Secretary of State Henry Kissinger. (Photo: Gerald Ford Library)
Secretary of State Henry Kissinger ordered a series of secret contingency plans that included airstrikes and mining of Cuban harbors in the aftermath of Fidel Castro’s decision to send Cuban forces into Angola in late 1975, according to declassified documents made public today for the first time. “If we decide to use military power it must succeed. There should be no halfway measures,” Kissinger instructed General George Brown of the Joint Chiefs of Staff during a high-level meeting of national security officials on March 24, 1976, that included then Secretary of Defense Donald Rumsfeld. “I think we are going to have to smash Castro,” Kissinger told President Ford. “We probably can’t do it before the [1976 presidential] elections.” “I agree,” the president responded.
The story of Kissinger’s Cuban contingency planning was published today in a new book, Back Channel to Cuba: The Hidden History of Negotiations Between Washington and Havana, co-authored by American University professor William M. LeoGrande and Peter Kornbluh who directs the National Security Archive’s Cuba Documentation Project. Research for the book, which reveals the surprising and untold history of bilateral efforts towards rapprochement and reconciliation, draws on hundreds of formerly secret records obtained by the authors. The documents detailing Kissinger’s Cuban contingency planning in 1976 were obtained by Kornbluh through a Freedom of Information Act request to the Gerald R. Ford Presidential Library.
According to the book, Kissinger’s consideration of open hostilities with Cuba came after a protracted effort of secret diplomatic talks to normalize relations — including furtive meetings between U.S. and Cuban emissaries at La Guardia airport and an unprecedented three-hour negotiating session at the five-star Pierre Hotel in New York City. Cuba’s efforts at supporting the anti-colonial struggle in Africa, the authors write, “was the type of threat to U.S. interests that Kissinger had hoped the prospect of better relations would mitigate.”
The book describes Kissinger as “apoplectic” with Castro — in oval office meetings Kissinger referred to the Cuban leader as a “pipsqueak” — for Cuba’s decision to deploy thousands of soldiers to Angola to assist the Popular Movement for the Liberation of Angola (MPLA) party of António Agostinho Neto against attacks from insurgent groups that were supported covertly by the United States and apartheid regime of South Africa. Concerned that Castro would eventually broaden his military incursion beyond Angola, Kissinger counseled Ford that they would have to “crack the Cubans.” “If they move into Namibia or Rhodesia, I would be in favor of clobbering them,” Kissinger told the president, according to a March 15, 1976, Oval Office memorandum of conversation.
In the March 24 meeting with an elite national security team known as the Washington Special Actions Group, Kissinger expanded on the domino scenario. “If the Cubans destroy Rhodesia then Namibia is next and then there is South Africa,” Kissinger argued. To permit the “Cubans as the shock troops of the revolution” in Africa, he argued, was unacceptable and could cause racial tensions in the “Caribbean with the Cubans appealing to disaffected minorities and could then spillover into South America and even into our own country.”
Moreover, the lack of a U.S. response to the global exercise of military power by a small Caribbean island nation, Kissinger feared, would be seen as American weakness. “If there is a perception overseas that we are so weakened by our internal debate [over Vietnam] so that it looks like we can’t do anything about a country of eight million people, then in three or four years we are going to have a real crisis.”
Drafted secretly by the Washington Special Actions Group in April 1976, the contingency plans outlined punitive options that ranged from economic and political sanctions to acts of war such as mining Cuba’s harbors, a naval quarantine, and strategic airstrikes “to destroy selected Cuban military and military-related targets.” The contingency planners warned Kissinger, however, that any act of aggression could trigger a superpower confrontation. Unlike the 1962 missile crisis, stated one planning paper, “a new Cuban crisis would not necessarily lead to a Soviet retreat.”
Indeed, “a Cuban/Soviet response could escalate in areas that would maximize US casualties and thus provoke stronger response,” Kissinger’s national security advisers warned. “The circumstances that could lead the United States to select a military option against Cuba should be serious enough to warrant further action in preparation for general war.”
Back Channel to Cuba was released today at a press conference at the Pierre Hotel, the site of the first official secret meeting to normalize relations between the United States and Cuba in July 1975. The authors suggested that the history of such talks, and the lessons they hold, remain especially relevant at a time when both President Obama and President Raul Castro have publicly declared the urgency of moving beyond the legacy of perpetual hostility in U.S.-Cuban relations.
Document 1: Memorandum of Conversation, February 25, 1976
During a conversation with President Ford in the Oval Office, Secretary of State Kissinger raises the issue of Cuba’s military incursion into Angola, implying that Latin American nations are concerned about a “race war” because of Cuba’s efforts in Africa. “I think we are going to have to smash Castro. We probably can’t do it before the elections.” The president responds, “I agree.”
Document 2: Memorandum of Conversation, March 15, 1976
In another Oval Office conversation, Kissinger raises the Cuban military involvement in Africa and expresses concern that Castro may deploy troops elsewhere in the region. “I think sooner or later we have to crack the Cubans … I think we have to humiliate them.” He continues to argue that, “If they move into Namibia or Rhodesia, I would be in favor of clobbering them. That would create a furor … but I think we might have to demand they get out of Africa.” When President Ford asks, “what if they don’t?” Kissinger responds, “I think we could blockade.”
