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OO RUEHWEB

DE RUEHTU #1135/01 3081613
ZNY CCCCC ZZH
O 031613Z NOV 08
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5710
INFO RUCNMGH/MAGHREB COLLECTIVE PRIORITY

C O N F I D E N T I A L TUNIS 001135 
 
SIPDIS 
 
E.O. 12958: DECL: 11/03/2018 
TAGS: ASCH PREL PGOV TS
SUBJECT: GOT QUESTIONS STATUS OF AMERICAN COMMMUNITY SCHOOL 
 
REF: TUNIS 1111 
 
Classified By: Ambassador Robert F. Godec, reason 1.4(B) 
and (d) 
 
 ¶1.  (SBU)  Summary:  The MFA held a surprise meeting on 
October 30 to review the status of the American Community 
School of Tunis (ACST).  In attendance were senior school and 
Embassy officials.  The Ministry wanted clarification for the 
basis of the school's existence in Tunis since 1959 since it 
did not fit under any current law.  A Ministry of Finance 
official stated that the school should be paying taxes on its 
"results" while declining to answer questions on the 
applicability to non-profit organizations.  He asked 
questions about required financial reports he said were 
missing and alleged that payroll tax receipts were unusually 
low.  The Ministry of Education representative stated that 
unless there is a bilateral agreement, the school is subject 
to Tunisian law, without explaining the ramifications of his 
statement.  A 1963 agreement which has been the de facto 
mechanism for the school's benefits does not in fact apply 
the GOT officials said.  Documents that partially address the 
school's status, including a MFA diplomatic note from late 
1983 that addresses the tax free status of the school's 
personnel, were reviewed.  The meeting closed with the Chief 
of Protocol stating that a period of reflection should be 
pursued by both sides to explore the status question.  The 
Ministry of Finance sent two officials the following day to 
the school to announce an audit of the school's payroll for 
the last ten years.  The Embassy is seeking to have that 
audit delayed on the grounds that the status issue has only 
just been raised.  End Summary. 
 
American School Officials Convoked to the MFA 
--------------------------------------------- 
 
¶2.  (SBU) Moncef Hajeri, Chief of Protocol at the Ministry of 
Foreign Affairs convoked Patrick Meyer, the Director of ACST, 
October 30 for a review of the school's legal and financial 
status.  A diplomatic note was sent mid-morning convoking 
Meyer the same afternoon.  At the meeting, Hajeri was 
accompanied by Lohai Samir (phonetic), Director General of 
Taxation in the Ministry of Finance, Mohamed Zoghlami 
(phonetic), Director General for Private Instruction in the 
Ministry of Education, MFA Director General for Legal Affairs 
Mondher Dheraief, and the MFA Director for the Americas, Ms. 
Holla Bachtobji.  Meyer was accompanied by Matthew Long, 
Chairman of the school's Board of Governors (and Embassy IO), 
Faouzi Ben Sedrine, ACST Business Manager, and the DCM. 
 
¶3.  (SBU) The unusual meeting (neither Meyer nor Ben Sedrine 
had ever been to the MFA) was opened by Hajeri, who said that 
the MFA and he personally had been reviewing the status of 
various institutions in Tunisia and that they were requesting 
any documents the school had permitting it to provide 
education in Tunisia; its overall legal and fiscal status; 
the status of its teachers and other personnel.  The purpose 
was neither a witch hunt nor intended to put into question 
the existence of the school.  Hajeri noted that many 
privileges accorded to the school were based on a cultural 
exchange agreement between the two countries from 1963 but 
that the school could not be covered in such an agreement 
since it was established in 1959.  Furthermore, the agreement 
made no specific reference to the school. 
 
¶4.  (SBU)  When asked why the sudden focus on ACST after 49 
years of operation, Hajeri responded that the fact that there 
had been no questions in the past did not mean there could 
not be now.  Hajeri claimed that the GOT was trying to model 
its practices after more advanced nations.  When asked 
whether the goal was to clarify existing practices and find a 
legal basis to continue them or to eliminate the benefits the 
school currently enjoys, Hajeri dodged the question by 
replying that governments only change things slowly. 
 
Ministry of Finance Alleges Improprieties 
----------------------------------------- 
 
¶5.  (SBU)  At this point, Samir began to allege improprieties 
by the school.  He said that the school has never paid taxes 
on its activities and that it should pay taxes on its 
"results".  School officials noted that the organization is a 
non-profit one and asked whether non-profit organizations 
were taxed.  Samir replied that "results" are taxed.  Asked 
whether there was a difference between a result and a profit, 
he replied that companies are subject to taxation.  Hajeri 
interjected that there is a difference between a profit and 
result but Samir gave no indication of agreement.  Samir 
further alleged that the total amount of withholding from 
salaries was insufficient compared to the payroll and that 
the school was failing to submit a required annual report on 
staff earnings.  Since the finance manager was not present, 
school representatives noted the questions, but were unable 
to answer in detail. 
 
¶6. (SBU)  Zoghlami said that Tunisian law had two categories 
for schools that do not teach the Tunisian curriculum. 
Either the school is covered by a bilateral agreement and 
subject to its terms or it is subject to Tunisian law.  He 
said that there was no bilateral agreement covering ACST and 
that the 1963 agreement did not cover the school.  He gave no 
indication as to the practical effect on the school that 
there was no bilateral agreement.  Dheraief followed by 
asking a series of questions about the school's structure, 
relationship to the Department of State and accreditation, 
which were factually answered. 
 
Both Sides Should Reflect on Status Issue 
----------------------------------------- 
 
¶7.  (SBU)  Hajeri closed the meeting by saying there should 
be a period of reflection by both sides and see what new 
information might be brought forward on the status issue.  In 
answer to a question, he said that creating some form of a 
bilateral agreement could be a possible solution to placing 
the school in a proper legal framework. 
 
Ministry of Finance Announces Audit the Next Day 
--------------------------------------------- --- 
 
¶8.  (SBU) Apparently not in agreement with Hajeri's closing 
comment, on October 31 the Ministry of Finance sent two 
officials to the school to deliver a letter announcing an 
audit on November 17 of the school's payroll for the last ten 
years.  The school has referred the letter to its attorney. 
 
Ministry of Finance Reportedly the Protagonist 
--------------------------------------------- - 
 
¶9.  (C) In a private discussion with the DCM, Hajeri said 
that the Ministry of Finance was behind the current push on 
status and that he did not know their motivation.  He claimed 
that a 1983 diplomatic note giving school employees tax 
exempt status should be sufficient with respect to tax 
issues, adding that the school had too many longstanding 
benefits for them all to be taken away.  The DCM followed up 
as well on the recent removal of police security from ACST. 
Hajeri had nothing new to add to the Foreign Minister's 
commitment to raise it with the Minister of the Interior 
(reftel). 
 
Next Steps 
---------- 
 
¶10.  (SBU)  We are now engaged in further research of the 
documents we have available on the history of ACST's presence 
and the benefits it currently receives.  We have record of an 
attempt to create a formal agreement on the school's status 
dating from late 2001, to which the GOT did not reply.  We 
believe it may be the appropriate time to resurrect that 
approach.  We are working with the Office of Overseas Schools 
and L on the matter.  In the meantime, we have asked the MFA 
to slow down the Ministry of Finance on the grounds that the 
discussion on status has just begun, and that not enough time 
has been given to address the question. 
 
 
GODEC