US embassy cable - 04MANAMA138

C O N F I D E N T I A L MANAMA 000138 
 
SIPDIS 
 
DEPARTMENT FOR NEA/ARP, 
LONDON FOR ETHAN GOLDRICH, 
CAIRO FOR STEVE BONDY 
 
E.O. 12958: DECL: 01/27/2014 
TAGS: PGOV, PHUM, BA 
SUBJECT: PARLIAMENT FLEXES MUSCLE - INVESTIGATION INTO 
PENSION FUND IRREGULARITIES 
 
 
Classified By: Ambassador Ronald E. Neumann for reasons 1.4 (b) and (d) 
. 
 
1.  (C)  Summary.  Bahrain's first major parliamentary crisis 
has strengthened the Parliament but impressed only part of 
the electorate. After a recess the battle may resume.  We 
have pushed for and received assurances that the Parliament 
will continue.  End summary. 
 
2. (U)  Parliament's investigation into the alleged financial 
corruption of government-controlled pension funds has 
dominated Bahraini attention for the past three weeks. The 
initial findings of the investigation allege that the funds 
lost BD 750 million (USD 1.9 billion) in losses due to bad 
investments and financial and administrative mismanagement. 
The Parliamentary Investigative Committee demands that the 
GOB repay the lost funds, implement oversight and restructure 
the funds' boards.  It also demands that the GOB make its 
actions immediate. 
 
3.  (C)  Despite some of GOB misgivings, the Prime Minister 
publicly agreed to endorse the Committee's recommendations. 
Political insiders speculate that the Prime Minister's quick 
and public response to accept whatever the Committee 
recommended was a ploy to end the investigation. Speaker of 
the House Khalifa Ahmed Dhaharani publicly cautioned on 
January 20 that any further investigation of these funds will 
lead to a back lash and a suspension of Parliament. One 
political insider told the Ambassador on January 21 that the 
Ministers of Information, Cabinet Affairs, and Parliamentary 
Affairs privately put Dhahrani up to it. 
 
4.  (C)  Parliament will not be suspended.  The Ambassador 
asked for and got assurances on this point from the Crown 
Prince and three key ministers.  The King, aware of the 
conversations, emphasized to the Ambassador the "positive" 
value of the struggle. 
 
5.  (C)  Even if the GOB formally accepts the 
recommendations, the Parliament may not halt its pursuit of 
government officials.  On January 26, Committee Chair Fareed 
Ghazi Rafee told PolOff that the only way Parliament will 
gain credibility with the people is to force a Minister to 
resign.  Political observers around town are telling us that 
Minister of Finance and National Economy Abdulla Saif is most 
at risk of getting the axe.  When Saif appeared before the 
Investigative Committee he was nervous and evaded answering 
questions, according to Press, NGO representatives and 
businessmen who attended the January 14 session.  They 
commented that the Committee's grilling of Saif was intense. 
The King told the Ambassador on January 26 that the 
investigation was not conducted in an ideal manner, but 
Parliament as an institution must be allowed to develop. 
 
6.  (C)  COMMENT:  The GOSI investigation is a step forward 
for Parliament in terms of developing a more accountable 
government system.  Open discussion of financial scandal in 
the GOB is a unique event in Bahrain's history.  Some Embassy 
sources consider the investigation to be an improvement in 
the democratic development of Bahrain, especially if the GOB 
swiftly carries out the Committee's recommendations. 
However, some still remain ambivalent to the whole 
proceedings.  At a January 22 majlis, young Shi,a men told 
DCM that the Parliamentary maneuvers were only theater.  The 
battle between the GOB and the Parliament continues, 
especially now with the Investigative Committee planning to 
delve deeper into the public pension fund losses. Notably, 
Minister Saif is caught in the crosshairs.  A Cabinet contact 
told the Ambassador that no one will ultimately save Minister 
Saif if the Parliament really wants to go after him. Even 
some business contacts hope he goes.  Saif's removal might 
ultimately slow our bilateral FTA negotiations. END COMMENT. 
NEUMANN