Document 3: Washington Special Actions Group Meeting, Cuba, March 24, 1976
Kissinger convenes The Washington Special Actions Group-a small elite team of national security officials-on March 24 to discuss a range of options and capabilities to move against Cuba. “We want to get planning started in the political, economic and military fields so that we can see what we can do if we want to move against Cuba,” he explains. “In the military field there is an invasion or blockade.” Kissinger shares his domino theory of Cuban military involvement in the region. “If the Cubans destroy Rhodesia then Namibia is next and then there is South Africa. It might only take five years,” Kissinger argues. In discussing military options, he states, “if we decide to use military power it must succeed. There should be no halfway measures – we get no reward for using military power in moderation.” Kissinger orders the group to secretly draw up plans for retaliation if Cuban troops go beyond Angola.
Document 4: Cuban Contingency Plan Summary, (ca. April 1976)
This document is a summary of the Cuban Contingency survey considering the possible U.S. reactions to continued Cuban and USSR “Angola style” intervention. The summary notes that the U.S. is already engaging in some efforts to dissuade further intervention through “public warnings, signals to the USSR, changes in our African policy and some measures designed to isolate Castro.” While any U.S. response will affect U.S.-Soviet relations, “It is easier to bring pressure on Cuba, as the closer and weaker partner in a tightly interwoven relationship, than on the Soviet Union.”
Document 5: Cuban Contingency Plan Paper 1, (ca. April 1976)
According to this lengthy contingency planning paper, the objective of these plans is to prevent a pattern in which Cuba and the USSR “arrogate to themselves the right to intervene with combat forces in local or regional conflicts.” The contingency plan outlines four courses of action that vary on a scale of seriousness for deterring continued Cuban intervention, including: political pressure, actions against the USSR, a scenario of actions (combining political, economic and military measures), and military steps. Any actions taken towards Cuba could spur greater tension with the USSR. “In short, confronting Cuba — the weaker partner — is an obvious step toward confronting the USSR.” Political measures are presented as the best option for dissuading Cuba because of the increased chances of a U.S.-Cuban “incident” stemming from military actions. Along with the possibility of an incident, this document notes that “one of Cuba’s main foreign policy objectives has been to normalize relations with the countries of this hemisphere.”
The document outlines the option for a quarantine. As Cuba is highly dependent on imports and foreign military equipment (from the USSR), especially by sea, the U.S. would be able to exacerbate Cuba’s greatest vulnerability. On that same theme, the paper points to the U.S. base at Guantanamo as the greatest vulnerability for a Cuban response to any U.S. military actions. Other military steps outlined in the plans include mining Cuban ports and conducting punitive strikes against selected targets.
Document 6: Cuban Contingency Plan Paper 2, (ca. April 1976)
This paper covers several categories of U.S. actions against Cuba: deterrence, pressure to cease and desist, interdiction of Cuban action under way, and retaliation. Any form of deterrence taken by the U.S. would have to be “predicated on a willingness to take some action if the deterrence failed.” However, and reiterated once again, any action taken to confront Cuba would also incite a confrontation with the USSR. The possible military measures presented include three forms of quarantine (selected war materiel, POL imports, maritime blockade excluding food and medicine), mining Cuban ports, and punitive airstrikes on selected targets.
The document notes two important ambiguities — the role of Cuban military involvement in Africa and the threshold to determine the U.S. response to a Cuban provocation. “In sum, there is a good chance the US will be confronted by an ambiguous situation, in which Cuban intervention is not clearly established.” As well, there is “no precise threshold” which would determine the U.S. response, except to state that the threshold would be low if Cuban action were directed against the US or its territories (Puerto Rico), higher in the Caribbean and Latin America, and highest in Africa.
The document states that “we should further make it clear that we are not reverting to the shenanigans of the early 1960’s” and that the U.S. is not violating any international agreements. While the Soviets in 1970 indicated that they regarded the 1962 U.S.-Soviet agreement as still in force, the “failure of the Cubans to permit the UN supervision renders the US pledge technically inoperative.”
Document 7: Kissinger Aide-Memoire to Cuba, January 11, 1975
This conciliatory message drafted by an aide to Kissinger, and approved by the Secretary of State, was given to the Cuban side at the first meeting between U.S. and Cuban representatives, which took place at a cafeteria in La Guardia airport. “We are meeting here to explore the possibilities for a more normal relationship between our two countries,” it begins. The objective is to “determine whether there exists an equal determination on both sides to settle the differences that exist between us.” While the ideological differences are wide, Kissinger expresses hope that such talks will “be useful in addressing concrete issues which it is in the interest of both countries to resolve.” As a gesture to the Cubans, the U.S. will permit Cuban diplomats (accredited to the UN) to travel from New York to Washington and may begin granting additional visas to Cubans for cultural, scientific and education meetings. For Kissinger, “no purpose is served in attempting to embargo ideas.”
Document 8: Memorandum for the Secretary, Meeting in New York with Cuban Representatives, January 11, 1975
In a briefing paper on the first secret meeting at La Guardia airport, Kissinger’s aide Lawrence Eagleburger reports on the tone and exchange of views. The Cubans stated they had no authority to negotiate at that time, but emphasized the importance of removing the embargo as a “sine qua non” for talks. Eagleburger reports that he wanted to “leave both Cubans with a clear understanding that while I had received their message, I was in no way prepared — even unofficially — to accept [removing the embargo] as a precondition to further talks.” Even though at times there was a seemingly difficult tone in the meeting, as Eagleburger explains, “the atmosphere of the meeting was extremely friendly.”
