[Info-tech] PRESS: ILLYRIA-Albania for $ale: With a Little Help from Her 'Friends' (fwd)

[Mentor Cana]

Albania for $ale: With a Little Help from Her 'Friends'

(Giving someone the benefit of the doubt simply means to let Albania be New 
World's guinea pig) 

by Gary Q. Kokalari

Last February, virtually lost in the media attention over the Kosova crisis, 
a ceremony was held at the U.S. Department of Commerce in Washington, DC. 
Commerce Secretary William Daley looked on while then Albanian Prime Minister 
Pandeli Majko and Dr. Chirinjeev Kathuria, the president of a Chicago-based 
company known as New World Telecom, signed an agreement to establish a joint 
venture between New World and Albtelecom, Albania's state-owned 
telecommunications firm. The objective of this deal was to establish an 
exclusive joint venture for the development of a $300 million wireless 
telecommunication system in the Republic of Albania.
The press releases were quite impressive -  "U.S. telecom company to invest 
$300 million dollars in Albania."  My first reaction was, "who is New World 
Telecom?"  But at that time, like most Albanians, I was preoccupied with the  
Kosova conflict, so New World faded from my radar screen.   
Fortunately, the Serb genocide machine was driven from Kosova, and at least 
here in the United States life returned to some semblance of normality. In 
August, after again reading on the news wires about New World Telecom in 
Albania, I decided to revisit this situation to find out who New World 
Telecom is and what this company is up to in Albania. 
So, I started to conduct research through normal channels - Wall Street 
research resources, news archives, Dun & Bradstreet, etc. What I found is 
that virtually no information about New World exists in the public domain. 
This seemed somewhat peculiar since this was a company that claims to have 
developed telecommunication systems around the world and has represented that 
it plans to invest $300 million in the development of a telecommunication 
system in Albania.
After I had commenced my investigation, I discovered that several other 
Albanians were also questioning New World's activities in Albania. One was 
Ismet Hamiti, an Albanian from Kosova who has thirty years of experience as a 
telecommunications professional. Mr. Hamiti is based in Thailand where he is 
the regional representative for the International Telecom Union. For twelve 
years he was head of the development and design department of Kosova PTT, and 
he is presently advising Kosova PTT in its efforts to rebuild the telephone 
system in Kosova. The other individual is Agron Alibali, an attorney from 
Albania who is now based in Boston. Together, we assembled what to us seemed 
a very disturbing picture about New World Telecom.
Because this deal  was being driven by the Commerce Department, which was the 
most aggressive promoter of New World Telecom, I contacted Commerce 
Department officials to discuss this matter. With the lobbying assistance of 
the State Department and the American Embassy in Tirana, I learned that the 
Commerce Department exerted enormous pressure on the Albanian government to 
select New World Telecom  as a partner for Albtelecom. With this support, New 
World pre-empted several major, highly qualified, well known international 
telecom companies that were keenly interested in developing business in 
Albania.
Upon discussing this matter with officials at the Commerce and State 
Departments, it appeared to me that the U.S. government had not completed an 
adequate level of due diligence to determine the capabilities of New World 
Telecom. Nor could the Commerce Department provide me with any information to 
substantiate New World's ability to complete a project of the magnitude of 
the one proposed for Albania.
The Commerce Department suggested that I speak with Dr. Kathuria to learn 
more about New World Telecom. I called Dr. Kathuria several times at what I 
was led to believe was  New World's headquarters using the telephone number 
listed on their web site. Each time I called either Dr. Kathuria answered the 
telephone or I reached a voice mail. Perhaps it means nothing, but I found it 
odd that the president of what is purported to be a international 
telecommunications company would be answering the phone on the company's main 
number.  
Despite repeated requests, Dr. Kathuria has not provided me with any 
information to convince me that New World has the technical or financial 
ability to complete the proposed project. In quite grandiose terms he has 
described projects New World telecom is "working on", and projects that his 
"partners" have completed, but he has not been able to point to a single 
project anywhere that was successfully completed by New World that is 
comparable to the $300 million project he has proposed for Albania.  
In addition to contacting Dr. Kathuria, I wrote to President Rexhep Meidani, 
Secretary Daley and the State Department asking all of them to substantiate 
New World's track record. As of the time of this writing, they have not 
provided the information that would indicate that New World has either the 
technical capability or the financial resources to develop a $300 million 
telecom system. It appears that through associating New World with major 
companies, ones with which relationships may or may not exist, Dr. Kathuria 
has developed a level of credibility that has enabled  him to have the U.S. 
and Albanian governments do his bidding.
I have requested investigations of this matter by Senator McCain's and 
Senator Helm's offices as they have oversight responsibility for the Commerce 
and State Departments, respectively. As a result, Senator Helm's office 
forwarded information to me about New World Telecom. These documents, which 
consisted primarily of self-serving press releases, had been submitted to the 
Senate Foreign Relations Committee by the Commerce Department because of my 
inquiry.   After reviewing this material I wrote to Secretary Daley as 
follows:

