 
     F. WILCOX/LIGHT EMAIL--07/06/06 
     G. LIGHT/WILCOX EMAIL--05/31/06 
     H. USUN 255 
 
1.  This is an action request.  Please see para 7. 
 
2.  On November 7 (refs A-B), the UN's Office of Legal 
Affairs (OLA) provided USUN with copies of correspondence 
between the UN Development Program (UNDP) and Bank Leumi, 
concerning UNDP's effort to secure the return of 
$1,842,543.50, which UNDP had tried to transfer to the 
Palestinian Economic Council for Development and 
Reconstruction (PECDAR) through Bank Leumi on July 5, 2005. 
In November 2005, UNDP requested U.S. assistance in securing 
the release of these funds, which the Bank of New York is 
holding in a non-interest bearing account pursuant to a 
judgment entered against the Palestinian Authority and the 
PLO.  The Japanese government provided these funds for two 
UNDP projects in the West Bank, and because the Bank of New 
York has frozen them, UNDP cannot use them for the 
humanitarian purposes for which the Japanese government 
provided them.  According to OLA, the Japanese government 
recently began pressuring UNDP to secure the return of the 
funds, suggesting that the delay in UNDP's implementation 
could call in question Japan's willingness to provide future 
donations. 
 
3.  In response to UNDP's request for U.S. assistance in 
securing the release of these funds and per ref C, USUN and L 
held a conference call with OLA on March 3, 2006, during 
which OLA was advised that the most expeditious way for UNDP 
to recover its funds would be to seek a refund from Bank 
Leumi.  (Note:  The transfer request document indicates that 
it is not valid after 180 days.  USUN advised OLA that 
because Bank Leumi did not successfully transfer the funds 
within 180 days, UNDP, as a depositor whose instructions were 
not carried out, should assert its legal right to the return 
of its funds.  End Note.)  OLA was also advised to consider 
hiring a lawyer in Israel to seek additional information on 
its remedies under Israeli law. 
 
4.  USUN followed up regularly with OLA by phone (refs D-G), 
and was told that OLA had advised UNDP to seek a remedy from 
Bank Leumi.  USUN asked OLA to provide us with copies of 
UNDP's correspondence with Bank Leumi so the United States 
could help if Bank Leumi declined UNDP's request for a refund. 
 
5.  On October 18, 2006, Bank Leumi declined UNDP's request, 
advising that the Bank of New York has blocked the transfers 
for two reasons:  (1) an interim order by a U.S. court that 
the funds should be held pending judgment; and (2) a block by 
the U.S. Department of Treasury's Office of Foreign Assets 
Control relating to PECDAR.  (Comment:  The UN has never 
asked USUN about the OFAC block to which the Bank of New York 
referred.  USUN understands that OFAC blocked funds of the 
Palestinian National Authority in April 2006; the Bank of New 
York's letter might have referred to that order.  End 
Comment.)  In discussions with OLA immediately thereafter, 
USUN expressed concern (per ref C-F) that UNDP's request to 
Bank Leumi did not pose the correct question and suggested 
that UNDP submit a revised request to Bank Leumi, 
articulating the correct legal basis for its request for a 
refund. 
 
6.  In a November 8 telcon, OLA renewed UNDP's request for 
U.S. assistance, arguing that UNDP's correspondence with Bank 
Leumi shows that Bank Leumi will not refund UNDP's money. 
Even though the text of UNDP's request to Bank Leumi does not 
specifically assert its legal rights as a depositor, OLA 
argued that having UNDP submit a revised request to Bank 
Leumi would be fruitless.  To seek to compel Bank Leumi to 
act, OLA said UNDP would have to initiate civil proceedings 
in Israel.  OLA reiterated its contention that the 
Headquarters Agreement obligates the United States to 
intervene either with the Bank of New York or with the 
appropriate U.S. court to secure the return of UNDP's funds. 
They acknowledged that another option would be for UNDP to 
sue Bank Leumi in Israel to recover its funds, but said that 
option would be time consuming and would not necessarily 
succeed. 
 
7.  During that conversation, USUN agreed to seek additional 
guidance from the Department.  Begin Action Request:  USUN 
seeks instructions from Department as to whether USUN should 
 
 
advise OLA again that UNDP should submit another written 
request to Bank Leumi, seeking return of its funds.  If that 
is still the recommended course of action, USUN suggests 
providing a draft text of the request that UNDP should send 
to Bank Leumi.  End Action Request. 
BOLTON