Document 9: Memorandum of Conversation, Pierre Hotel, U.S.-Cuba Meeting, July 9, 1975
This meeting marks the first formal negotiating session to explore normalized relations between the United States and Cuba. To break the ice, Eagleburger suggests that Kissinger is disposed to meet with the Cuban foreign minister during the upcoming UNGA meetings in September. Assistant Secretary of State William D. Rogers begins by explaining that Washington would support lifting multilateral sanctions at the OAS and that the United States would then begin to dismantle the trade embargo, piece by piece, in response to similar gestures from the Cubans. Over the course of the next three hours the U.S. and Cuban officials discuss a series of reciprocal and bilateral improvements of relations, with much of the meeting focused on the Cuban responses to the points raised by the U.S. side. Responding to the piece by piece approach of the U.S., the Cuban representatives reiterate that any precondition for talks remains the lifting of the embargo. “We cannot negotiate under the blockade,” Ramon Sánchez-Parodi argues; “until the embargo is lifted, Cuba and the United States cannot deal with each other as equals and consequently cannot negotiate.”
Ecuador’s President Rafael Correa criticized on Saturday a new U.S. government plan to intervene and weaken Latin American governments.
Correa said that Obama’s intention to create six innovation centers for educating new “leaders” in Latin America, Sub-Saharan Africa, Middle East, and Asia, was clearly intended to interfere with Latin American countries.
“What they want is to intervene in Venezuela, Bolivia, Ecuador, because they say we attack freedom of speech; but go and see for yourselves who are the owners of media in United States,” said Correa.
On Tuesday President Barrack Obama said that his government will support civil society in countries where freedom of speech and association are threatened by the governments.
“We’re creating new innovation centers to empower civil society groups around the world,” said Obama during his speech in a plenary session of the Clinton Open Initiative. “Oppressive governments are sharing worst practices to weaken civil society. We’re going to help you share the best practices to stay strong and vibrant.”
President Correa hit back “This is part of the conservative restoration: the insolent announcement of intervention in other countries.” He added “Let us live in peace and respect the sovereignty of our countries.”
Correa also responded that he will propose the creation of an innovation center in the United States to teach the country “something about human rights,” so they might learn about true democracy and freedom of speech, revoke the death penalty and end the blockade on Cuba.
Correa has accused opposition movements in the country of trying to destabilize his government.
President Barack Obama announced in a speech on Tuesday that the United States would be aggressively funding and supporting “civil society” groups around the globe, calling it a “national security” issue.
“It is precisely because citizens and civil society can be so powerful — their ability to harness technology and connect and mobilize at this moment so unprecedented — that more and more governments are doing everything in their power to silence them,” said Obama at the Clinton Global Initiative’s annual conference in New York.
Obama singled out Venezuela for allegedly “vilifying legitimate dissent” and said that Latin America would host one of the six Regional Civil Society Innovation Centers, a new initiative that seeks to create a global network to create cross-border partnerships. Other regions targeted for these new centers include Sub-Saharan Africa, the Middle East and Asia.
However, U.S. assistance to so-called civil society groups, especially in Latin America, has been marred in controversy, especially with regards to leftist governments.
The United States Agency for International Development (USAID), one of the U.S. bodies that funds and supports “civil society” organizations abroad, funded Venezuelan opposition groups responsible for the 2002 coup attempt against the democratically-elected former president Hugo Chavez.
In 2009, according to USAID documents obtained through the U.S. Freedom of Information Act, the group had also funded local regional governments and municipalities in Bolivia at a time when the government of Evo Morales was dealing with right-wing separatist movements in the eastern part of the country. Morales eventually expelled the agency from the country in 2013, a move followed by Ecuador’s President Rafael Correa later that year. Correa announced in November 2013 that USAID is required to leave the country by the end of this month.
“Partnering and protecting civil society groups around the world is now a mission across the U.S. government,” said Obama.
He ordered, via a presidential memorandum, agencies such as USAID, the Department of State, and Homeland Security, to work more regularly with civil society groups across the globe. … Full article
With all this money pouring into palm oil companies, lands for oil palm plantations are at an all time premium, wherever they can be found.
Oil palm plantations can, however, only be established on a narrow band of lands in tropical areas that are roughly 7 degrees North or South of the equator and that have abundant and evenly spread rainfall. This makes the potential area for new oil palm plantations rather limited. Plus, most of these lands are composed of forests and farmlands that are occupied by indigenous peoples and peasants, some of whom are already growing oil palms for local markets.
The expansion of oil palm plantations, therefore, depends upon companies getting these people to give up their lands. This is not an easy sell, given the meagre jobs and other benefits that an oil palm plantation generates in comparison with the destruction that it causes and the value that the lands already hold for the people. A typical oil palm plantation requires only one poorly paid worker for every 2.3 hectares, while the surrounding communities pay a high price for the deforestation, water use, soil erosion and chemical fertiliser and pesticide contamination that it causes.1 Companies trying to acquire lands from communities also run into customary forms of land governance that do not allow for a company to buy up land one parcel at a time.
The easy way for companies to get around these hurdles is to ensure that the communities do not even know that their lands have been signed away. It is very common in Africa, for instance, for companies to sign land deals directly with the national government without the knowledge of the affected communities. In many cases, the companies signing the deals are obscure companies registered in tax havens with their beneficial owners hidden from view. The managers of these companies tend to come from the mining sector or other extractive industries with long histories of shady deals in Africa. In Papua New Guinea and Indonesia, land deals are typically brokered between local elites and foreign investors, also often with obscure ownership structures registered in tax havens.
Such small shell companies are not in the business of developing plantations. Once the land contracts are signed, they immediately look to sell out to larger companies with the technical capacity and financial resources to build the plantations. And it is usually at this point that the communities come to understand that their lands have been sold.