"In my opinion, there was one thing missing from this promotional material ñ 
evidence that New World Telecom has ever successfully completed the turn-key 
development of a telecommunication project anywhere in the world.  If my 
interpretation is correct, then it appears that the Commerce Department, 
knowingly or unknowingly, influenced the government of Albania to entrust the 
development of its telecommunication system to, in the best case, a fledgling 
company.
Mr. Secretary, I ask you, if you should decide to build a new home, will you 
hire a contractor who has never built a single house?  Should the government 
of Albania be expected to entrust the development of a $300 million 
telecommunication system, a crucial link to the forward progress of the 
country's economy, to a company that has never done this before?"

Not surprisingly, Secretary Daley has not responded. This is the same William 
Daley who is a member of the Daley family political machine of Chicago which, 
by coincidence, is also the home of New World Telecom.
Yet, the Commerce Department and State Department are now placing enormous 
pressure on the Albanian government to grant New World Telecom a license to 
develop one of Albania's most strategic economic sectors. Quite frankly, 
something smells rotten in Tirana - and Washington.
In September,  Dr. Kathuria, U.S. Ambassador Limprecht and a Motorola 
"representative", presided over a press conference in Tirana for the signing 
of a "letter of intent" for Motorola to supply $50 million in telecom 
equipment for the Albanian government.  One should not become overly 
impressed with this event because letters of intent are typically not worth 
the paper on which they are written, and it was obvious that the ceremony was 
staged for its public relations value rather than to commemorate a legally 
binding commitment on the part of Motorola.
So I continued to press the Albanian and American government officials to 
provide me with rationale for promoting New World in Albania.  To no avail, I 
requested a meeting with representatives of the Commerce and State 
Departments and New World Telecom to discuss this matter. I also requested 
meetings with President Meidani and Prime Minister Majko during their recent 
visits to the United States to discuss New World Telecom, but they were too 
busy.  ...But I can appreciate their reticence to see me  - it's quite 
obvious they didn't want to hear what I had to say.   
After repeatedly badgering the State Department to justify their support of 
New World Telecom, in October I received this e-mail message from a State 
Department official:

"The interest we have (in the promotion of New World Telecom) is helping 
Albania to get a reliable supplier of telecommunications services that will 
provide the largest proportion of the population service in the shortest 
period of time. So here comes a company (New World Telecom) with a admittedly 
weak pedigree that appears willing and able to put such a system in place. 
They are backed, enthusiastically, by some impressive names in 
telecommunications, which is also an endorsement. On the question of ability, 
I think they ought to be given the benefit of the doubt and permitted to show 
what they can do."

