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Cablegate: Citibank Recovers Its Usd 7 Million Transaction

VZCZCXRO0400
OO RUEHROV RUEHTRO
DE RUEHKH #1158/01 2880733
ZNR UUUUU ZZH
O 150733Z OCT 09
FM AMEMBASSY KHARTOUM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4559
INFO RUCNIAD/IGAD COLLECTIVE
RUEHGG/UN SECURITY COUNCIL COLLECTIVE
RHMFISS/CJTF HOA

UNCLAS SECTION 01 OF 02 KHARTOUM 001158

NSC FOR MGAVIN, LETIM
DEPT PLS PASS USAID FOR AFR/SUDAN
ADDIS ABABA ALSO FOR USAU

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL SU
SUBJECT: CITIBANK RECOVERS ITS USD 7 MILLION TRANSACTION

REF: KHARTOUM 1072

1.(SBU) SUMMARY: On September 30, the Government of Southern Sudan
(GoSS) returned to Citibank the USD 7 million dollars of funds it
had impounded on September 9. The shipment had been intended to pay
salaries for United Nations - African Union Mission in Darfur
(UNAMID) peacekeepers (reftel). Through the active engagement of
Special Envoy (SE) for Sudan General Scott Gration, Charge
d'Affaires (CDA) Whitehead and S/CRS Active Response Corps detailee
Ged Smith, the funds were returned on the eve of the arrival of a
Citibank team to Juba. This allowed the latter to re-direct its
focus from cash recovery to demonstrating Citibank's long-term
commitment to doing business in Southern Sudan. The GoSS responded
positively to Citibank's initiative and raised several possible
business opportunities for the bank's consideration. If these
initiatives are successful, Citibank could be positioned to become
the primary international bank for Southern Sudan, providing
financial services to its government, the United Mission in Sudan
(UNMIS), NGOs, and the private sector. End summary.

--------------------------------------------- -----
HAPPY ENDING TO A COMMERCIAL TRANSACTION GONE AWRY
--------------------------------------------- -----

2. (SBU) On September 9, Citibank, as agent bank for UNAMID, shipped
USD 7 million in cash out of Nairobi, Kenya, to pay the salaries of
UN peacekeepers in several Darfur locations. When the pilot made an
unscheduled stop to re-fuel in Wau, Southern Sudan, agents from
Southern Sudan's Ministry of Internal Affairs (MoIA) arrested the
flight crew and seized the USD 7 million - alleging possible
involvement in illicit arms procurement. Strenuous protests by
UNMIS and Citibank resulted in the release of the plane and flight
crew within a few days; but the cash was impounded by GoSS officials
in the vaults of the Bank of Southern Sudan (BoSS).

3. (SBU) The Office of the Special Envoy for Sudan (S/USSES), the
U.S. Embassy and Citibank began a vigorous campaign to get the GoSS
to release the funds. CDA Whitehead raised the issue directly with
the GoSS Minister of Finance Deng and GoSS Vice President Machar.
Ged Smith, the Treasury Department's S/CRS - Active Corps
representative in Juba represented the US Consulate at meetings with
BoSS and GoSS officials. The CDA and Smith made it clear that
Citibank was one of the few international banks that had shown an
interest in doing business in Southern Sudan. The GoSS's delay in
returning the money would have negative repercussions not only for
Citibank's willingness to work in Southern Sudan but also that of
other international corporations. Smith pointed out in his meetings
that Citibank had met all regulations for importing the funds into
Sudan through filing documents with the Central Bank of Sudan (CBoS)
in Khartoum. It had been only the unscheduled landing in Wau that
had arguably been an infraction of Southern Sudan's cash importation
rules.

4. (SBU) S/USSES, working with OFAC, drafted a letter from SE
Gration to GoSS President Salva Kiir stating that no U.S. sanctions
regulations had been broken by the transfer. Consulate Juba
delivered this letter to President Kiir's office. A second letter
signed by Treasury Advisor Smith was given by the CDA to Finance
Minister Deng. As a result, on September 30 the money was released
via an electronic transfer from BoSS to Citibank in Nairobi.

-----------------------------------
VISIT OF THE CITIBANK TEAM PROCEEDS
-----------------------------------

5. (SBU) Despite resolution of the commercial transfer issue,
Citibank decided it was still important to send a senior-level
delegation to Juba. The latter was led by Kevin Fitzgerald,
Washington-based Managing Director for North America Public Service
Sector and regional Citibank officials from Nairobi and
Johannesburg. Acting CDA Mark Asquino and Consul General Ava Rogers
accompanied Fitzgerald and his team to meetings with BoSS and GoSS.
During the meetings, Fitzgerald underscored that Citibank wanted to
avoid transaction problems in the future, and that it was interested
in exploring the eventual provision of comprehensive banking
services in Southern Sudan. During the team's initial meeting with
BoSS, some of the latter's officials complained that Citibank had
"failed" to open a branch in Juba, and instead was working through
Kenya Commercial Bank for the time being. However, during a follow
up meeting, the BoSS director of Banking Operations and Foreign
Exchange asked that Citibank provide BoSS with USD cash deliveries.
As the two sides discussed BoSS cash delivery needs, it became clear
the latter were similar to those of the UN. On this basis, Citibank
asked if BoSS would object to its combining the UN and BoSS
shipments, as there would be a savings of having both shipments
flown into Juba on the same airplane. BoSS responded that this was

KHARTOUM 00001158 002 OF 002


a good idea, especially if logistics costs would be reduced.

6. (SBU) Accompanied by CG Rogers, the Citibank team's final meeting
was with Luka Biong Deng, GoSS Minister of Presidential Affairs.
The Minister said that despite the recent transaction problem, GoSS
still viewed Citibank as having the potential to become Southern
Sudan's primary international bank. He added that there was not
only the prospect of BoSS business, but also additional
opportunities for Citibank to work with Multi-Donor Trust Funds
(MDTF) and other funding vehicles that would be needed if Southern
Sudan became independent.

7. (SBU) Comment: Citibank's willingness to engage with the BoSS and
GoSS after resolution of the seizure of the 7 million dollar
shipment bodes well for the bank having a future role in Southern
Sudan. The GoSS's positive response to Citibank's initiative could
result in Citibank emerging as the primary international bank for
Southern Sudan.

WHITEHEAD

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