Most of these cases eventually lead to a situation where a large multinational plantation company, backed by a national government and a multimillion dollar contract, faces off against a poor community trying desperately to hold onto to the lands and forests it needs to survive. It is incredibly difficult for communities to defend themselves against such powerful forces, and those that do risk the threat of violence, whether by paramilitaries in Colombia, police in Sierra Leone, or the army in Indonesia.
Tax havens and land grabs for palm oil in Africa
The case of Atama Resources Inc
In 2010, the Government of the Republic of the Congo signed away more than 400,000 ha to a Congolese registered company called Atama Plantation whose owners remain unknown.2 In return, this mysterious company promised to develop the Congo Basin’s largest ever oil palm plantation, converting 180,000 ha of mostly forested land in the provinces of Cuvette and Sangha while paying the government a token annual fee of $5 per hectare of planted land. The company was under no obligation to conduct environmental or social impact assessments or to consult with affected populations.
When the contract was signed, Atama Plantation was wholly owned by Silvermark Resources Inc, a company registered in the offshore fiscal paradise of the British Virgin Islands.3 The only publicly available information on Silvermark is that it is owned and directed by two shell companies registered in Brunei. Because of the rules of secrecy governing companies registered in Brunei and the British Virgin Islands, it is impossible to know who the actual owners of these companies are.
In 2011, ownership of Atama Plantation was transferred to a holding company in Mauritius, another fiscal paradise, before finally being sold, in 2012, to Malaysia’s Wah Seong Corporation, a “pipe-coating specialist” company with no history in the palm oil sector that is controlled by Malaysian businessman Robert Tan.4
Whoever the owners of Silvermark are, they pocketed an estimated $25 million, without doing anything more than orchestrate the contract with the Congolese government. And, under the deal with Wah Seong, they still hold 39% of the shares with yet another British Virgin Islands registered company with unknown owners holding the remaining 10%.
The case of Liberian Forest Products Inc. (LFPI)
On August 21, 2006 a little known London minerals exploration company announced to the world that it had taken control of 700,000 ha of land in Liberia– equal to about 7% of the country’s entire land area. The owners of Nardina Resources PLC claimed they had acquired rights over this massive chunk of land through a take over of a Liberian company called Liberian Forest Products Inc. (LFPI). Nardina then changed its name to Equatorial Biofuels PLC and then again to Equatorial Palm Oil Ltd (EPO) to reflect its new mandate as a palm oil company. Meanwhile, the original owners of LFPI walked away with £1,555,000 in shares and cash.
But how did the owners of LFPI get hold of such an obscene amount of territory in a country just emerging from over a decade of civil war? And who were these owners anyway?
EPO’s disclosure documents from its listing on the London AIM stock exchange in 2010 show that the money it paid for LFPI went to two offshore companies, Kamina Global Ltd of the British Virgin Islands and Subsea BV of Liberia, which each had 50% shares of LFPI.
Searches conducted in December 2013 through the company registry in Liberia found no record of registration for a company called Subsea BV. However, the articles for registration for LFPI of November 2006 indicate that LFPI is a Liberian company owned by Tony Smith (50%) and A. Kanie Wesso (50%), who are both trustees for a new company to be formed, called Subsea BV. The sole LFPI director named in the document is Mark Slowen, a British businessman operating from Liberia whose name also turns up as the CEO of SubSea Resources DMCC (Dubai Multi Commodities Centre), a company that acquired mineral rights in Liberia at around the same time.
A second business registry document for LFPI from August 2007 refers to LFPI as a British owned company– with ownership split between Mark Slowen (50%) and Kanie Wesso (50%). Both documents describe LFPI as a company whose sole business is logging.
Subsea BV also turns up in the UK business directory as a director of the G4 Group, which has several business interests in Liberia and is controlled by the notorious financial fraudster Lincoln Fraser.5 The G4 Group’s Liberian subsidiary, G4 WAO Inc., exports rubber tree logs and holds a phosphate exploration concession covering 36,000 ha in Bopolu. According to the company website, G4 WAO “manages in excess of one million acres of the best crop growing conditions in the world” and has partnered with the International Crops Research Institute for the Semi-Arid-Tropics (ICRISAT) “to establish trial sites on various G4 farming enterprises in Liberia, Ghana and Kenya.”6
Kamina Global Ltd, the other company that was paid by EPO for the acquisition of LFPI, is even more opaque. Legislation in the British Virgin Islands does not require companies to disclose their directors or shareholders, so it was not possible to identify the people behind Kamina Global through company records.7
When EPO acquired LFPI, the contract was under examination by Liberia’s Public Procurement and Concession Commission. It would conclude that the agreement contained “gross irregularities and non-compliance with the law” and EPO was forced to renegotiate. LFPI, now under the ownership of EPO, signed a new contract with the government in 2008, this time covering a much reduced but still valuable 55,000 ha area of land in Butaw. With this concession and another of a similar size in Liberia, EPO went public on the London AIM stock exchange, eventually attracting significant investment from the Siva Group, a Singapore-based holding company of Indian billionaire Chinnakannan Sivasankaran, who has quietly amassed one of the world’s largest land banks for oil palm in just a few years. The Siva Group started buying shares of EPO in 2010 and by 2013 it controlled 36.7% of the company and had formed a 50:50 joint venture with EPO based in Mauritius, called Liberian Palm Developments Ltd, that took control of all of EPO’s Liberian land concessions.8
In 2013, the Siva Group would sell its shares in EPO and its Mauritian joint venture to KL Kepong of Malaysia, one of the world’s largest palm oil companies.
