Algeria: Sonatrach's latest scandal

On 30 July we reported that Sonatrach’s CEO, Abdelhamid Zerguine, had been sacked and replaced by Said Sahnoun, the former Vice President for Production. Sahnoun will be Sonatrach’s ninth CEO since President Abdelaziz Bouteflika first took office in 1999 and the fifth in the last four years.

Although no reasons have been given for this surprise move, which adds to the reputation of Sonatrach’s management instability, it had been hypothesised that the open conflict between Zerguine and Energy Minister, Youcef Yousfi, over divergent visions for the exploitation of shale gas and the marketing strategy for natural gas in Europe was the primary cause. 

Our sources in Algeria indicate, however, that Zerguine was sacked because he resisted pressure from above to conduct corrupt under-the-counter deals of the kind that gave rise to the “Sonatrach scandal” in 2010.

The key name in this new scandal appears to be Ali Haddad, an extremely wealthy and powerful businessman who is a close friend and associate of the president’s brother, Saïd Bouteflika. Ali Haddad played a key role in financing and thereby ensuring Bouteflika’s re-election for a fourth term in April 2014.  

The price for his support now appears to be that his massive construction company, Groupe ETRHB, is given more Sonatrach contracts.

It is too early to know how foreign IOCs will react to this sudden development.  If it deters them from participating in the current licensing round and Algeria’s much-trumpeted unconventional oil and gas exploration and development, the cost and damage to Algeria will be no less great than the original 2010 scandal.

For a comprehensive analysis of this emerging scandal please refer to Algeria Politics & Security – 01.08.14

Pulling the plug on Bamako

Having been deprived of a large part of its multilateral budget aid following the 2012 coup, things were looking rosy for the Mali government by January of this year as international donors, including the World Bank, European Union, and the African Development Bank (AfDB), committed US$4.4 billion to support the economic and social recovery of the country.

So far over the past year, Mali has received US$300 million of the approximately US$900 million allocated by the World Bank’s assistance programme. Over the past months, however, it has seemed only a matter of time before the international community, especially those parts holding the purse strings, lost patience with the incompetent and corrupt Bamako government. That has now happened.

The last straw for international donors was the purchase in May of a presidential jet for Ibrahim Boubacar Keïta (IBK) from a private company without any tender. In addition to the improper purchasing process, it now transpires that not all of the money paid for the plane finished up in the hands of the supplier.

Similar corruption allegations also surround questionable arms contracts made by the IBK coterie. As a consequence, the International Monetary Fund (IMF) has suspended aid to Mali until September. The World Bank followed suit by postponing the payment of US$63 million in budgetary support. Managing director Sri Mulyani Indrawati announced the decision on 25 June.

An estimated €100 million from the European Union has also been frozen until further notice, and it is expected that major foreign donors will now suspend payments. Important donor partners include France, Germany, the United States, Canada, Holland, Sweden, Denmark, and Norway. A review of the management of Mali’s public finances is also underway.

These decisions are a severe punishment and big blow to the Bamako government, but they are not all surprising. The question is how deeply they will affect negotiations over the future of Azawad.

These financial blows, alongside the defeat of the Malian army in May, have not only strengthened the negotiating hand of the Mouvement National pour la Libération de l’Azawad (MNLA) but have shifted international opinion towards the realisation that some form of federalism is the only solution.

Dialogue better than war

Mali’s president and prime minster are going through a painful learning process. Interviews in the international media with IBK and Prime Minister Moussa Marra at the end of June suggest that both men now prefer dialogue to war.

From the tone of the interviews, it is clear that they have been chastened by the Malian army’s humiliating performance in Kidal, the increasing frustration of the United Nations with the government’s failure to make progress in the peace process, and the decisions of the international donor community to suspend funds.

These events have perhaps served the purpose of making the political class realise that if the government does not enter into serious and well-meaning negotiations with the rebel Azawad groups very soon, Bamako’s future could become extremely grim.

For more news and expert analysis about the Sahara region, please see Sahara Focus.

  

© 2014 Menas Associates

Nigeria: Sanusi suspension becomes test of will for Jonathan

Central Bank of Nigeria (CBN) governor Sanusi Lamido Sanusi is challenging his suspension by President Goodluck Jonathan in the courts, and the case is becoming an overwhelmingly political clash as accusations are traded publicly.

