From: <a href="http://www.aftenposten.no/spesial/wikileaksdokumenter/article3990373.ece">Aftenposten</a><br>
Date: 29.06.2006
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C O N F I D E N T I A L TUNIS 001630 SIPDIS NOFORN SIPDIS
STATE FOR NEA/MAG - HARRIS STATE PLEASE PASS USTR - BELL USDOC
FOR CLDP - TEJTEL AND ITA/MAC/ONE (NMASON) E.O. 12958: DECL:
06/28/2016 TAGS: PREL, ECON, PGOV, EFIN, ETRD, EINV, TS
SUBJECT: CORRUPTION IN TUNISIA PART II: THE ANATOMY OF EXPLOITATION
REF: TUNIS 1622
Classified By: AMBASSADOR WILLIAM HUDSON FOR REASONS 1.4 (b) AND (d)

1. (C) SUMMARY: This is the second of a four cable series on
corruptions impact on the Tunisian economy and Tunisias
political future. Despite the Tunisian economys success,
Tunisians increasingly complain about corruptions negative
impact. Traditional corruption and bribery exists in Tunisia
as elsewhere in the world, but most complaints focus
specifically on the disproportionate power and influence
wielded by a few elites, chief among them Tunisias First
Family: President Ben Ali, wife Leila (Trabelsi) Ben Ali and
their extended clan. While the extent of this corruption is
rumored to encompass all the major sectors of the economy and
is impossible to accurately measure, the domestic frustration
the subject generates is perhaps more significant than the
facts on the ground. Part two of this series addresses how
corruption has manifested itself in the Tunisian context. END
SUMMARY.

CATEGORIES OF CORRUPTION
------------------------

2. (C) SIMPLE: There are four main categories of corruption in
Tunisia. First, there is basic bribery and extortion, which
most commonly is seen among the police and security forces.
Tunisias "police state" image includes a policeman on nearly
every corner, whose main job appears to be checking car
paperwork, identification cards and generally intimidating
citizens. Any infraction can result in the seizure of ones
documents, which requires hours of subsequent bureaucratic red
tape to resolve. Thus, for a small fee, one can avoid any
potential negative consequence of the stop and proceed
normally. Given the low salaries paid to police officials
(approximately TD 300/USD 230 per month), it is no surprise
this has become increasingly widespread as civil servants try
to cope with a rising cost of living. However, this type of
simple corruption has yet to become a phenomenon in Tunisia.

3. (C) BUREAUCRATIC: This type of corruption is the main
target of GOT efforts to investigate, convict and punish
offenders. Usually identified among mid-level civil servants,
this type of corruption can involve everything from bribes
paid to "experts" who provide evidence in court cases to
siphoning from government accounts. For example, one FSN
reported that he had to bribe a series of experts to conduct
the property assessments needed to finalize the inheritance
issues related to his fathers death. He believed that without
bribes, the case could have dragged on unresolved for years.
Investigated by the Tunisian equivalent of the U.S. Government
Accountability Office, such cases - when identified -
typically result in conviction and punishment. However, the
fact that only mid-level officials ever seem to be
investigated leads many to assume that this system is simply
designed as a bureaucratic facade. The GOT can claim to take
anti-corruption steps without addressing the major corruption
that causes economic distortion. Meanwhile, Tunisians
increasingly feel this type of corruption is pervasive, and
that only by manipulating the system or bribing an official,
can they obtain the desired result.

4. (C) INFLUENCIAL: While the first two categories of
corruption are widely accepted as present in Tunisia by the
GOT, which has developed control mechanisms to contain them,
the third type is not publicly addressed, as it involves more
senior government officials such as ministers. Generally, this
type of corruption involves the misuse of official government
entitlements for personal benefit. For example, some military
officials who receive government cars and drivers are rumored
to use this transportation to take their children to school or
go to the beach on the weekend. Ministers are also believed to
utilize their name and influence in order to purchase
government property at discounted prices. Further, it is
assumed that ministers utilize influence and information to
ensure business contacts -- including family and friends --
have inside details on government contracts, which lead to
profitable kickbacks. Regardless of the extent of this type of
corruption, Tunisians generally consider such officials
technocrats more than politicians. Thus, few complain
significantly about this phenomenon although many wish a
stronger system of checks and balances existed to root it out.

5. (C/NF) FIRST FAMILY: The last type of corruption is that
about which Tunisians from all strata of society are
complaining: President Ben Ali and his familys exploitation of
the Tunisian economy for personal gain. Despite increasingly
liberal economic legislation, all key decisions, especially
related to investment and privatization, are made at the
highest levels of the government -- probably by the President
himself. This arrangement has permitted President Ben Alis
extended family (siblings, in-laws, and distant relatives) to
become aware of, to assert interests in, and to carve out
domains in virtually every important sector of the Tunisian
economy. This dominance leads Tunisian public perception to
believe that connections to the First Family (if not outright
partnership with them) are essential for businesses of any
significant size to survive. Worse, people are now convinced
that the First Family is an insatiable economic animal bent on
gratuitous enrichment and unchecked influence-wielding.