Are Chinese companies grabbing land for palm oil?
China runs neck and neck with India for the world’s number 1 palm oil importer. So it would only make sense that Chinese companies would be involved in the current rush for lands for oil palm plantations. But while there have been several reports of massive land grabs for palm oil by Chinese companies, few of these have materialised.
China’s telecom giant ZTE, which has a biofuels division, was said to have signed an agreement with the Democratic Republic of the Congo to develop 2 million hectares of oil palm plantations. The numbers were later scaled down to 100,000 ha and it now seems like the project has been scrapped entirely.
In 2005, Indonesia’s President Yudhoyono announced a plan to develop 1.8 million hectares of land along the Kalimantan border into oil palm plantations. Several Chinese companies including state-owned investment company CITIC Group were offered one third of the area in return for building roads and railways and details were released of a $600 million project between CITIC and Indonesian palm oil giant Sinar Mas to develop a 100,000 ha plantation in the area, with a $380 million dollar loan from the China Development Bank.9 Sinar Mas’ subsidiary Golden Agri Resources is one of the main suppliers of palm oil to China. The plans, however, were never put into operation.
In 2012, Sinar Mas, which is controlled by Indonesia’s Widjaja family, announced a new partnership for oil palm development with China, this time with state-owned China National Offshore Oil Corp. and another Widjaja controlled company, HKC Holdings of Hong Kong. Wang Jun, the former chairman of CITIC Group, is the honorary chairman and a director of HKC. The companies said the project would be rolled out over eight years in Papua and Kalimantan, “where regional governments had reserved about one million hectares of land for it.”
Less than a year later, the Widjajas cemented another major palm oil deal with China. This time in Africa. In March 2013, Golden Agri Resources’ wholly-owned subsidiary Golden Veroleum Limited procured a $500 million term loan facility from the China Development Bank to support the construction of its 220,000 ha oil palm plantation project in LIberia. Typically the CDB only loans to overseas companies or projects when Chinese companies are directly involved.10
For now, China appears to be channeling most of its investments in palm oil through Asian palm oil companies, such as Sinar Mas, that dominate the global palm oil trade. The only Chinese company making significant direct investments in oil palm plantations has so far been China’s state-owned oil company Sinochem. In April 2012, Sinochem paid 193 million euros to acquire 35% of the Belgian plantations company SIAT, which has oil palm plantations in Gabon, Ghana and Nigeria. It also announced that its rubber company in Cameroon would be expanding its plantations and starting to move into palm oil production.
1 UNEP, “Oil palm plantations: threats and opportunities for tropical ecosystems,” December 2011
2 See the excellent report, “Seeds of Destruction“, Rainforest Foundation UK, 2013
3 Silvermark is owned by Tinaldi Ltd and the Director is Greenland Ltd. Greenland Ltd is reported to be controlled by Benny Lum (who may just be a proxy). It controls Lamington Capital Inc (maybe Singapore) which is also a shareholder in African Petroleum Corporation Limited. It was also used to direct a transfer of funds to a Thai company that is linked to Thaksin. Both Tanaldi Ltd and Greenland Ltd (Brunei) are registered in Brunei to the address of HMR Trust Ltd (which is involved in offshore financial services). Other documents indicate that Tanaldi Limited is owned by Tan Sri Barry Goh Ming Choon of Malaysia and the company acts as a trust for other Malaysian businessmen. Barry Goh controls B&G Capital Resources Berhad (“BCGR”) which he started in 1994. BGCR has served as the principal contractor to Tenaga Nasional Berhad (TNB), one of the largest government link companies in Malaysia
4 Atama Resources Inc was registered in Mauritius in July 2011, as 100% owned by Silvermark. In 2012, Wah Seong purchases 51% of Atama Resources Inc. through its 100% owned subsidiary WS Agro Ind Pte Ltd (Singapore). 39% remains with Silvermark. 10% is taken by Giant Dragon Group (BVI), which is 100% owned by Marston International Ltd. (BVI), who’s director is Eastern Sky Ltd. (Hong Kong). Eastern Sky is a nominee director for several other companies. The Wah Seong Corporation is largely controlled by Malaysian businessman Robert Tan. Marston International Ltd. is the owner of Pergenia International Limited (PIL) incorporated in British Virgin Island on 10 January 2007 and Netstar Holdings Limited registered in BVI in 2003. Marston International Ltd is also the controlling shareholder of PT Jaya Pari Steel Tbk. (Indonesia). Reports from PT Jaya Pari Steel Tbk say that Marston International Ltd is owned by John Matthew Ashwood (50%) and Brian Whiteman and Robinson McKinstry (50%), who seem only to be proxies and John Ashwood likely works for Vistra, an offshore financial company based in Hong Kong. PT Jaya Pari Steel is a company of the Gunawan family of Indonesia, which is involved in finance and steel. The family controls 46 percent of Indonesia’s PT Bank Panin. Marston International Limited is also a major shareholder in another Gunawan steel company, Betonjaya Manunggal Tbk PT, through its ownership of Profit Add Limited (Samoa). Marston International is listed as a shareholder of Best Dragon Enterprises Limited, alongside Tito Sulistio, who is connected to the Suharto family.
5 Fraser is described by Offshore Alert as a “British conman who masterminded the $400 million Imperial Consolidated fraud” which robbed thousands of pensioners and others of their savings when it went bankrupt in 2002.
