US embassy cable - 03OTTAWA1857

UNCLAS OTTAWA 001857 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EB/ESC/ESP (GLASS), S/CT (FOX), IO/PHO (PEREZ), 
AND WHA/CAN 
TREASURY FOR GENERAL COUNSEL (DAVID AUFHAUSER), OFAC 
DIRECTOR (NEWCOMB), TREASURY DAS FOR TERRORISM (ZARATE), 
AND TREASURY TASK FORCE ON TERRORIST FINANCING 
NSC FOR PETERS 
 
E.O. 12958: N/A 
TAGS: ETTC, EFIN, PTER, PREL, CVIS, KVPR, CA, UNSC, Iraq, Terrorist Finance 
SUBJECT: TERRORIST FINANCE - OTTAWA: TREASURY LETTER ON 
IRAQI ASSETS 
 
REF: STATE 186972 
 
1.  (SBU) Summary:  The GOC has received reftel letter and is 
exploring the legal procedures necessary to complete transfer 
of assets to the Iraqi government in compliance with the 
expected notification from the UN 661 Committee.  The frozen 
Iraqi government assets are held by banks, and the GOC does 
not know details of ownership or number of accounts.  The 
Department of Foreign Affairs raised the possibility that the 
GOI might want to keep the C$20,000 in Canada to cover costs 
related to its missions here.  End summary. 
 
2.  (SBU) We confirmed the GOC's receipt of the letter 
referred to in reftel and used the opportunity to clarify 
possible procedures for release of Iraqi assets.  Canada has 
approximately C$20,000 in frozen Iraqi government assets and 
the GOC is not aware of any assets in Canada belonging to 
individuals. 
 
Complications 
------------- 
 
3.  (SBU) Although Iraqi government assets were frozen in 
compliance with the UN order after Gulf War I, there was no 
requirement for banks to report details of the accounts to 
the GOC.  Thus the GOC does not know the names of the account 
holders, the exact number of accounts or the total amount in 
each account.  Seizure by the GOC for transfer to the 
Development Fund In Iraq would require a legislative change, 
a lengthy process as parliament has recessed for the summer. 
 
Awaiting notification from the 661 Committee 
-------------------------------------------- 
 
4. (SBU) The GOC is waiting for notification from the UN 661 
Committee in order to finalize the details of its legal 
options.  A lawyer working on the issue agreed that, given 
the fact that the GOC does not know details of the accounts 
and does not have legal authority to transfer the funds 
without legislative action, a letter from a "duly authorized" 
official of the Iraqi government to the Minister of Finance 
and the Minister of Foreign Affairs requesting transfer of 
GOI assets to a specified account (the DFI) might do the 
trick.   The GOC would then issue a general certificate 
authorizing banks to make the transfer.  Banks would make the 
decision on whether they considered the GOI requesting 
official "duly authorized" but would probably follow GOC 
guidance. 
 
Does the Iraqi Government Want to Transfer the Assets? 
--------------------------------------------- --------- 
 
5. SBU) DFAIT pointed out that a request to transfer the 
assets could depend on GOI plans for its missions in Canada. 
Iraq has real property in Canada (consulates as well as the 
embassy).  DFAIT believes the diplomatic account is in 
arrears, and there may be property taxes outstanding.  If 
Iraq plans to sell its missions, it would make sense to 
transfer the funds, but if the GOI plans to maintain a 
diplomatic presence in Canada it may wish to keep the funds 
for use here. 
 
 
CELLUCCI