VZCZCXYZ0011
PP RUEHWEB

DE RUEHDM #0274/01 0991518
ZNY SSSSS ZZH
P 091518Z APR 09
FM AMEMBASSY DAMASCUS
TO RUEHC/SECSTATE WASHDC PRIORITY 6245
INFO RUEHAM/AMEMBASSY AMMAN PRIORITY 7573
RUEHGB/AMEMBASSY BAGHDAD PRIORITY 1047
RUEHLB/AMEMBASSY BEIRUT PRIORITY 5119
RUEHEG/AMEMBASSY CAIRO PRIORITY 3877
RUEHLO/AMEMBASSY LONDON PRIORITY 0517
RUEHFR/AMEMBASSY PARIS PRIORITY 0486
RUEAIIA/CIA WASHINGTON DC PRIORITY
RHEFDIA/DIA WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
S E C R E T DAMASCUS 000274 

SIPDIS 

DEPT FOR NEA/ELA; NSC FOR SHAPIRO/MCDERMOTT; PARIS FOR
WALLER; LONDON FOR TSOU 

E.O. 12958: DECL: 04/08/2019
TAGS: ETRD EFIN ETTC PGOV PREL SY
SUBJECT: CORRUPTION INVESTIGATION RATTLES BUSINESS COMMUNITY 

REF: A. DAMASCUS 168
     ¶B. DAMASCUS 218
     ¶C. 08 DAMASCUS 541 

Classified By: Charge d'Affaires Maura Connelly for reasons 1.4(b,d) 

-------
Summary
------- 

¶1. (S) The recent imprisonment of a prominent businessman
thought to be close to President Asad has rattled the Syrian
business community.  Although the high-profile arrest was not
reported by Syrian media, Prime Minister Utri made a veiled
reference to it in a daily newspaper, saying, "we will cut
off the hand of any who dare to abuse the public funds."
Business contacts report that two other business elites are
currently under investigation for corruption charges linked
to the February arrest of Customs Directorate Chief Brigadier
General Hasan Makhlouf, including the current Chairman of the
Damascus Chamber of Industry.  Adding to their concern, a
popular local business magazine recently published profiles
of "The Top 100 Syrian Businessmen," which many feared would
raise their profile to the regime.  Conspicuously absent from
the article was Syria's most famous tycoon, Rami Makhlouf.
End summary. 

---------------------------
Computer Magnate Imprisoned
--------------------------- 

¶2. (C) Syrian business elites are abuzz with the news that
SARG security officials jailed Engineer Firas Bakour (DOB:
01/30/1966) in late March, along with former Minister of
Communication and Technology Amro Salem and two unnamed
employees of Syria Telecommunications Establishment (STE).
Contacts report that Bakour's arrest stemmed from a USD 65
million SARG tender that he was awarded to provide a Voice
Over Internet Protocol (VOIP) service to STE.  According to
the reports, SARG officials were angered at the slow pace of
Bakour's progress in fulfilling the contract -- particularly
when his "winning" bid for the tender had been over twice as
high as those of several foreign companies.  A close friend
of Bakour's offered a different take, claiming that the Sunni
Bakour's Alawi enemies had grown jealous of the virtual
monopoly his company enjoyed over IT in Syria and the USD 10
million that he was reportedly earning each month. 

¶3. (C) The President and CEO of INANA Group -- an umbrella of
eight subsidiary companies that offer a variety of
information technology, telecommunications, marketing,
entertainment and business development lines -- Bakour was
close to President Bashar al-Asad in the mid-1990s when Asad
headed the then-nascent Syrian Computer Society (SCS).  A
longtime Embassy contact with a sister living in Florida,
Bakour's presence at Embassy rep events in 2007 had a
chilling effect on other guests due to his alleged ties to
SARG security services.  While Syrian media has not reported
the high-profile arrest, Prime Minister Utri made a
thinly-veiled reference to it in the March 31 edition of
daily Tishreen, saying, "we will cut off the hand of any who
dare to abuse the public funds." 

¶4. (C) In 2008, former Minister of Communications and
Technology Amro Salem told us that he was asked to resign
from his ministerial post in December 2007 because he had
launched an investigation into Bakour's suspicious business
activities.  He claimed then that President Asad had
personally cleared him of any wrongdoing and had ordered the
investigation of Bakour to proceed.  (Note: It would not be
unusual for Syrian security forces to arrest all suspects
while sorting out individual stories.  End note.) 