Sanusi submitted a 36-point memorandum to Jonathan on 17 March which containing detailed rebuttals of the allegations against him contained in a Financial Reporting Council of Nigeria briefing note.

Jonathan’s February suspension of Sanusi was preceded by earlier attempts to get the governor to resign before the June 2014 end of his term. Initially, Sanusi said that he would not seek reinstatement to his post but would test the constitutional legitimacy of the suspension in court to establish a legal principle.

Having been sent a list of infractions at the bank under his management, Sanusi has analysed them and seems to have changed his strategy. He is now publicly asking Jonathan to reinstate him for the remaining three months of his tenure.

A long political and legal battle looms but it is certain that Jonathan will use every tactic to ensure that Sanusi does not get access to the governor’s office before his tenure formally ends. 

The trend of claims and counter-claims in the dispute suggests that there will not be an independent and credible effort to investigate the basis of Sanusi’s concerns about the Nigerian National Petroleum Corporation, which has been unable to account for failing to transfer some US$49.8 billion in revenues from January 2012 to July 2013 to the CBN accounts.

Acknowledging that he lacks the constitutional power to remove Sanusi from office, Jonathan says the governor is free to return to office once he disproves the ‘acts of financial recklessness’ allegations against him. These supposedly arose from recently received audits of CBN accounts.

Sanusi’s quick response to Jonathan’s allegations was to allege that there was a conspiracy supported by bank chiefs who are unhappy that they would have to open their books to independent auditors so that the missing billions can be tracked.

This view, relating to the role of Nigeria’s banks as likely intermediaries in corrupt flows of funds, has been voiced by Sanusi and other financial experts. Prior to his appointment as CBN governor, Sanusi was chief executive of First Bank Nigeria, through which billions of state oil earnings are transferred between state agencies and other institutions.

Sanusi will meet Justice Gabriel Kolawole later this week when he attends a rescheduled hearing on the case. 

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

© 2014 Menas Associates

Ghana: PPP anti-corruption march finally goes ahead

Following approval by Ghana's police forces the much awaited Progressive People's Party (PPP) protest against corruption finally did go ahead last week. There was an interesting tagline from a PPP national youth coordinator "Divine Nkrumah" that corruption under the Mahama government was like a "General Mosquito" causing infection that should be eliminated immediately.

The term "General Mosquito" has often been used to refer to NDC General Secretary, Johnson Asiedu Nketia , who is currently arguing for the abandonment of the party's internal Electoral College system in favour of a less secure voting system.

 

PPP protesters, carrying a range of attention-grabbing banners, relayed accusations of misappropriation of government funds and controversial "judgement debt" cases. They also echoed suggestions from PPP communications director, William Doworkpor, including the reduction of executive power, separating the Attorney General's office from the Ministry of Justice to prevent partisan interference, and setting up a new, impartial "national commission" to investigate judgement debt cases.

 

Despite the PPP's anti-corruption calls some observers have questioned the party's own claims to be above the fray on probity matters. For example the local Research and Advocacy Platform (RAP) group has accused PPP flagbearer - and former 2008 Convention People's Party (CPP) presidential candidate - Dr. Paa Kwesi Nduom (above) of being involved in corruption at the State Enterprises Commission (SEC) while working on an SEC contract in the late 1980s. The group said that Nduom fraudulently claimed to be a representative of a noted US accounting firm. Previous accusations against Nduom have claimed that he was paid a significant sum in US Dollars for his services and that he was eventually appointed to the SEC while still a contractor which is a significant conflict of interest that he has yet to explain.

 

It has been alleged that Nduom was saved from further investigation by the intervention of the US Embassy and that the matter was never resolved. RAP is now calling for the Economic and Organized Crime Office (EOCO) to reopen investigations. No political party in Ghana, no matter how small, seems safe from corruption allegations against its senior members.

 

For more news and expert analysis about Ghana, please see Ghana Politics & Security.

 

© 2013 Menas Associates

Ghana: Arms trafficked to Nigeria may have been intended for terrorism

The Attorney-General's office, including its senior officials, have been the subject of considerable criticism in recent months, particularly in connection with high profile financial scandals, whether in turning a blind-eye to corruption, in inadequately prosecuting a corruption case, or actually being penalised – like former Attorney-General Martin Amidu – for alleging that “gargantuan corruption” has occurred.

