Tuesday, July 29, 2008

Aristide's American Profiteers



Aristide's American Profiteers

Wall Street Journal

July 28, 2008; Page A13

(Read the original article here)

This column has long followed the story of Jean Bertrand Aristide's Haiti, two U.S. telephone companies and a few American political insiders. Many questions remain unanswered and now both companies are back in the news.

On July 10 the Federal Communications Commission hit IDT Corp. with a $1.3 million fine for "willfully and repeatedly failing to file with the commission" its contracts with Haiti's telecom monopoly, Teleco Haiti, in 2003 and 2004.

Not only should those contracts have been filed, they should have been made public. Now that they have been made public, we learn that Teleco Haiti granted IDT the right to terminate calls in Haiti at less than half the official settlement rate, and that IDT agreed to deposit all payments not at Teleco Haiti, but in an offshore account in the Turks and Caicos managed by a company called Mont Salem.

Long-distance revenues were one of Haiti's few sources of hard currency. Yet after President Aristide left office in 2004, Teleco Haiti's coffers were found to be empty. Still, IDT may have played only a small role in the alleged looting of Teleco Haiti.

A far more interesting actor is Fusion Telecommunications. It may have been terminating traffic in the country as far back as the mid-1990s, not long after Bill Clinton used the U.S. military to restore the coup-deposed Mr. Aristide to power. But we don't know if this is true because Fusion's contracts, which should also be public under FCC rules, have been shrouded in secrecy.

The FCC decision against IDT is a victory for former IDT employee Michael Jewett. He filed suit in federal court in Newark, N.J., in 2004, alleging that the company fired him because he objected to an illegal deal between it and Teleco Haiti.

Much of what Mr. Jewett described in his complaint turned out to be in the contract. But there's more. He also alleged in court documents that he was told that the Mont Salem account belonged to Mr. Aristide. IDT denies this.

Mr. Aristide's Haitian critics have long alleged that Fusion was getting a preferred connection rate in return for kickbacks to the strongman. This, they say, allowed Fusion to dominate the U.S.-Haiti route, something that would have made company insiders rich. Haitians told me in 2001 that Fusion even had an office inside Haiti Teleco.

The chairman of Fusion's board was and still is Marvin Rosen, who was the finance chairman of the Democratic National Committee during the 1996 Clinton fund-raising scandals. During the late 1990s, Joseph P. Kennedy II and Thomas "Mack" McLarty, both prominent Democrats, were on the board. Fusion has previously denied any wrongdoing.

In February 2007, the FCC told me that its "Haiti file," containing contracts, had vanished from its records room. To re-create the missing file, it asked IDT, Fusion and other companies for copies. Fusion produced one, from 1999, that it says matched the one it had filed.

In December, I filed an application to see that contract under the Freedom of Information Act. Eight months later the company is still blocking my request. Company lawyers have met with the FCC to argue for confidentiality.

Why Fusion would fight so hard to keep what is supposed to be a public contract out of the public's view is a good question. Here's one possible reason: A civil action filed by the Republic of Haiti in November 2005 in Florida charged that Aristide operatives gave "rate concessions" to various telephone companies, and these "included Fusion Telecommunications." The suit also charged that Teleco "allow[ed] certain carriers to 'settle' allegedly disputed Teleco billings on favorable terms," and that Fusion was one of them. These, the civil action notes, "were not in Teleco's interest" and "violated U.S. law."

The Florida suit -- which was withdrawn after a change of government in 2006 but can be reinstated if the plaintiff desires -- also alleges that "the fraudulent scheme to steal Teleco revenues was carried out in part through defendant Mont Salem," which "serve[d] as a front for the interests of the Aristide Group." It says that "at Aristide's direction," two carriers were instructed to make payments to Mont Salem. One was a Canadian company. The other was IDT. And further: "At Aristide's direction Teleco's then-counsel also caused Teleco to request at least one other carrier, Fusion, to make payments through Mont Salem."

The FCC is set to decide by Sept. 26 on whether the Fusion contract should be public. Its IDT decision sets a precedent, and Americans deserve to know what happened between the Clintonistas and Mr. Aristide. Haitians also deserve accountability. Mr. Aristide, who fled Haiti in 2004 under a cloud of corruption charges, is living in South Africa but trying to make a return to power in Haiti. If he succeeds, Haiti's future will remain as dim as its past. The FCC should give a full accounting on whether some of his past enablers were high-ranking American politicians.

Write to O'Grady@wsj.com

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