7 Kamina’s company registration information indicates that it was registered on 17 March 2006 and struck off on 2 November 2009. It’s registered agent is TMF (BVI) Ltd, a company which manages numerous shell companies on behalf of clients around the world. As written on the same document: “Under the BVI Business Companies Act, 2004 companies are not required to file information on Directors and Shareholders of a company.”
8 Siva Group’s 36.7% share of EPO is held by way of several subsidiaries: Biopalm Energy Limited (16.62%), The Siva Group (16.62%) and Broadcourt Investments Ltd (3.46%).(The joint venture is between EPO’s wholly-owned subsidiary Equatorial Biofuels (Guernsey) Limited and Biopalm Energy Limited, a wholly owned subsidiary of Geoff Palm Ltd based in the offshore city of Labuan, Malaysia, and which is owned by Broadcourt Investments Ltd, a British Virgin Islands registered holding company with Chinnakannan Sivasankaran, the Siva Group’s founder and owner, listed as its only director and shareholder since January 2007.
9 “The Kalimantan border oil palm project,” Milieudefensie – Friends of the Earth Netherlands and the Swedish Society for Nature Conservation, 2006; “China’s investment foray into Indonesia,” Asia Sentinel, 6 June 2013
The rush to develop oil palm plantations in Africa is a double whammy for the continent. Not only does it involve a huge land grab of peoples’ lands and food producing resources, it also directly undercuts the livelihoods of millions of people involved in Africa’s traditional oil palm sector.
This is not the first time foreigners have pushed an expansion of oil palm in Africa. During the the colonial occupation of the continent, the European powers became interested in palm oil as an industrial lubricant and for making candles. African families were forced to pay a special tax, known as the “takouè” to the colonial authorities, in the form of palm oil and palm nut. King Léopold II of Belgium forced every farmer in the province of Equateur in the Congo to plant 10 palms a year.1
The European powers also established their own oil palm plantations around this time. Plantations were created in West and Central Africa as well as in Southeast Asia. Research stations and collection missions were launched to develop high yielding varieties of oil palms through the cross breeding of traditional or wild varieties.
With independence, most of these plantations and research stations were nationalised, and the new African governments reenergised the expansion of national production. In Bénin, for example, the state-owned Société Nationale du Développement Rural (SONADER) led an expansion of oil palm plantations in the south immediately after independence, while another state-owned company, the Société Nationale pour l’Industrie des Corps Gras (SONICOG) built new palm oil refineries and palm nut processing factories.
But, at the end of the 1990s, World Bank and donor imposed structural adjustment programmes forced African governments to privatise their national palm oil companies and to sell off their mills and plantations. While many national companies simply crumbled away, European companies with old colonial connections captured the most lucrative operations. SOCFIN, controlled by billionaires Vincent Bolloré of France and Hubert Fabri of Belgium, took over national companies in Cameroon, the DRC, Guinea and Nigeria. SIAT, controlled by the family of South African diamond magnate Ernest Oppenheimer and the Belgian Vandebeeck family, took plantations in Gabon, Ghana and Nigeria, while another old money Belgian company, SIPEF took over a chunk of the state-owned oil palm plantations of Côte d’Ivoire. Unilever, one of the world’s largest and oldest food companies, scored plantations too – in the DRC, Ghana and Côte d’Ivoire.
Today there is a second wave of foreign interest in oil palm plantations in Africa. With land for oil palm plantations becoming more difficult and expensive to acquire in Malaysia and Indonesia, companies and speculative investors are keen to open up new frontiers for export production. Some investment is going to Papua and to Latin America, but the biggest target is Africa. A long list of companies, from Asian palm oil giants to Wall Street financial houses, are scrambling to get control over lands on the continent that are favourable to oil palm, especially in the West and Central regions.
Over the past five years, vast areas of land in Africa have been allocated to foreign companies for oil palm plantations by African governments, with minimal if any consultation with the affected populations and many allegations of corruption. Table 1 lists 60 deals covering nearly 4 million hectares over the past decade and a half.
A number of different actors are involved. There are established Asian plantation companies, like Wilmar and Sime Darby, and multinational palm oil traders, like Cargill and Olam, both looking to establish a new basis of palm oil supply for global markets in Africa. But many of the first movers are in fact small obscure companies, typically domiciled in tax havens, whose owners intend only to sign land deals and then sell their companies as soon as possible to larger players with the capacity to develop the plantations. In many cases it is difficult to work out who the owners of these companies are.
The communities facing land grabs from palm oil companies are under tremendous pressure to accommodate them, with pressure coming from the companies, the government, the local chiefs and even the army and paramilitaries. Those who resist face arrest, harassment and violence. And yet communities in Africa and around the world, from Papua New Guinea to Sarawak, from Cameroon to Guatemala, continue to struggle to stop palm oil companies from entering their lands.
Communities in southwest Cameroon have been involved in a three year struggle to stop the US company Herakles Capital from setting up an oil palm plantation in their area. Despite support from the president of Cameroon, Herakles has been unable to move forward with its plans because the communities are united in their total opposition to the plantation and because of the creative actions that they have undertaken, with support from national and international partners, to put pressure on the company to leave. The company and the government keep coming back and presenting new terms, the latest being a presidential decree that reduces the land allocated to Herakles from 73,000 ha to 20,000 ha and boosts the rent that the company must pay. Community leaders have been arrested and harassed with lawsuits. Yet the communities are sticking to their bottom line demand – no oil palm plantations on their lands.
