US embassy cable - 04SANAA3130

C O N F I D E N T I A L SECTION 01 OF 02 SANAA 003130 
 
SIPDIS 
 
E.O. 12958: DECL: 12/14/2014 
TAGS: ECON, KCOR, PGOV, PINR, YM, ECON/COM 
SUBJECT: PROMINENT BUSINESS LEADER ON MINISTERIAL CORRUPTION 
 
 
Classified By: Ambassador Thomas C. Krajeski for reasons 1.4 (b and d). 
 
 1. (C) Summary.  Pol/Econ Deputy had a wide ranging 
discussion with Abdul Wahab Thabet, Chairmen of the Thabet 
brothers, the second largest company in Yemen.  Thabet 
vigorously criticized three of the most powerful ROYG 
ministers for corruption, and stated that on economics 
President Saleh, "doesn't get it."  Thabet was very 
forthcoming on corruption problems, and said that opposition 
to economic reform will cease if the ROYG made real progress 
on corruption and administrative reforms.  End summary. 
 
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Minister of Finance: The Biggest Obstacle to Change 
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2. (C) According to Thabet, Deputy Prime Minister and 
Minister of Finance al-Salami represents the biggest obstacle 
to economic reform and real progress on tackling corruption. 
Thabet explained that attempts by the Central Bank to 
reorganize are thwarted by the Minister of Finance.  Salami, 
he said, also forced out the former Customs Chairman Hafedh 
Mayed for trying to reduce tariffs, particularly on cars. 
The new customs chairman, Dr. Zobaidi Thabet is, according to 
Thabet, "worthless and not focused on stopping smuggling." 
And in any case, questioned Thabet, is it really smuggling if 
the government officially allows it to happen?" Thabet 
thought it unlikely that Salami was on his way out, but 
removing him is the only way to affect real change in Yemen. 
(Comment: Salami is likely going nowhere except perhaps up, 
although his departure would signal a sea-change in Yemen 
economic development.  End comment.) 
 
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Prime Minister Ba Jammal -- "Useless" 
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3. (C) Characterizing Prime Minister Ba Jammal as "useless," 
Thabet said he was supposed to be out two months ago.  (Note: 
Ba Jammal's rumored departure is talked about openly in all 
circles and most interlocutors report that it is only a 
matter of time. End note.)  When queried about possible 
successors, Thabet dismissed rumors that Deputy Prime 
Minister and Minister of Planning Ahmed Sofan may take the 
PM's place.  According to Thabet, the most commonly mentioned 
candidate is Sanaa University Rector Salah Ba Surah, whom 
Thabet dismissed as "incompetent."  He noted that the third 
rumored successor, Aden Governor Shuaibi, should not be 
elevated to PM because Aden Governorate was the "size of a 
job he can handle." Thabet said that several businessmen are 
lobbying for Foreign Minister Qirbi to take over as PM. 
(Comment: Qirbi as PM would change the post-unification 
tradition of having a PM from the South.  Thabet said that 
Qirbi being from the al-Bayda region -- on the border -- 
would likely be acceptable for both Southerners and 
Northerners.  End comment.) 
 
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Sofan Involved with Aden Port Tender Mismanagement 
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4. (C) Claiming that Sofan is all talk and short on 
follow-through, Thabet complained that while he may be the 
darling of some Western officials, in his opinion he was part 
of the problem.  Thabet claimed that Sofan and PM Ba Jammal 
are in cahoots, interfering with transparancy efforts in the 
tender process for the Port of Aden.  Thabet said that under 
the auspices of the Rotterdam Management Group, several 
companies were short-listed for the tender to operate the 
Port -- Dubai and Hutchison Whampoa were the leading 
contenders.   According to Thabet, Sofan and Ba Jammal 
convinced the tendering board to approve all 13 bidding 
companies for final review, including their own company, the 
former operator of the Port, which has been roundly 
criticized as inept and corrupt.  Thabet implied that Sofan 
and Ba Jammal's company may win the contract.  (Comment: 
Specific accusations aside, Post assesses this to be an 
accurate accounting of the corrupt tendering process and 
notes that it is common for Ministers to ensure their own 
companies win lucrative tenders. End Comment) 
 
5. (C) Thabet appealed for the embassy to lobby for a clean, 
transparent process and said that he along with his brother, 
a prominent MP, plan to  seek an audience with the President 
urging him to consider the Hutchison Whampoa group. (Note: 
The Thabets who are heavily involved in marine businesses 
would probably benefit from Hutchison. End Note.) 
 
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On Economic Reform -- Where's the Money Going? 
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5. (C) In Thabet's analysis, no one at the top really 
understands the changes needed for necessary economic 
reforms.  On a positive note, Thabet noted that Saleh 
recently announced the creation of a committee to investigate 
diesel smuggling (septel), but remarked that the last time 
someone was fired for corruption, he was promoted to a higher 
position a week later.  Thabet said he and other members of 
the Chamber of Commerce would stop opposing economic reforms 
if the government could clearly account for where the money 
that would be saved by ending subsidies would be spent -- how 
would it benefit the Yemeni people. 
 
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President Saleh -- The Old Man Doesn't Get It 
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6. (C) In response to the question, "who understands the 
economic situation?" Thabet relied, "The old man doesn't get 
it, and the people around him feed him bad information." 
Complaining that the President is more and more inconsistent 
in his speeches, Thabet said recent attempts by the Saleh to 
combat corruption are laughed off by most observers.  Thabet 
said only the US, UK and EU donor nations were capable of 
convincing Saleh of the need for economic reforms.  "Maybe 
the old man will listen," said Thabet, "athough he only 
understands tribal and security issues." Thabet confided that 
he could think of only two potentially honest brokers, 
Minister of Labor Affairs and Social Fund Director Arahabi, 
and former Minister of Oil and Minister of Finance al-Wajih. 
 
7. (C) Comment. Thabet is a long-time Embassy interlocutor 
whose frustration is clearly mounting along with negative 
economic indicators and growing corruption.  Thabet is not 
the first to point to the inability of the senior ROYG 
leadership to get through to Saleh on dire economic trends. 
Securing a viable international operator for the Port of Aden 
is one of the few hopes for Yemen's economy.  If Thabet's 
allegations surrounding the Port of Aden contract are true, 
the ROYG will be missing a rare opportunity to bring in much 
needed direct foreign investment into Yemen. 
 
8.  Comment Continued.  At a dinner meeting with MOPIC 
Minister Sofan and visiting MCC threshold team, Ambassador 
told Sofan that donor countries and the international 
business community would closely watch the Aden Port tender. 
It was very important for Yemen's reputation, Ambassador told 
the Minister, that the process be transparent, fair, and 
result in award of the contract to a reputable company. 
Sofan agreed completely but confirmed that the tender 
committee would consider all bidders, there is no shortlist. 
End Comment. 
KRAJESKI