TWO foreign companies that signed a secret $25.8 million deal with the Prime Ministers

and the National Election Commission appear on the verge of becoming involved in

polling preparations, despite assurances to donors that they are only a back-up option.

Foreign donors may be hoping the Ciccone Calcographica SA embarrassment fades into

obscurity, but it seems the government may still be serious about its new Argentinian

partner.

The Ministry of Interior-based Election Bureau has been told to set aside two rooms

for Ciccone staff.

Gdala Fleishman, a representative of the Israeli company Malam Systems Ltd, which

is linked to the Ciccone deal, told the Post that he may be able to talk to the press

in three weeks' time.

When asked if Malam would be working on the election in three weeks, Fleishman laughed:

"I am here, and I am happy to be here."

When news was leaked of the deal - signed by the two Prime Ministers, National Election

Commission president Chheng Phon and Ciccone's Asia division chairman, Oscar Ruben

Ciccone - it rocked foreign donors.

An election expert said the fact that the government was striking a behind-the-scenes

deal with Ciccone while asking for foreign aid proved it was not acting in good faith

and planned to ignore the international community's stated standards for a free and

fair elections.

All diplomats interviewed by the Post said they didn't know of the deal until early

March.

Most government ministers didn't know till then either.

Were it not for the subsequent "good news" headlines generated by Hun Sen's

agreement of a Royal pardon for Prince Ranariddh, indications were that foreign donors

were about to pull out of the elections.

Frenetic diplomacy does not seem to have quite resolved how the government, which

claims to be virtually penniless and in need of foreign aid, could strike a deal

that, according to the agreement, cost them $6.45 million on signing.

While some donors accepted the government line that Ciccone and Malam would only

step in if foreign aid was not forthcoming, most were aghast.

"This has raised serious concerns on the accountability and credibility of the

Cambodian electoral process," Japanese Embassy First Secretary Kazuhiro Nakai

said, soon after the news broke. "We are currently in the process of assessment

[on how the deal will affect Japanese funding]."

The Ciccone agreement accounts for voter and candidate registration (the present

responsibility of the European Union); printing of ballots (expected to be handled

by Japan); and the installment of a computer system to record voter registration

and balloting results (being provided by Australia).

But the government and the NEC must pay for "all the infrastructure, resources,

personnel, materials, communications facilities, transport facilities and every other

service or product which is not included in Ciccone's obligations".

One election worker estimated that these costs, plus the $25.8 million payment, to

Ciccone could mean a $32 million election.

The Ciccone election timetable was "laughable", said one foreign technocrat.

Registration was to have begun March 12, but they haven't even begun work yet.

Equally unrealistic, according to the election worker, is that the final voters lists

are to be distributed to the polling stations from July 14-24.

"There is no time for any appeal process," the worker said. "If they

want to distribute these lists in 10 days, I guess they will just fly over the polling

stations in a helicopter and drop them... They don't know what they are talking about.

It's dreaming. It's not realistic at all."

The Australians, now working on a $340,000 computer system, are continuing the project.

Asked if the Australians and Ciccone could combine, one diplomat said: "That's

what the Cambodians seem to want. Potentially, yes."

One foreign technician, more expert in electoral work than resident diplomats, was

asked whether Ciccone could work within the present electoral set-up. "No way.

Never," he said, adding that he would rather quit.

The European Union, which is already in the middle of its voter-and candidate-registration

package, has not made a public statement. British Ambassador George Edgar told DPA

that he could not comment on the implications.

Sources told the Post that Bangkok-based EU ambassadors to Cambodia had been pushing

to pull out of the elections, but it was unclear whether the Ciccone deal, Ranariddh's

previous participation problems or a combination of both was the trouble.

Although it remains to be seen how two different programs could be meshed, the contract

contains a clause that will make the scale of Ciccone's involvement dependent on

what foreign donors contribute.

"In such case, amounts of these services and equipment provided or granted by

international assistance shall be deducted from the global amount of $25.8 million,"

the deal states.

The contract calls for a down-payment to Ciccone of $6.45 million on signing plus

another $6.45 million to the company within 90 days. The final balance will be paid

to the company in two quarterly payments, presumably some time after elections are

completed.

Under these terms, either the NEC or the government should have already made at least

one payment to Ciccone. Officially, that appears not to be the case.

A member of the Election Bureau noted that very little money has been deposited into

the NEC's bank account. A withdrawal of $6.45 million from this account would be

impossible.

Minister of Finance Keat Chhon confirmed that the government has only given 4 million

riel ($1,142) of its pledged 18 billion riel ($5.14 million) election contribution.

Keat Chhon also said that the documents from the Ciccone deal have still not been

forwarded to his ministry, making a payment out of the national budget impossible.

Donors and election technicians severely doubt whether Ciccone and Malam - "a

group of foreigners with no experience in Cambodia" - could arrive this late

in the process and organize a remotely free and fair ballot for July 26.

One diplomat said the chance of a credible job being done at this stage was "absolutely

none".

Ciccone, according to Time Magazine, has links to an Argentine businessman nicknamed

by his own family "Papa Mafi" (Mafia Daddy).

Time, in a July 14, 1997 article, linked Ciccone to Argentina's "most powerful

- and feared - businessman", Alfredo Yabran.

Yabran has an estimated net worth of $500 million and defines power as "impunity",

Time said.

Yabran's critics claim in the article that, along with the Argentina's duty-free

shops and airport-customs warehouses, he unofficially controls Ciccone.

"Ciccone... holds contracts to produce Argentine passports, all-purpose identity

cards and gun licenses," the article stated. The firm also prints money, cheques,

license plates and lottery tickets. "The concessions give Ciccone access to

a wide variety of personal information on all Argentinians."

Diplomats noted that Malam was responsible, perhaps with Ciccone, for the registration

component of Zambia's 1996 election.

The Zambian election, done with international support, saw the ousting of long-time

strongman president Kenneth Kaunda.

However, one analyst described Malam's participation in the process as "expensive

and unsatisfactory". Another source familiar with the election added: "The

registration process excluded a significant number of eligible voters."

Fleishman refused to discuss details of the Cambodian deal or Malam's background,

saying only that it was an Israeli company with "a reputation that is quite

good".

"In these circumstances, I have to deny what you are asking me," Fleishman

said. "It is our usual policy to let the customer, the NEC, speak to the press."

Chheng Phon says the NEC is not the customer, and that he only signed as a "witness".

Yet the contract clearly states it is a three-way deal between the government, the

NEC and Ciccone.

Contact between Ciccone and the government began late last year with military advisers

to Hun Sen, according to a Western diplomat.

Sam Kieng, a Hun Sen adviser, appeared to be one of the main movers behind the deal.

Mol Roeup, a Hun Sen military adviser and chief of RCAF intelligence, visited Buenos

Aires in January to talk directly with Ciccone representatives about the deal.

Cabinet co-Minister Sok An now appears to be the main middleman between Ciccone,

the government and the NEC.