These comments are disturbing and highly contradictory.  On the one hand, the 
U.S. is desirous of "helping Albania to get a reliable supplier of 
telecommunications services." On the other hand, a reference is made to New 
World as having "an admittedly weak pedigree."  By so doing, the State 
Department official admits to supporting a company that does not appear to 
have any track record in the development of a comparable facility.
The U.S. government official further stated that New World is "backed 
enthusiastically by some impressive names in telecommunications." One of the 
impressive names he refers to is Motorola, a well known and respected 
company.  A recent article about New World in the Albanian newspaper 'Zeri i 
Popullit' also referred to New World as having the "backing" of Motorola.
I thought this was all very interesting. So I contacted an in-house attorney 
at Motorola to discuss this matter. The Motorola attorney informed me that "a 
letter of intent with Motorola doesn't mean anything," and that "Motorola 
does not commit to supply equipment or financing based solely on a letter of 
intent."  He also informed me that he is unaware of any legal agreement 
between Motorola and New World. With regard to any Motorola "backing" that 
New World may claim to have, the attorney offered to have any related 
document reviewed by their legal staff.
The U.S. and Albanian governments have been notified of my findings. 
The U.S. government official also stated in his message, "on the question of 
their ability, I think they (New World) should be given the benefit of the 
doubt and permitted to show what they can do." In effect, what this 
individual is saying is let Albania be New World's guinea pig. This is 
particularly disturbing when one considers that major telecom companies, such 
as Deutsche Telekom and Telecom Italia, expressed serious interest in this 
project. As an American, as much as I would prefer for the project to be 
awarded to a qualified American company, my primary interest is to see a 
competent, reputable company develop Albania's telecom system
To be sure, either the Commerce or State Department could have solicited a 
qualified U.S. telecom company to directly participate in the Albanian 
market. Secretary Daley could have easily contacted the chairmen of any 
number of American telecom companies, and I am highly confident one of them 
would have cooperated with him on the project in Albania.
The action of the Commerce and State Departments in electing to instead force 
New World Telecom, a company with a "weak pedigree", down the throats of the 
Albanians is grossly irresponsible.  What would be even more egregious is if 
Secretary Daley was in any way trying to tie Albania's WTO status to 
acceptance of the New World Telecom deal. In my opinion, this would be 
political extortion.
So given that New World Telecom has not been able to  provide concrete 
evidence that it has completed a comparable telecom project anywhere in the 
world, and given that the firm has not been able to prove that  it has the 
financial ability to finance this project on its own, the glaring question 
remains: Why did the Commerce and State Departments use their high offices to 
promote New World Telecom in Albania?
I recently wrote to World Bank president James Wolfensohn about New World 
Telecom, and received a letter in response. There appears to be a sharp 
difference of opinion between the World Bank's position on the privatization 
of Albania's telecom sector and that of the U.S. government. The letter 
states:

"The World Bank has followed the Albanian government's plans for privatizing 
state owned enterprises in telecommunications with interest.  We have 
conveyed our views to the government on various occasions over the last 
couple of years that both privatization and the issuing of licenses should be 
done on a competitive basis. Our experience from other transition economies 
shows clearly that only transparent and competitive procedures guarantee 
efficiency in the process and participation by reputable strategic investors 
with adequate experience. Such outcomes invariably encourage private sector 
activity and economic growth in the country concerned.
Recently, we had discussions with the Albanian delegation to the World Bank's 
annual meetings and have reiterated the above views at the highest level, 
including Prime Minister Pandeli Majko."

