ARISTIDE: corrupt and cynical demagogue

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ARISTIDE OR ARISTIL (as written on his birth certificate)was in fact a corrupt and a cynical demagogue building power by appealing to the poor. Haiti Telecom Kickbacks by Lucy Komisar, Two U.S. lawsuits charge that former Haitian President Jean-Bertrand Aristide and his associates accepted hundreds of thousands of dollars in kickbacks from politically connected U.S. telecom companies.

"Plus ça change," one might say in Haiti.

The more the leadership in this corruption riddled country changes, the more things stay the same.
President Aristide's sudden departure from Haiti in 2004 is stalked by controversy.

His defenders say he was a champion of the poor hustled out of the country by a Bush administration fearful of his radical populism.

His critics charge that he was a corrupt and cynical demagogue building power by appealing to the poor and repressing opposition.

Lawsuits filed this Fall challenge the former priest's image of political purity and raise claims that both he and U.S. corporate executives scammed illegal profits off the hemisphere's poorest population.

In one suit, a fired executive charged his former employer, the U.S. telecom IDT (Newark, NJ), with corruption, defamation, and intimidation under the New Jersey anti-racketeering law. In the second, the government of Haiti contends that IDT, Fusion (New York, NY) and several other North American telecoms violated the federal RICO anti-racketeering statute.

Both suits allege that Aristide, now in exile in South Africa, and his associates, took kickbacks.

The story that the suits reveal is emblematic of the business relationship between a powerful rich country and a tiny impoverished nation linked by technology - and corruption.

It starts out ironically: with a Western policy, designed to protect U.S. companies from price competition, which acts to give poor countries a break.

International phone calls access the routing systems of both the caller's country and the recipient's. The phone company where the call originates routinely pays a per-minute charge or "termination fee" for accessing the overseas system.

The goal of this arrangement is to level the playing field in situations where most of the calling goes in one direction.

There are, for example, far more Haitians in America who can afford to call family in their native land than there are Haitians in Haiti who have the money to dial America.

Without the 23 cents termination fee, only the U.S. company would be paid and the Haitian phone service would not be reimbursed for maintaining its infrastructure.

The U.S. established a system of fixed fees - the international settlements policy (ISP) - in the 1980s, based on a practice dating to the 1930s, to strengthen the bargaining position of American telecoms against foreign carriers.

In spite of the rhetoric of free-market competition, the U.S. didn't want foreign phone companies making deals that forced U.S. companies to compete against each another.

The Federal Communications Commission fixed the per-minute rates and required all U.S. companies to pay it. Companies had to inform the FCC and competitors if they negotiated lower rates.

The lawsuits charge that some U.S. firms cut secret deals to pay Haiti cut-rate per-minute fees while kicking back hundreds of thousands of dollars to Aristide and his associates.

Instead of providing the Haitian phone company with money to build up infrastructure and services, the deals helped corrupt officials to loot the system.

Artistide's supporters are loath to believe that the charismatic former priest may have betrayed Haiti's desperate poor who saw him as their savior throughout tumultuous years of alternating hope and despair.

Elected president for a five-year term from 1991 to 1996, Aristide was almost immediately forced into exile by a military coup. Three years later, a U.S.-led force, acting under a U.N. resolution, invaded Haiti to restore him to the presidency.

When Aristide's first term ended in February 1996, he was constitutionally barred from succeeding himself.

His close associate, former Prime Minister René Préval, served as president until Aristide was returned to office in February 2001. Citing evidence of fraud, the Organization of American States' electoral observation mission declined to certify the elections.

In February 2004, Aristide either resigned (the U.S. version) or was kidnapped (his story) and flown by the U.S. to South Africa.

Phone Home
Haiti's phone system had become a contentious issue between the U.S., which demanded that it be privatized, and Aristide, who wanted it to remain government-owned.

In the late 1990s, the Clinton administration cut off $500 million in promised loans and aid amidst charges by members of Congress that Aristide's government was rife with corruption.

According to the lawsuits filed in Miami and Newark federal courts, the political corruption was a two-way street running between politically connected North American companies and Aristide's government.

Haiti's Telecom sector is estimated at 400 million minutes a year, valued at $48 million.