------------------------
Known By the Company You Keep
------------------------ 

¶5. (C) Adding to the business community's case of the
jitters, the locally popular Syrian business magazine
al-Iqtissadi (the Economist) dedicated this week's edition to
profiling "The Top 100 Syrian Businessmen."  Listing the
businessmen alphabetically, the 55-page article contained
photographs and 3-5 paragraph corporate biographies of each
prominent businessman and his family.  Firas Bakour was
featured in the magazine, as was one-time SyriaTel Chief
Operating Officer Nader Qa'lai, who is reportedly himself
under investigation for embezzlement.  Syria's most infamous
tycoon -- Rami Makhlouf -- was conspicuously absent, as were
Muhammad and Abdulsalam al-Haykal, who own the media company
that publishes al-Iqtissadi.  The website "Syrian Informer,"
which is blocked in Syria, commented disparagingly on the
list as largely comprising nouveaux riches who have acquired
wealth through opportunism and corruption, presumably in
contrast to the more "virtuous" Damascenes who inherited
their fortunes. 

¶6. (C) Embassy contacts who were listed in the article
expressed nervousness at having their profiles publicly
elevated, while others were relieved to have not been
mentioned.  The head of one featured family lamented that the
article was probably already in the hands of the SARG's
equivalent to the Internal Revenue Service (IRS), which he
claimed would be examining the tax returns of each listed
family over the last several years.  (Note: The only Syrians
who consistently pay the correct amount of income tax seem to
be public servants, whose taxes are withheld automatically
from their government salaries.  End note.) 

-----------------------------
Wider SARG Campaign Underway?
----------------------------- 

¶7. (S) Bakour's arrest is the latest event in what contacts
report is a wide-ranging SARG crackdown on "corruption" that
began with the January sacking of Political Security
Department Chief Major General Muhammad Mansurah and
mid-February arrest of Chief Customs official Brigadier
General Hasan Makhlouf (refs A,B).  (Note: By all accounts,
Hasan is not close to his more famous cousins Muhammad, Rami
and Hafiz Makhlouf.  End note.)  The oft-heard rumor on the
Damascus streets is that Hasan Makhlouf attracted the ire of
Maher Asad after the President's brother learned from a real
estate agent that the Customs Director's driver had tried to
purchase a multi-million dollar property in Lattakia.
Investigators allegedly discovered some USD 50 million hidden
in the driver's home, which -- according to the story --
enraged Maher and prompted the Palace to act. 

¶8. (S) The rumor of Hasan Makhlouf's millions is strikingly
similar to another story that circulated around Damascus
following the August 2008 assassination of Brigadier General
Muhammad Sulayman (ref C).  Sulayman, who was Asad's top
security aide and reportedly managed several sensitive
military projects, was killed by sniper fire in the coastal
city of Tartous while Asad was visiting Tehran.  The
subsequent investigation into Sulayman's slaying reportedly
uncovered USD 80 million cash in a basement room of the
general's home in the mountains between Damascus and the
Lebanese border.  Asad was said to be devastated by the
discovery, and, fearing Sulayman had betrayed him, redirected
the investigation from solving his murder to finding out how
the general had acquired so much money. 

-------------------
Car Importers Under Suspicion
------------------- 

¶9. (S) Embassy contacts report that two prominent businessmen
are under suspicion in the Makhlouf/Mansurah investigation --
Ammar Karkour and Chairman of the Damascus Chamber of
Industry Imad Ghreiwati.  Karkour, the Syrian agent for
Audi/VW, and Ghreiwati, who owns the Ford dealership and
represents LG electronics, are both suspected of bribing the
Customs Director to accept grossly reduced invoices on their
imported cars and electronics in order to avoid paying
customs duties on the goods' actual value.  The Ghreiwati
family may have had a falling out with the Asad clan in fall
2008, as Imad's brother Issam then complained bitterly to us
about the President, the SARG's decision to close Damascus
Community School -- where the Ghreiwati children studied --
and revealed that the entire family was considering
emigrating to the U.S.  (Note: Ghreiwati's fall from grace
would be cheered by many of his class-conscious peers, who
resent his family's meteoric ascent to social prominence and
his once-favored status among the Alawis.  End note.) 

-------
Comment
------- 

¶10. (S) While there does not yet appear to be a direct link
between Bakour's arrest and the Makhlouf/Mansurah
investigation, our contacts believe that his incarceration is
part of a broader "anti-corruption" campaign ordered by the
Palace to re-assert Asad's authority and to shake-up the
status quo.  The Palace has probably already chosen the
eventual winners and losers in this investigation, the timing
of which may coincide with a long-anticipated cabinet
reshuffle.  Regardless of the SARG's motivation, the business
community's concern is illustrative of their tenuous
relationship with the Syrian government. While Bakour's and
Ghreiwati's situations demonstrate that proximity to the
regime is no guarantee of long-term security, other
businessmen equate Syria's byzantine legal and tax codes --
and not their lack of compliance to them -- to a sword of
Damocles the regime dangles over their heads to keep them in
line. 

CONNELLY