Cameroon is also a target for the Luxembourg based company SOCFIN, owned by billionaires Vincent Bolloré of France and Hubert Fabri of Belgium. Over the past decade and a half, SOCFIN has taken over lands for oil palm and other crops in several African countries, including Cameroon, DRC, Guinea, Nigeria, Sao Tome & Principe, and Sierra Leone. The company is notorious for human rights abuses and land conflicts at its operations, and for its aggressive tactics against those who oppose it. In the past few years, the company has slapped defamation suits on several organisations and journalists in Africa and Europe that have spoken out against it.
On June 5, 2013, communities affected by SOCFIN plantations in four African countries held simultaneous protest actions against the company, as a delegation of diaspora from these countries and supported by the French group Réseaux d’Action Transnationale (ReAct) presented a joint letter from the various communities to the Annual General Meeting of the Bolloré Group, which is a major shareholder in SOCFIN.
“This initial international protest is just the beginning. We are committed to upholding our rights and Mr. Bolloré will have to understand that,” said Emmanuel Elong, spokesperson for Synaparcam, the Socapalm resident farmers’ union in Cameroon.2
Strong community resistance combined with national and international, well targeted pressure, can roll back land grabs. The Jogbahn Clan in Liberia provides an inspiring example. When the British company Equatorial Palm Oil began surveying their lands as part of a deal it signed with the Liberian government, the communities took action to stop the work crews. They then marched to the local government offices to make it clear that they had never been consulted about the deal and that they would never give up their lands for the project. Along the way they were beaten, arrested and thrown in jail. But the communities refused to back down. Local and international NGOs joined their struggle, and exposed what was happening to the world. Finally, in March 2014, community leaders met with the Liberian President, Ellen Johnson Sirleaf, and secured a commitment from her to stop the company from expanding on their lands. Now Liberian groups are hoping to replicate these efforts with other affected communities in the country.3
The many different efforts to resist land grabs and maintain local control over palm oil production in Africa, Asia and Latin America demonstrate how committed local communities are to maintaining control over their ancestral lands and their biodiversity, for themselves and for future generations.
1 World Rainforest Movement, “Oil palm in Africa: past, present and future scenarios,“ 2010
2 Synaparcam, SoGB residents committee, Concern Union Citizen, and MALOA, “West African farmers stand up against Bolloré,” 5 June 2013
3 For more information about the case see: http://sdiliberia.org/node/263
A team of eight experts and journalists visiting the southern region of the West African state of Guinea were found dead in the town of Nzerekore on Sept. 20. Reports indicate that they were there to educate people about the nature of the disease for the purpose of its prevention.
Reports from Guinea say that the delegation had met with elders in the community but were later attacked by youths. Investigations into the details of the killings are ongoing.
There is tremendous mistrust surrounding the spread of the Ebola virus disease in some West African states where the epidemic has had an impact. Doctors Without Borders reported in April that their teams were forced to withdraw from Macenta in Guinea after being stoned by youths who said they were there to spread the disease.
Newspaper articles and rumors have circulated that the outbreak is a direct result of biological warfare being waged by imperialist countries against the African continent.
Although no one knows what the motivations were of those who carried out the killings in Guinea, obviously there are many people who mistrust the motivations of foreign aid workers responding to the crisis. Guinea is the first country that was identified in the latest spread of the disease, which has periodically struck in Central and West Africa over the last three decades.
Biological warfare and economic underdevelopment
The most widely discussed and controversial article related to the spread of the Ebola virus disease was published by the leading newspaper in Liberia, The Observer. Dr. Cyril Broderick, a former professor of plant pathology at the University there, asserted that the spread of the disease is a direct result of US Department of Defense bio-warfare against Africa.
Broderick’s article was published on Sept. 9 and stated that “Africa must not relegate the Continent to become the locality for disposal and the deposition of hazardous chemicals, dangerous drugs, and chemical or biological agents of emerging diseases. There is urgent need for affirmative action in protecting the less affluent of poorer countries, especially African citizens, whose countries are not as scientifically and industrially endowed as the United States and most Western countries, sources of most viral or bacterial GMOs that are strategically designed as biological weapons. It is most disturbing that the US Government has been operating a viral hemorrhagic fever bioterrorism research laboratory in Sierra Leone.”
This same author goes on to ask “Are there others? Wherever they exist, it is time to terminate them. If any other sites exist, it is advisable to follow the delayed but essential step: Sierra Leone closed the US bioweapons lab and stopped Tulane University for further testing.” (Sept. 9)
Broderick has been attacked for publishing the article, and according to Health Impact News “The western pro-pharma media has chided Dr. Broderick, saying that such an inflammatory piece of writing is ‘irresponsible’ since so many Africans are already distrustful of western medicine. They see western medicine as the answer to Africa’s deadly diseases such as Ebola, while Dr. Broderick sees it as the cause. Dr. Broderick states ‘African people are not ignorant and gullible, as is being implicated.’” (healthimpactnews.com, Sept. 21)
Following the publication of this article, President Barack Obama announced on Sept. 16 that the US would deploy 3,000 troops to the affected West African states as a means to combat the disease. Obama said in a press release that “The United States will leverage the unique capabilities of the US military and broader uniformed services to help bring the epidemic under control. These efforts will entail command and control, logistics expertise, training, and engineering support.” (White House press statement)
Washington is already heavily involved militarily in Africa. Several thousand Pentagon troops, Central Intelligence Agency (CIA) operatives and State Department functionaries are on the continent as part of the US Africa Command (AFRICOM). This intervention since 2008 has created more instability and underdevelopment in Africa as represented by the events in Egypt, Mali, Libya, Somalia, South Sudan and Nigeria, where the ostensible partnerships aimed at curbing “terrorism” has prompted the intensification of conflict, dislocation and in the case of the Horn of Africa, famine.