During the governments dominated by Aristide (1994-2004), Teleco (Télécommunications d'Haïti), the Haiti national telephone company, made agreements with foreign telephone companies, including IDT, Fusion Telecommunications, Skyytel (Montreal), Cinergy (Miami) and IPIP/Terra (Miami), granting them rights to connect to Haiti phone lines.

The suit by the Haitian government says that payments to Teleco were diverted or kicked back to Aristide's group through companies and bank accounts in the offshore Turks and Caicos Islands and the British Virgin Islands.

A key company was Mont Salem in the Turks and Caicos.

The offshore companies were described as "agents" or "consultants" for Teleco.

These Caribbean tax havens are known for setting up shell companies and bank accounts that guarantee secrecy to the owners, who routinely use them to hide and launder the money of corruption, fraud, tax evasion, drug trafficking, and other crimes.

Details about the IDT charges are laid out in the case filed by D. Michael Jewett, who was IDT's associate regional vice president for the Caribbean in 2003. That year, Jewett says, the company vice-president told him that IDT agreed to pay kickbacks to Aristide's Turks and Caicos bank account in return for a favorable phone deal in Haiti.

Instead of the FCC-mandated 23 cents a minute for calls originating in America, Teleco was willing to accept only 9 cents a minute--with 3 cents kicked back to Aristide, Jewett said.
Jewett's Tale
IDT fired Jewett in November 2003, within a week after IDT got back its signed contracts from Teleco and Mont Salem.

He fought for and won unemployment benefits, then hired a lawyer.

He filed suits for wrongful dismissal in federal court in Newark in May 2004 and October 2005. He claims he was fired because he opposed the deal.
Jewett's version of events goes like this: The initial Teleco proposal called for IDT to deposit funds in a U.S. bank account.

But fearing that it might pay and get no agreement, IDT decided to negotiate directly with Aristide.

In August 2003, IDT executive vice president for International Business Development Jack Lerer met with Aristide in Haiti.

A month later Lerer told Jewett the plan: IDT would deposit money in a Turks and Caicos account that Aristide had set up under the name Mont Salem.

In September 2003 the deal was sealed: Teleco would receive 6 cents and Mont Salem would keep 3. Teleco's records were falsified to show Mont Salem as the carrier, not IDT.
Aristide's Miami lawyer, Ira Kurzban, refused Corpwatch's request for comment on the telecoms cases.

Lawyers for the Haiti government say they know from Teleco billing statements that Mont Salem was paying Teleco 6 cents a minute for the minutes it was billing to IDT. They know from pleadings and a judicial order in the Jewett case that the rate in the IDT-Mont Salem agreement was 9 cents a minute.

Putting the records together, the Haitian government lawsuit asserts that in one six-month period in 2004, IDT paid $302,588 in kickbacks to the Aristide group.

The U.S. Department of Justice, the United States Attorney in Newark, NJ, and the Securities and Exchange Commission have initiated investigations into the charges against IDT.
Offshore Adventures
One of the strongest links to Aristide is Mont Salem.

Its Turks and Caicos incorporation papers show registration in June 2000 with capital of $5,000 - not much for a real company.

Its registered agent was Timothy O'Sullivan of Miller, Simons and O'Sullivan, Turks and Caicos.

The owner of shares was "M & S Nominees Ltd," (Miller and Simmons), listed at the same Turks and Caicos address.

It fits the model of a classic offshore shell company designed to receive and launder money, rather than that of a real firm.
Where did the money go?

Asked who the real Mont Salem owners are, Adrian Corr --lawyer for Miller, Simons and O'Sullivan in the Turks and Caicos--confirmed that "You can have nominee [strawman] directors," but declined to say if Mont Salem's listed owners were fakes.

"I don't know. You put me on the spot," said Corr. "I don't want to answer any questions about this. I have lawyers retained; It's better you speak with them. It's [former New Jersey] Governor Byrne's law firm." His attorney Kerrie Heslin at Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein in Newark did not respond to numerous requests for comment.

Neither did Mont Salem's lawyer, Michael Weinstein, at Podvey, Meanor, Catenacci, Hildner, Cocoziello & Chattman, also in Newark.

Raymond, July 16 2008, 3:18 PM

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