Cablegate: Argentines Not Shocked There's Corruption Going

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PP RUEHWEB

DE RUEHBU #1742/01 3581927
ZNR UUUUU ZZH
P 231927Z DEC 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC PRIORITY 2764
INFO RUCNMER/MERCOSUR COLLECTIVE
RUEHRL/AMEMBASSY BERLIN 1171
RUEHCV/AMEMBASSY CARACAS 1916
RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC
RHMFIUU/DEPT OF JUSTICE WASHINGTON DC
RUEHUNV/USMISSION UNVIE VIENNA 0215
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS BUENOS AIRES 001742

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV KCOR PREL EFIN AR
SUBJECT: ARGENTINES NOT SHOCKED THERE'S CORRUPTION GOING
ON: MUTED REACTION TO SIEMENS REVELATIONS

REF: BUENOS AIRES 1164

1. (SBU) Summary: German company Siemens' December 15 guilty

plea with the U.S. Department of Justice-Fraud Section, over

corrupt practices, including payments of bribes to officials

in previous Argentine governments, has provoked sustained

attention in the Argentine press but no major reaction from

government or from the public. Argentine federal prosecuting

judge Ariel Lijo, in charge of the Argentine investigation of

Siemens, contacted DOJ Attorney at post December 22 to

request assistance, but has no plans to travel to the United

States. He said he would travel to Germany to collect

evidence. Although the GOA initially was moderately

concerned that the Siemens plea agreement suggested

continuing payments to GOA officials through 2007 -- thus

potentially implicating the 2003-2007 government of President

Cristina Fernandez de Kirchner's (CFK) husband, Nestor

Kirchner -- press reports of a December 17 letter from the

local Siemens affiliate to the GOA denying any payments under

the Kirchner governments appear to have assuaged that

concern. Although the CFK government appears not to have any

problems with evidence surfacing of Menem-era corruption, it

may not make too much hay out of this guilty plea for fear of

eliciting calls for similar degrees of transparency and

investigation into more recent government deals. End Summary.

2. (SBU) The December 15 announcement of a guilty plea by

German company Siemens under the U.S. Foreign Corrupt

Practices Act, as well as revelations from the related case

in Germany, have attracted sustained press attention in

Argentina. The media have drawn obvious conclusions from the

reports' identification of bribe recipients by initials and

titles to tag former President Carlos Menem, his Interior

Minister Carlos Corach, and Immigration Director Hugo Franco

as recipients of millions of dollars in bribes paid by

Siemens to win a bloated $1.2 billion 1998 contract to issue

high-tech national identity cards to all Argentines. In

addition, press has focused on the possibility of bribes paid

to officials in the subsequent de la Rua government, when the

discredited Siemens contract was renegotiated before

eventually being rescinded.

3. (SBU) The government of President Cristina Feranandez de

Kirchner (CFK) reportedly took issue at first with the plea

agreement's language of bribes and other illicit activities

by Siemens extending from 1998 to 2007, which suggested at

least illicit activities under the government of CFK's

husband, former President Nestor Kirchner (NK, 2003-2007).

USG sources quoted by the local press, however, indicated

that no government officials in the Nestor Kirchner or

Cristina Fernandez de Kirchner administrations had been

implicated. On December 17, the President of Siemens

Argentina, Enrique Antonio Genzone, was reported by the press

(La Nacion, December 18) to have written to CFK Minister of

Planning Julio de Vido to report that the bribes occurred

""only under the Menem government,"" or ""not since 2003"" (a

""clarification"" that contains an apparent contradiction

regarding the 1999-2001 de la Rua government). Siemens took

out a full-page ad in major Argentine newspapers over the

weekend of December 20 to repeat its statement that neither

Kirchner government was involved in the corruption.

Requests for Assistance

-----------------------

4. (U) Argentine press have drawn attention to a reported

provision of the U.S. plea agreement that requires Siemens to

fully cooperate with foreign governments investigating the

cases of corruption affecting them. This was described as an

""open door"" and an unprecedented opportunity for Argentina to

investigate local corrupt practices, with some questioning of

whether the GOA was responding with enough energy to the case.

5. (SBU) Embassy has received two GOA approaches about

possible requests for assistance under our Mutual Legal

Assistance Treaty (MLAT). First, officials from the Ministry

of Justice's Anti-Corruption Office contacted Legat on

December 19 to request assistance in obtaining the plea

agreement, and in particular confirmation of the names of

those referred to by their initials and title as well as

details on evidence that the bribes were paid. On December

22, federal investigating judge Ariel Lijo contacted DOJ

Attorney at Post to request help in obtaining a certified

copy of the complaint against Siemens and the plea agreement.

In addition, he requested help obtaining the German audit of

Siemens. DOJ Attorney at Post is working with DOJ

prosecutors on Lijo's request for the U.S. public documents

and inquiring regarding the availability, through U.S.

channels, of the German audit.

Denials

-------

6. (U) After a day of silence, former President Carlos Menem

issued a denial that he had accepted any bribes, calling the

allegations ""malicious."" Officials in the de la Rua

administration have engaged in a more robust bout of

finger-pointing, arguing over who was responsible for

considering a renegotiation of the Siemens contract even

after official reports of irregularities had been issued by

the semi-autonomous GAO-equivalent Sindicatura General de la

Nacion (SIGEN).

A Good Fit with the Kirchner Narrative, But...

--------------------------------------------- -

7. (SBU) Comment: Generally, the Siemens revelations fit

well with the Kirchner narrative that former President Carlos

Menem's march to privatize the economy was a process larded

with corrupt deals. The detailed and convincing charges now

leveled against Menem and his associates offer something more

concrete than Argentine justice has been able to produce to

date. This may also play out in Argentina's favor in the

realm of investment disputes, given that the CFK government

has sought to annul the February 2007 ICSID ruling that

awarded Siemens $217.8 million for the GoA's 2001

cancellation of the identity card project. (The ICSID

arbitral panel ruled that the de la Rua government decision

to rescind the identify card contract was a breach of

contract under the Argentina-Germany Bilateral Investment

Treaty. See reftel for background.)

8. (SBU) Comment continued: Still, the CFK administration may

be reluctant to make too much of the case given widespread

suspicions that all is not entirely right in the current (and

previous) government's public licitation processes. Official

corruption in Argentina is not the province of one former

government or one wing of the Peronists, and too much

attention to the Siemens case, it may be feared, might

encourage the public to demand even greater and broader

scrutiny to contracts. We can't help but note to ourselves

that the DOJ and SEC pursuit of Siemens (by implicating

Kirchner opponent Menem rather than a Kirchner official)

serendipitously undermines the Kirchner assertions of a vast

USG conspiracy against them.

WAYNE

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