Cablegate: Bahraini Next Steps On Future Bank

VZCZCXRO1292
OO RUEHBC RUEHDE RUEHDIR RUEHKUK
DE RUEHMK #1016 3121018
ZNY CCCCC ZZH
O 081018Z NOV 07
FM AMEMBASSY MANAMA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7392
INFO RUCNIRA/IRAN COLLECTIVE IMMEDIATE
RHBVAKS/COMUSNAVCENT IMMEDIATE
RHMFISS/HQ USCENTCOM MACDILL AFB FL IMMEDIATE
RUEATRS/TREASURY WASHDC IMMEDIATE

C O N F I D E N T I A L MANAMA 001016

SIPDIS

SIPDIS

STATE FOR NEA/RA, EEB
STATE FOR T, ISN, EEB, NEA
TREASURY FOR U/S LEVEY

E.O. 12958: DECL: 11/08/2017
TAGS: PARM PREL MNUC KNNP EFIN ECON IR BA
SUBJECT: BAHRAINI NEXT STEPS ON FUTURE BANK
REF: A. MANAMA 1011
B. LEVEY - ERELI 11/06/07 TELCON
C. STATE 148605

Classified By: Ambassador Adam Ereli, reasons 1.4(b) and (d).

1.(C) Following up on Ref. B telcon, Ambassador briefed Minister of Finance Sheikh Ahmed Al Khalifa and Central Bank of Bahrain (CBB) Governor Rashid Al Miraj on November 7 regarding actions the USG believes are necessary in order to make Bahraini oversight of Future Bank consistent with the letter and spirit of relevant U.S. Executive Orders. Ambassador explained it was essential that the Government of Bahrain (GOB) take strong measures to ensure that the bank was neither controlled by Iranian entities or involved in transactions with Iran.

2.(C) Al Miraj said Bahrain shared U.S. concerns and would act swiftly. Future Bank is enjoined from engaging in any new business with Iran. It must report weekly to the CBB on all payments in and out of Future Bank. The CBB will appoint two independent members to Future Bank's Board of Directors, whose job it will be to oversee the bank's operations.

3.(C) Asked why they couldn't replace the entire Board with new Directors, as mentioned by the Minister of Finance (Ref. A), Al Miraj replied that the addition of the two new Directors accomplished the same purpose: it will mean that the CBB has control of the Board of Directors and it will effectively prevent Future Bank from having any dealings with Iran. As for decreasing Iranian ownership to below 50%, Al Miraj said it would be difficult to find investors, given the cloud Future Bank is under. He noted that Ahli United Bank, which holds a one-third stake in Future Bank, has had to create a blind trust since they could find no one interested in buying their shares. Ambassador told Al Miraj that we appreciated their prompt action and would check with Washington to see if these measures go far enough to satisfy U.S. concerns.

4.(C) Ahli United Bank CEO Adel El-Labban confirmed to Econoff November 7 that he had presented to the CBB a proposal to place his bank's Future Bank shares in blind trust. He was awaiting CBB approval, which Al Miraj had told him would soon be forthcoming. El-Labban also said he had presented Al Miraj with a report confirming that Ahli United had undertaken no new Iranian business. Ahli United's only exposure was loans that were being paid down. Once these were satisfied, his bank would have no Iranian business outstanding.

5.(C) Comment: While not as robust as the measures outlined earlier by the Finance Minister, Al Miraj was emphatic that these steps will give the CBB effective control over Future Bank and prevent any dealings with Iran or its agents. End comment. ********************************************* ******** Visit Embassy Manama's Classified Website: XXXXXXXXXXXX********************************************* ******** ERELI

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