THE FAMILY BUSINESS
-------------------

6. (C/NF) The Familys interests are rumored to extend to
virtually every corner of the economy from information and
communication technology, to manufacturing, retail,
transportation, tourism, banking, and agriculture and food
processing. The EU ambassador to Tunisia notes that foreign
direct investment has stalled in recent years due largely to
perceptions that "political control has grown to such a level
that all goes up to Carthage (the Presidential Palace) for
decision." He added that the family uses tactics such as
"compulsory partnerships," and that he has heard "countless
examples of threats (to extort) when companies are get too big
or become too successful," which further limits economic
growth and entrepreneurial activity for fear of attracting the
first familys attention.

7. (C/NF) Every Tunisian seems to have an account of how the
Trabelsi or Ben Ali clan has intimidated legitimate
businessmen or manipulated regulations for its own benefit. A
local journalist told Poloff that a government office for real
estate was opened on a Sunday so no one would see property
registered in the name of Ben Alis son. The journalist also
reported laws are being altered to allow a son-in-law to gain
control of a major commercial port. (NOTE: A detailed list of
family members and their alleged business holdings will be
reported in part four of this series. END NOTE.) Political
connections are also believed to be behind the circumvention
of investment policies regulating French mega-distributor
Carrefours entrance in the market. Another son-in-law is
rumored to have assisted Carrefours launch of the first
international franchise operation here, enriching first family
members in the process through ownership stakes.

8. (C/NF) These tactics have also negatively impacted U.S.
investment -- the prime example of which is McDonalds
unsuccessful seven-year effort to invest in Tunisia in the
1990s. McDonalds undertook lengthy market research, obtained
necessary licenses and real estate leases, entered commercial
agreements, secured a local partner, and established necessary
product supply chains. Their investment, however, was scuttled
by a last minute intervention by First Family personalities
who reportedly told McDonalds representatives that "they had
chosen the wrong partner." The implication was clear: either
get the "right" partner or face the consequences: McDonalds
chose to pull out completely at great cost. Tunisian business
contacts decry the McDonalds case as a black mark on Tunisia,s
international investment reputation, as it indicates Tunisia
does not play fairly or always act rationally. This example is
also frequently related to illustrate the First Familys
tactics and ultimate influence.

HOW ITS RUN
------------

9. (C/NF) While widespread, such rumors of coercion or
extortion may be overblown, in part due to tight control over
Tunisias media that prevents public airing of corruption or
improper influence. The editor of XXXXX
paper cannot report on the corruption issue
without documentary evidence that would stand up in the
Tunisian legal system. Regardless of the rumors, Ben Ali and
his family have clearly benefited from their unique access to
key business and economic information. In fact, it appears
that the link between state-managed growth programs and
personal interests have overlapped in the form of
privatization. A main driver of the Tunisian economy,
privatization and liberalization plans that were launched in
the 1990s seem to have also directly enriched the Ben Ali
clan. The family is believed to have gained control of several
key industries through privatization, and has also benefited
from GOT efforts to encourage competition. For example, Leila
Ben Alis brother successfully launched a new airline Karthago,
in part due to GOT privatization incentives. Lucrative
charters that state-owned Tunisair had previously operated
were transferred to Karthago, which also borrows Tunisair
planes when needed.

10. (C/NF) The family further benefits from a general lack of
transparency in the Tunisian economy. Zoning laws have
allegedly been manipulated to allow family members and other
insiders to buy agricultural lands at low prices before
developing the land as profitable commercial or residential
real estate. Tunisians allege that Ben Alis relatives have
also exploited the parallel market, illegally importing
everything from cars to electronic goods. The weak financial
system has also been manipulated. One local financial expert
blames the Family for chronic banking sector woes due to the
great percentage of non-performing loans issued through crony
connections, and has essentially paralyzed banking authorities
from genuine recovery efforts.

FIGHTING BACK
-------------

11. (C/NF) While every Tunisian seems to have a story about
how Ben Alis family has exploited Tunisias economy for its own
benefit, some have successfully protected their business
interests from family interference. Senior officials from
Tunisiana, the profitable private mobile phone services
company, report no one has ever contacted them about giving
the Family a cut of their business. A local shipping magnate
says shipping is "too complicated" for the First Family, which
has never suggested they wanted in on her successful
operations. (COMMENT: Nonetheless, this businesswoman was
approached for a donation to a Leila Ben Ali-associated
charity. When she declined, her firm was subject to a "random"
state audit that ended when she wrote a laudatory press
article about the President. END COMMENT.) A Tunisia-based
regional advertising firm reports that, although it has faced
pressure from Ben Alis relations, the firm has simply refused
to be cowed. Thus, like all types of corruption in Tunisia, it
remains unclear how much of the phenomenon is exacerbated by
fearful businesses giving in to extortionary tactics. One
businessman who has gone head to head with the Trabelsis on
two occasions XXXXX says, "We are a
nation of ten million cowards. You have to stand up. If you
do, they will move on to an easier target."

12. (C/NF) COMMENT: The extent to which the President
personally benefits from his own economic activities or those
of other family members remains unclear. One European
ambassador reports that seven employees manage Ben Alis
investments in that country alone. Contacts have conflicting
reports - some believe nothing happens without his knowledge,
others say his family and advisors hide their corruption from
him. Whatever the case, Tunisians now ruefully comment that if
first president Habib Bourguiba thought he was the "father" of
Tunisia, Ben Ali acts like its "owner". The political
implications of this impression will be reported in part three
of this series. END COMMENT.

HUDSON
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