Rising Corruption In Tunisia

Wikileaks is unveiling what Tunisians have always known: they are being robbed in daylight by an uncouth band of mobster thugs.

zine el abidine ben ali leila ben ali 2009 10 25 8

The Tunisian president Ben Ali is a tyrant. But there's a tyrant and then there's a tyrant. Ben Ali suppresses political dissent but sold Tunisians a mantra of "shut up and make money". Many Tunisians were willing to console themselves to this. In fact, the most common refrain I heard from Tunisians as to their opinion of Ben Ali is that "I do not like him, but I do not hate him". It was reasonable enough: Ben Ali was no angle, but kept the peace and Tunisians were more prosperous than their neighbors in a troubled region. As long as you stayed out of politics, you could enjoy life in a pleasant country and pursue business. But that dictated trade-off is now vanishing. No longer are you safe if you keep your head out of politics. Ben Ali was considered with political power, but his in-laws - the widely detested Trebelsis - are not content with such political dominance and mundane corruption. As with tyranny, there's corruption and then there's corruption. Corruption exists even in open democratic systems, so is to be more expected in an authoritarian regime where officials do not have to fear accountability. But there's the corruption of privatizing national firms into the hands of family and friends, or purloining money from state funds, or using one's influence to procure favorable bank loans which are never paid back nor asked to be. To a degree, such corruption confined to this nature is reasonably tolerable, if need be, and may not have an identifiable adversed effect on the economy. Consider this a more dignified and professional corruption.

The Trebelsis are anything but. These people are literally a rag-tag bunch of uneducated and lowly street thugs who found their way into power through the whoring prowess of First Lady Leila Ben Ali. She was mistress to Ben Ali back when he was prime minister and got pregnant and deceptively told Ben Ali that she was bearing a son (something the father of three daughters desperately wanted) and he summarily married her. Her family slowly began to accumulate power so much so that they now have monopolized the Tunisian economy through thuggery, intimidation, expropriation and outright theft and operate with such immunity that Tunisian now refer to them in mafia parlance as "the Family". The mafia don is a BelHassen Trebelsi - a high school dropout. The U.S. embassy cables in Tunis provide an insightful window to the rampant corruption and its adverse effect on Tunisia's economy as investors fear the growing hand of "the Family" (read the entire report here) (abridged):

According to Transparency International's annual

survey and Embassy contacts' observations, corruption in

Tunisia is getting worse. Whether it's cash, services, land,

property, or yes, even your yacht, President Ben Ali's family

is rumored to covet it and reportedly gets what it wants.

With those at the top believed to be the worst offenders, and likely to remain in power, there are no checks in the system.

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All in the Family

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¶3. (S) President Ben Ali's extended family is often cited as

the nexus of Tunisian corruption. Often referred to as a

quasi-mafia, an oblique mention of "the Family" is enough to

indicate which family you mean. Seemingly half of the

Tunisian business community can claim a Ben Ali connection

through marriage, and many of these relations are reported to

have made the most of their lineage. Ben Ali's wife, Leila

Ben Ali, and her extended family -- the Trabelsis -- provoke

the greatest ire from Tunisians. Along with the numerous

allegations of Trabelsi corruption are often barbs about

their lack of education, low social status, and conspicuous

consumption. While some of the complaints about the Trabelsi

clan seem to emanate from a disdain for their nouveau riche

inclinations, Tunisians also argue that the Trabelsis strong

arm tactics and flagrant abuse of the system make them easy

to hate. Leila's brother Belhassen Trabelsi is the most

notorious family member and is rumored to have been involved

in a wide-range of corrupt schemes from the recent Banque de

Tunisie board shakeup (Ref B) to property expropriation and

extortion of bribes. Leaving the question of their

progenitor aside, Belhassen Trabelsi's holdings are extensive

and include an airline, several hotels, one of Tunisia's two

private radio stations, car assembly plants, Ford

distribution, a real estate development company, and the list

goes on. (See Ref K for a more extensive list of his

holdings.) Yet, Belhassen is only one of Leila's ten known

siblings, each with their own children. Among this large

extended family, Leila's brother Moncef and nephew Imed are

also particularly important economic actors.

¶4. (S/NF) The President is often given a pass, with many

Tunisians arguing that he is being used by the Trabelsi clan

and is unaware of their shady dealings. XXXXXXXXXXXX

a strong supporter of the government and member of

XXXXXXXXXXXX, told the Ambassador that the problem is

not Ben Ali, but "the Family" going too far and breaking the

rules. Nevertheless, it is hard to believe Ben Ali is not

aware, at least generally, of the growing corruption problem.

This might also reflect the seeming geographical divisions

between the Ben Ali and Trabelsi fiefdoms, with the Ben Ali

clan reportedly focused on the central coastal regional and

the Trabelsi clan operating out of the greater Tunis area and

therefore, generating the bulk of the gossip. The Ben Ali

side of the Family and his children and in-laws from his

first marriage are also implicated in a number of stories.