The statements from the World Bank raise several questions to which the State 
and Commerce Departments should respond. Was the selection of New World a 
transparent and competitive procedure?  Should we view a company with no 
track record in developing a comparable telecom facility as a reputable 
strategic investor with adequate experience? I believe the answer to these 
questions is "no."  But one thing is clear, the World Bank has far more 
experience in the development of telecom systems in "transition economies" 
than the State and Commerce Departments combined. 
In my opinion, the process by which New World Telecom has gained a foothold 
in Albania appears to be little more than a highly sophisticated, intricately 
spun web of deception with the Commerce and State Departments serving as 
either accomplices or dupes.
During my investigation of the New World Telecom deal, I discovered that two 
other companies are engaged in business development in Albania. Crys-Tel 
Telecommunications Inc. claims to have acquired media assets in Albania and 
also claims to be developing telecommunications related businesses there as 
well. The Albanian government has also announced that it has granted 
concessions to Metals Research Group to develop Albania's copper resources.  
Supposedly, Metals Research will invest $75 million to develop these 
resources.
As it turns out, Crys-Tel and Metals Research Group have several things in 
common.
First, they are both traded on the Pinks Sheets. For those who are unfamiliar 
with the stock market, many companies that trade on the Pink Sheets have 
either been de-listed from major stock exchanges or are too thinly 
capitalized to trade on a major exchange. Although there are legitimate 
companies that trade in this manner, the Pink Sheets have been known to be 
the stalking grounds of many a stock manipulator. Interestingly, X-Stream 
Networks, an affiliate of New World Telecom, is also traded on the Pink 
Sheets.
After completing additional research, I learned that Anthony Papalia Jr. is 
Vice President of Crys-Tel and that Robert Papalia is President of Metals 
Research Group.  Robert Papalia is also listed as CEO and Anthony Papalia 
Sr., the father of Anthony Jr., is listed as President of yet another Pink 
Sheet listed company known as PAC Rim Information Systems.    
Upon further investigation I learned that Anthony Papalia Sr. and Robert 
Papalia are Italian born twin brothers who are well known to police in 
Vancouver, Montreal and London.  
According to a January 4, 1996 edition of 'The Daily Mail' (London),, Anthony 
Papalia Sr. escaped from prison while awaiting a 1980 trial on charges of 
defrauding investors of a gold mining scheme in British Columbia.
According to a December 27,  1997 edition of The Vancouver Sun', the Papalia 
brothers and another partner, Giovanni Camporese, have had run-ins with 
securities regulators. The article stated that, "In 1977, they were arrested 
by Scotland Yard in an alleged plot to defraud investors through Metals 
Research, which claimed to have a gold mine in British Columbia  Despite 
intense media coverage and lengthy court proceedings, they were eventually 
acquitted of all charges. Meanwhile, Anthony Papalia had been charged in 
Vancouver with defrauding Continental Securities of $51,000.  He was 
convicted in 1982 and sentenced to two years less a day, but the appeal court 
overturned the conviction and ordered a new trial."
Were the Papalia's guilty? I'll let you be the judge. But are these the type 
of people we want running around Albania? And should the Albanian government 
squander its precious natural resources on people like the Papalias?
It is quite disconcerting to know that, of all the companies in the world, 
the Albanian government has elected to do business with Crys-Tel, Metals 
Research Group and New World Telecom, when there are many companies that 
could have been pursued that are far more capable, with superior reputations 
and verifiable financial strength. In the best case, the Albanian government 
officials are inexperienced and incompetent. In the worst case, they are only 
living up to their reputation for running what has been ranked by 
Transparency International as one of the most corrupt governments in the 
world.  
But what's the excuse of the U.S. government for promoting companies like New 
World Telecom? Particularly when one considers that there are major American 
and European telecom companies that would welcome the opportunity to develop 
a $300 million telecom system in Albania.
I know one Albanian American who brought the matter of New World Telecom to 
the attention of President Meidani, and his position was that the American 
government told him not to worry  and that there is nothing wrong with New 
World Telecom. I would like to remind President Meidani that the U.S. 
government officials are bureaucrats, not businessmen, and just because an 
American official says it's okay, doesn't necessarily mean it's okay. 
Albania's government officials have the fiduciary responsibility to do their 
own research on New World Telecom, Crys-Tel, Metals Research Group, and for 
that matter, any other companies that are desirous of doing business with the 
government. Taking an ostrich like position by burying one's head in the sand 
is unacceptable.
My speculation about New World Telecom may or may not prove correct; however, 
there is one way to find out for certain - open the bidding for Albania's 
telecom system to a transparent selection procedure. The World Bank has also 
made this suggestion, and it is a process they have even offered to 
subsidize. With this process all bidders, including New World Telecom, will 
be required to submit for consideration by the Albanian government their 
qualifications, verifiable track records and audited financial statements. My 
recommendation to the Albanian government is that this model should be 
adopted for this and all other major projects in Albania. It is far better to 
be safe than sorry.
In the fall of 1996, I warned the Berisha government that if they did not 
bring an end to the pyramid schemes that "it was not a question of if, but 
when" they would collapse. At that time I also warned the Albanian government 
that if they did not take action, and if the pyramids collapse of their own 
weight, that "large scale civil unrest with ensue." In retrospect, Berisha's 
failure to heed my warnings and those of others had devastating results for 
the Albanian people and the Balkans when Albania exploded into anarchy in 
1997.  Can Albania afford another economic debacle?
I suggest that the Albanian government ponder the words of James Hendrix, 
"castles made of sand, fall into the sea  - eventually."



Gary Q. Kokalari is an Albanian American and serves as president of the 
Albanian Heritage Foundation and as a director of the Kosova Relief Fund.  
Professionally, he has nineteen years of experience as a financial  advisor 
to wealthy investors and corporate clients.   He holds an M.B.A. from the 
Wharton School and a B.S. from Boston University.


THE ARTICLE WAS PUBLISHED IN THE ISSUES 885 AND 886 OF 'ILLYRIA'