Last week - during a bail hearing for defendants in an arms smuggling case that was reported in Ghana Politics & Security earlier this year - the Attorney-General's office claimed that the arms and munitions that were discovered and confiscated in transit to Nigeria were actually intended to assist terrorist activities in the neighbouring country. The three defendants in the case, who were denied bail following the prosecution's claims, could face life sentences for their actions with the case being big enough to attract senior attorney-general involvement. Their defence is that they were employed, prior to their arrest, by an arms-selling company called Globat although when captured it did not appear they were on assignment for any recognised company.

Although the case appears relatively minor, the severity of recent Nigerian terrorist activity notwithstanding, it can be viewed in conjunction with the increase of smuggling and criminal activity in Ghana in general. This includes drug smuggling, the spectre of piracy, and the corresponding need for the government to crack down on such activity and to be seen to do so. This is especially so because it involves one of Ghana's regional neighbours and the backdrop of increased ECOWAS cooperation against these criminal scourges.

The cocaine-for-baking powder story covered in Ghana Politics & Security at the end of 2011, even though the size of the cocaine court exhibit which disappeared was a drop in the ocean, illustrated the disorganisation and infighting among the police force and the judiciary over what should have been a straightforward case eventually required investigations and a report for the president. Hopefully this arms-smuggling case will be investigated and prosecuted without any major mishap.

For more news and expert analysis about Ghana, please see Ghana Politics & Security.

© 2012 Menas Associates

Brazilian Sports Minister quits in corruption probe

Becoming the fifth cabinet minister to resign in recent months, Brazil's Sports Minister Orlando Silva has quit his post amid a row over corruption which is threatening to derail President Dilma Rousseff.

Silva resigned on 26th October after persistent accusations that he helped to siphon money off a charitable fund to promote sport for deprived children, using the embezzled money for himself and to prop up the Communist Party of Brazil, part of the ruling coalition. He has been accused of stealing up to US$23 million.

He has strongly denied the allegations and has called his principal accuser, a police officer, a delinquent. In resigning, Silva said that “I decided to leave the government so that I can defend my honour”. Although no hard evidence was laid against him, analysts say that the pressure mounting on him – including a recently opened inquiry by the Supreme Court - made it inevitable that he would stand down.

Silva was the only Communist in Rousseff's Cabinet. It is widely expected that she will allow the Communist Party to nominate his successor, despite the party's apparent involvement in many of the recent graft scandals. Rousseff's willingness to let the Communists retain control of the ministry suggests that she is not keen to engage in a bruising political fight and risk her coalition unravelling.

To date she has been unaffected by the scandals, many of which stem from appointments made under her predecessor Luiz Inacio Lula da Silva, but analysts say there are limits to the amount of resignations that can occur before she starts to look weak.

The role of Sports Minister will be critical in the upcoming years, as the country prepares to host the 2014 World Cup. The amount of money and contracts involved makes it a potentially lucrative post for a corrupt official, and Rousseff is likely to insist on a candidate with impeccable integrity.

Sources: BBC, Reuters, AFP

For more news and expert analysis about Brazil, please see Brazil Focus.

Top Iraqi corruption investigator resigns

Iraq's Prime Minister Nouri Al-Maliki has accepted the resignation of Judge Rahim Hassan Al-Uqailee, the man leading Iraq's fight against corruption, in a blow to efforts to clean up the country's government and parliament.

Al-Uqaliee, the head of the country's Integrity Commission, submitted his resignation on 8th September, citing “pressure from political parties” to cover up corruption and a lack of political support for his agency.

Despite al-Uqaliee's public frustrations with stonewalling politicians, other explanations for his resignation are already circulating in Iraq's febrile political atmosphere. One of the members of the parliamentary committee on integrity, Sabah Saadi, claimed that the ruling party was pushing al-Uqaliee to launch “false and fabricated” corruption probes against political figures including Ahmad Chalabi, the US's former protégé in Iraq.

One of Saadi's fellow committee members, however, said that al-Uqaliee's resignation was a result of his failure to produce results in tackling Iraq's rampant corruption, ranked as the fourth worst in the world by Transparency International.

A third MP, Shakir Kitab claimed that the resignation “sheds light on complicated political relations and lack of transparency and stability in the government” rather than on the activities of one or another political bloc.