Ben Ali has seven siblings, of which his late brother Moncef

was a known drug trafficker, sentenced in absentia to 10

years prison in the French courts. Ben Ali has three

children with his first wife Naima Kefi: Ghaouna, Dorsaf and

Cyrine. They are married respectively to Slim Zarrouk, Slim

Chiboub, and Marouane Mabrouk -- all significant economic

powers.

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This Land is Your Land, This Land is My Land

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¶5. (S/NF) With real estate development booming and land

prices on the rise, owning property or land in the right

location can either be a windfall or a one-way ticket to

expropriation. In summer 2007, Leila Ben Ali received a

desirable tract of land in Carthage for free from the GOT in

order to build the for-profit Carthage International School

(Ref F). In addition to the land, the school received a 1.8

million dinar (US $1.5 million) gift from the GOT, and within

a matter of weeks the GOT had built new roads and stoplights

to facilitate school access. It has been reported that Ms.

Ben Ali has sold the Carthage International School to Belgian

investors, but the Belgian Embassy has as yet been unable to

confirm or discount the rumor. XXXXXXXXXXXX asserted

that the school was indeed sold for a huge, but undisclosed sum.

He noted any such sale would be pure profit since Ms. Ben Ali's

received land, infrastructure, and a hefty bonus at no cost.

¶6. (S/NF) Construction on an enormous and garish mansion has

been underway next to the Ambassador's residence for the past

year. Multiple sources have told us that the home is that of

Sakhr Materi, President Ben Ali's son-in-law and owner of

Zitouna Radio. This prime real estate was reportedly

expropriated from its owner by the GOT for use by the water

authority, then later granted to Materi for private use. A

cafe owner recounted a similar tale to an Embassy employee,

reporting that Belhassen Trabelsi forced him to trade in a

cafe he previously owned in a prime location for his current

cafe. The cafe owner stated Trabelsi told him he could do

whatever he wanted there; if 50 dinar bribes to the police

were not effective, Trabelsi said the owner had only to call

him and he would "take care of it."

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Yacht Wanted

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¶6. (S/NF) In 2006, Imed and Moaz Trabelsi, Ben Ali's nephews,

are reported to have stolen the yacht of a well-connected

French businessman, Bruno Roger, Chairman of Lazard Paris.

The theft, widely reported in the French press, came to light

when the yacht, freshly painted to cover distinguishing

characteristics, appeared in the Sidi Bou Said harbor.

Roger's prominence in the French establishment created a

potential irritant in bilateral relations and according to

reports, the yacht was swiftly returned. The stolen yacht

affair resurfaced in early 2008 due to an Interpol warrant

for the two Trabelsis. In May, the brothers were brought

before Tunisian courts, in a likely effort to satisfy

international justice. The outcome of their case has not

been reported.

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Show Me Your Money

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¶7. (S) Tunisia's financial sector remains plagued by serious

allegations of corruption and financial mismanagement.

Tunisian business people joke that the most important

relationship you can have is with your banker, reflecting the

importance of personal connections rather than a solid

business plan in securing financing. The legacy of

relationship-based banking is a sector-wide rate of

non-performing loans that is 19 percent, which remains high

but is lower than a high of 25 percent in 2001 (Ref I).

Embassy contacts are quick to point out that many of these

loans are held by wealthy Tunisian business people who use

their close ties to the regime to avoid repayment (Ref E).

Lax oversight makes the banking sector an excellent target of

opportunity, with multiple stories of "First Family" schemes.

The recent reshuffle at Banque de Tunisie (Ref B), with the

Foreign Minister's wife assuming the presidency and Belhassen

Trabelsi named to the board, is the latest example.

According to a representative from Credit Agricole, Marouane

Mabrouk, another of Ben Ali's sons-in-law, purchased a 17

percent share of the former Banque du Sud (now Attijari Bank)

shares immediately prior to the bank's privatization. This

17 percent share was critical to acquiring controlling

interest in the bank since the privatization represented only

a 35 percent share in the bank. The Credit Agricole rep

stated that Mabrouk shopped his shares to foreign banks with

a significant premium, with the tender winner,

Spanish-Moroccan Santander-Attijariwafa ultimately paying an

off the books premium to Mabrouk. XXXXXXXXXXXX

recounted that when he was still at his bank he used to receive

phone calls from panicked clients who stated that Belhassen Trabelsi

had asked them for money. He did not indicate whether he advised

them to pay.

