US embassy cable - 04MANAMA200

C O N F I D E N T I A L SECTION 01 OF 02 MANAMA 000200 
 
SIPDIS 
 
DEPARTMENT FOR NEA/ARP, 
CAIRO FOR STEVE BONDY, 
LONDON FOR ETHAN GOLDRICH 
 
E.O. 12958: DECL: 02/11/2014 
TAGS: PGOV, PHUM, ELAB, BA 
SUBJECT: GOB'S RESPONSE TO PENSION FUND SCANDAL 
 
REF: MANAMA 138 
 
Classified By: By CDA Robert S. Ford for reasons 
1.4 (b) and (d). 
 
1.  (C) SUMMARY.  Although the GOB responded swiftly to 
Parliament,s recommendations to rectify pension fund 
irregularities (see reftel), Parliamentary members still 
insist the GOB has not done enough and continue to call for 
legal action against the ministers involved. In addition, 
labor federation leaders condemn the GOB's actions amending 
pension fund laws without the federation's input.  With 
Parliamentarians perceiving that the public will not take the 
National Assembly seriously unless it removes a minister from 
office, we expect the Parliament to question the ministers 
with the objective of voting at least one out of office. END 
SUMMARY. 
 
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CHANGES TO PENSION FUND MANAGEMENT 
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2.    (U) According to press reports, at the February 8 
Cabinet meeting, the Prime Minister announced major policy 
changes to guarantee independence of Bahrain,s two pension 
funds to improve both their efficiency and performance.  The 
Minister of Labor and Social Affairs and the Minister of 
Finance and National Economy will no longer manage the 
pension funds.  Instead, the Prime Minister plans to appoint 
personally new directors-general for both funds and to 
reorganize the GOSI pension fund board to consist of 15 
members; five representatives from the government, five from 
employers, and five highly experienced and qualified 
individuals registered with the funds.  Other GOSI management 
changes include shortening term appointments for auditors, 
director-generals and board members.  The Cabinet also 
amended the laws regulating the Public Fund Commission (PFC), 
separating its finances from the GOB,s general budget and 
appointing military sector representatives, financial 
experts, and auditors to the PFC board. 
 
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LABOR AND PARLIAMENTARY REACTION TO GOB'S ACTIONS 
--------------------------------------------- ---- 
 
3.    (U) Council of Representatives (COR) First Deputy 
Chairman Abdulhadi Marhoon commented to the press that the 
Cabinet,s actions concerning the pension funds should not 
obscure the Investigative Committee,s primary recommendation 
to hold the three ministers responsible for their violations. 
 On February 9, Investigative Committee Chairman Fareed Ghazi 
told the press that he viewed the Cabinet,s response as a 
step in the right direction but concurred with MP Marhoon 
that it was "unsatisfactory to the public which expects a 
ministerial change.8 
 
4.  (U)  Anticipating the labor federation's reaction to the 
Cabinet's actions, in a public statement COR member Abdulnabi 
Salman suggested on February 9, that employees representative 
to the GOSI board should be elected through the General 
Federation of Bahraini Workers (GFBW) instead of appointed by 
the Prime Minister.  That same day, the GFBW publicly 
condemned the Cabinet for amending the PFC laws without its 
consultation, citing Article 8 of the Labor Law giving the 
labor federation the right to represent workers in all 
committee and councils concerning labor and labor issues. 
 
5.  (C)  A Shi'a Parliamentarian told the CDA that the COR 
would certainly question the three ministers.  There was a 
strong push among nearly all members to do so.  He thought 
the Ministers would be called in when the National Assembly 
reconvenes in March. 
 
6.  (C) COMMENT.  Public opinion regarding the government,s 
response to the investigation has been a mixed bag.  Some 
consider the GOB,s response to be a genuine desire to 
rectify the irregularities.  Others are more skeptical that 
officials are exchanging one set of poor managers for another 
that is personally appointed by the Prime Minister.  In its 
haste, the Cabinet's actions appears to have ignored 
established labor laws (see para. 4), furthering the opinion 
that the Prime Minister is just shuffling the deck.  This 
scandal is the first true test of Parliament's ability to 
hold government accountable.  Key members of the Parliament 
believe that the majority of Bahrainis will not take the 
National Assembly seriously unless they "get a minister."  We 
expect the Parliament to question the ministers, the first 
constitutional step leading to a vote of no confidence. END 
COMMENT. 
FORD