On 12th September, al-Uqaliee reiterated his reasons for resigning in a public letter to the integrity committee. In it, he declared that “the fight over stealing the money of the state and its property is the unspoken part of the struggle for power in Iraq today”. Despite such obstacles, however, in 2010 the Integrity Commission issued 4,082 arrest warrants for government officials, including 197 high-level figures.

According to Iraqi MPs, al-Maliki is planning to replace al-Uqaliee with a fellow member of his Dawa Party, Ala' al-Sa'idi. It remains to be seen whether the new head of the Integrity Commission will be able to ignore the pressures and obfuscations of shady officials.

Sources: AFP, Los Angeles Times, Aswat Al Iraq

For more news and expert analysis about Iraq, please see Iraq Focus.

Public pressure mounting over corruption in Brazil

Across Brazil on 7th September, the country's Independence Day, thousands demonstrated against corruption in the government, which organisers called a “pandemic which threatens the credibility of institutions and the entire democratic system”.

The demonstrations come in the midst of an anti-corruption drive by President Dilma Rousseff. Since she took office in January, four ministers have resigned under pressure over corruption; several others have also been accused of graft, while dozens of lower-ranking officials have been fired or arrested.

Rousseff's campaign has begun to spin out of her control. What began as a series of low-key internal investigations to root out graft in government agencies was picked up by the Brazilian press, and has since snowballed into a nationwide campaign against what is perceived to be a widespread culture of corruption.

The drive is now threatening Rousseff's political position, as well as sparking a growing civic campaign which could leave her vulnerable before the end of her first year in office. Media reports suggest that the effects of the purge are creating speculation that Rousseff's predecessor, Luiz Inacio Lula da Silva, could return in 2014 to replace her again as president.

Since June, Agriculture Minister Wagner Rossi, Chief of Staff Antonio Palocci, Transportation Minister Alfredo Nascimento, and Defence Minister Nelson Jobim have left their posts. The president has been criticised for allowing Tourism Minister Pedro Novais to remain, despite the arrest of many of his senior aides for a scheme to embezzle ministry funds.

The cycle of accusations and counter-accusations – many made anonymously through the media - is threatening the cohesion of Rousseff's governing coalition, with some viewing it as a fratricidal campaign of personal score-settling. Many now believe that Rousseff's Worker's Party will struggle to keep the coalition intact.

The Independence Day marches represent a new phase in the anti-corruption campaign, which has previously been largely confined to the political class. It suggests that the public is no longer prepared to tolerate the patronage-based cliques which have dominated Brazilian politics for years.

The protests place Rousseff in a difficult position. Although many of the demonstrators expressed support for the president's campaign, others were angry at the entire political system – suggesting that she must maintain the momentum or face becoming a target of public anger for not going far enough.

Sources: Financial Times, BBC, UPI, Christian Science Monitor

For more news and expert analysis about Brazil, please see Brazil Focus.

Iraq: Investment environment still poor

Iraq announced this month that it was seeking investment in its agricultural sector. The country, once known as the bread basket of the Middle East, is keen to redevelop its agricultural sector, which is unable to meet domestic needs.

Iraq is only able to supply around half of its grain needs, which total some 9 million tonnes. In a bid to boost the sector, agriculture minister Ezzeddine Al-Dawla announced in March that the government intended to offer incentives for farmers, such as providing loans for projects. The minister also announced that he would welcome foreign investors into the sector. Despite the high hopes of many Iraqis, including those in the investment committee that foreign investment would be streaming in to the country by now, the investment climate is generally still poor. This lack of interest among foreign investors has prompted huge disappointment in the country as Iraq is as desperate as ever for housing and basic services.

One of the main hurdles to attracting foreign investment continues to be the investment law and in particular the ruling within it that foreign companies cannot buy land in Iraq, only rent it. According to the Investment Committee this is putting many foreign firms off. This is only one issue that makes Iraq an unappealing prospect for many potential investors. Bureaucracy, corruption, inefficiency, not to mention the security situation, all mean that Iraq has a long way to go to convince foreign firms to invest outside the energy sector.

To make matters worse, many foreigners are struggling to get visas. It is rumoured that this is because of a recent decision by the Prime Minister's Office to take control of the matter itself. This move was supposedly a means to prevent corruption. Some sources, however, claim that bringing visa issue into the Prime Minister's Office will have the opposite effect. Iraq still has an uphill struggle to turn itself into the foreign investment hub it dreams of.

For more news and expert analysis about Iraq, please see Iraq Focus.

© 2011 Menas Associates