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The Trickle Down Effect

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¶8. (S) While the stories of high-level, Family corruption are

among the most flagrant and oft-repeated, Tunisians report

encountering low-level corruption more frequently in their

daily lives. Speeding tickets can be ignored, passports can

be expedited, and customs can be bypassed -- all for the

right price. Donations to the GOT's 26-26 Fund for

development or to the Bessma Society for the Handicapped --

Leila Ben Ali's favored charity -- are also believed to

grease the wheels. XXXXXXXXXXXXX, a well-connected

member of Parliament, faced increased pressure from the GOT

after refusing several "requests" to donate money to

Trabelsi's soccer team. XXXXXXXXXXXX reported

that customs inspectors demanded 10,000 dinars to

get his goods through customs; he did not reveal whether

or not he acquiesced to the demand.

¶9. (S) Nepotism is also believed to play a significant role

in awarding scholarships and offering jobs.

Leila Ben Ali's late mother, Hajja Nana, is also reported to

have acted as a broker for both school admissions and

government job placement, providing her facilitation services

for a commission.

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Mob Rule?

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¶10. (S/NF) The numerous stories of familial corruption are

certainly galling to many Tunisians, but beyond the rumors of

money-grabbing is a frustration that the well-connected can

live outside the law. One Tunisian lamented that Tunisia was

no longer a police state, it had become a state run by the

mafia. "Even the police report to the Family!" he exclaimed.

With those at the top believed to be the worst offenders,

and likely to remain in power, there are no checks in the

system. The daughter of a former governor recounted that

Belhassen Trabelsi flew into her father's office in a rage --

even throwing an elderly office clerk to the ground -- after

being asked to abide by laws requiring insurance coverage for

his amusement park. Her father wrote a letter to President

Ben Ali defending his decision and denouncing Trabelsi's

tactics. The letter was never answered, and he was removed

from his post shortly thereafter.

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The Elephant in the Room

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¶11. (S) Several Tunisian economists argue that it does not

matter whether corruption is actually increasing because

"perception is reality." The perception of increasing

corruption and the persistent rumors of shady backroom

dealings has a negative impact on the economy regardless of

the veracity. Contacts tell us they afraid to invest for

fear that the family will suddenly want a cut. "What's the

point?" XXXXXXXXXXXXXX asked, "The best case scenario is that

my investment succeeds and someone important tries to take a

cut." Persistently low domestic investment rates bear this

out (Ref H). Foreign bank accounts, while illegal, are

reportedly commonplace. A recent Ministry of Finance amnesty

to encourage Tunisians to repatriate their funds has been an

abject failure. XXXXXXXXXXXXXX stated that he plans to incorporate

his new business in Mauritania or Malta, citing fear of

unwanted interference. Many economists and business people

note that strong investment in real estate and land reflects

the lack of confidence in the economy and an effort to keep

their money safe (Ref C).

¶12. (S) Thus far, foreign investors have been undeterred, and

according to Tunisian business contacts, largely unaffected.

Foreign investment continues to flow in at a healthy rate,

even excluding the privatizations and huge Gulf projects

which have yet to get underway. Foreign investors more

rarely report encountering the type of extortion faced by

Tunisians, perhaps reflecting that foreign investors have

recourse to their own embassies and governments. British Gas

representatives told the Ambassador they had not encountered

any impropriety. XXXXXXXXXXXX stated that several years ago

Belhassen Trabelsi attempted to strong arm a German company

producing in the offshore sector, but that after the German

Embassy intervened Trabelsi was explicitly cautioned to avoid

offshore companies. Despite pronouncements about increasing

domestic investment, the GOT focuses heavily on increasing

FDI flows to the country, particularly in the offshore

sector. Nevertheless, there are still several examples of

foreign companies or investors being pressured into joining

with the "right" partner. The prime example remains

McDonald's failed entry into Tunisia. When McDonald's chose

to limit Tunisia to one franchisee not of the GOT's choosing,

the whole deal was scuttled by the GOT's refusal to grant the

necessary authorization and McDonald's unwillingness to play

the game by granting a license to a franchisee with Family

connections.

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Comment

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¶13. (S) Although the petty corruption rankles, it is the

excesses of President Ben Ali's family that inspire outrage

among Tunisians. With Tunisians facing rising inflation and

high unemployment, the conspicuous displays of wealth and

persistent rumors of corruption have added fuel to the fire.

The recent protests in the mining region of Gafsa provide a

potent reminder of the discontent that remains largely

beneath the surface. This government has based its

legitimacy on its ability to deliver economic growth, but a

growing number of Tunisians believe those as the top are

keeping the benefits for themselves.

¶14. (S) Corruption is a problem that is at once both

political and economic. The lack of transparency and

accountability that characterize Tunisia's political system

similarly plague the economy, damaging the investment climate

and fueling a culture of corruption. For all the talk of a

Tunisian economic miracle and all the positive statistics,

the fact that Tunisia's own investors are steering clear

speaks volumes. Corruption is the elephant in the room; it

is the problem everyone knows about, but no one can publicly

acknowledge. End Comment.