Pentagon and CIA drone operations have carried out numerous targeted assassinations in Somalia. In Mali, a US-trained military officer returned to this former French colony and staged a coup providing a rationale for internal destabilization as well as an ongoing occupation by Paris.
Cuba offers medical solidarity
Meanwhile the revolutionary nation of Cuba pledged to send medical personnel in the fight against the disease. Cuba has a profound history in providing unconditional solidarity with the African continent.
In an address on Sept. 18 before the United Nations Security Council emergency session on Ebola, Vice Minister of Foreign Relations Abelardo Moreno told the participants that, “Cuba’s response is part of our solidarity with Africa, Asia and Latin America and the Caribbean. Over the last 55 years, we have collaborated in more than 158 countries, with the participation of 325,710 health workers. Some 76,744 collaborators have worked in 39 African countries. Today, in this sector, 4,048 Cubans are serving in 32 African nations, 2,269 of whom are doctors.” (granma.cu, Sept. 19)
Moreno went on the report that, “The medical brigades which will be sent to Africa to fight against Ebola form part of the ‘Henry Reeve International Contingent’ – created in 2005 – composed of doctors specializing in combating disasters and large-scale epidemics. Cuba’s response confirms the values of solidarity which have guided the Cuban Revolution: not to give what we can spare, but to share what we have.”
This approach contrasts sharply with that of the White House and Pentagon. Cuba has built up considerable trust in Africa due to its consistent policy of international solidarity.
At least three countries that have reported Ebola cases are reporting improvements in fighting the disease and its proliferation. In Nigeria, the Federal Government announced that schools would be re-opened on Sept. 22 despite opposition from the sections of the Nigerian Union of Teachers (NUT).
In Sierra Leone, there was a state of emergency declared restricting movements for three days. The government announced on Sept. 22 that the situation was now under control. Similar announcements have been made in reference to developments in Senegal, where at least one case has been reported.
Nonetheless, there have been nearly 3,000 deaths reported from the disease. In addition, there are still numerous questions related to the conditions under which the disease is spread and the most effective means to treat and eradicate the epidemic. (WHO Update, Sept. 22)
This outbreak does draw attention to the need for genuine independence and development on the African continent. The training of medical personnel and scientific researchers would contribute immensely to preventing future healthcare crises.
Cuban revolutionary foreign policy provides an example of how underdeveloped states, which have a legacy of slavery, colonialism and neo-colonialism, can transform through a process of class struggle and self-reliance. With over five decades of hostility from the US, Cuba has been able to make significant contributions to African liberation whether in the fight against settler-colonialism in Southern Africa in the years past or through the contemporary challenges related to the Ebola outbreak, the training of African medical personnel and other healthcare issues.
Let us be clear, if that is possible, about President Obama’s plan to deal with ISIS, the boogeyman of America’s own making. The president last week swore that he would “degrade and destroy” the Islamic State, after having spent three years providing weapons and money to jihadists fighters, including ISIS, in hopes that they would “degrade and ultimately destroy” the Syrian state of president Bashar Assad. So, the Americans set out to destroy one state, in Syria, whose government had never presented any danger to the U.S., and wind up creating another state, a caliphate astride the borders of Syria and Iraq, that openly declares its intention to do battle with the U.S.
Obama assures us that he is assembling a new coalition of the willing to join him in smashing ISIS. It turns out that every prospective member of the coalition was a co-conspirator with the United States in giving birth to ISIS – Britain and France and other Europeans, Turkey, Saudi Arabia, Jordan, Kuwait, the United Arab Emirates…ISIS has many, many fathers, all of whom now deny patrimony.
Obama appears to be leaving the natural gas-rich nation of Qatar out of his coalition, which doesn’t seem fair, since Qatar was a loyal ally of the United States and NATO just three years ago, when Obama was busy trying to degrade and destroy another state, Libya, which also posed no threat to the U.S. The emir of Qatar worked his gaseous little butt off for Obama, sending money and guns and mercenaries to help the Libyan jihadists that the U.S. wanted to install as the new government.
Once regime change had been accomplished in Libya, Qatar helped the Americans send hundreds of Libyan jihadists to Syria, to put that regime out of business. But, Libya never did get a new state, to replace the one that was destroyed in 2011. Instead, the country is wracked by civil war, that is also a proxy war between Saudi Arabia and its friends and Qatar.
Wars Within Wars Within Regime Changes
It seems that Qatar backed the wrong side – the Muslim Brotherhood – after the regime change in Egypt in 2011. The Saudi Arabian royal family hates the Muslim Brotherhood, because the Brotherhood advocate elections, and kings don’t do elections. So, the Saudis bankrolled another regime change in Egypt, putting the military back in charge, and are now fighting a proxy war with Qatar in Libya. Which is why the Saudis blackballed Qatar from participating in Obama’s coalition of the willing against ISIS. (You do understand all this, right?)
Turkey, which is part of NATO, has been a wonderful father to ISIS, allowing the caliphate’s fighters free use of its long border with Syria and Iraq. In return, Turkey gets to buy the cheap oil from the fields that ISIS seized from Syria and Iraq, which makes the Turks somewhat reluctant to try to kill little baby ISIS.
It’s starting to look like Obama might have to take out the caliphate on his own, which is why the president’s top military advisor is talking about putting serious U.S. boots on the ground in Iraq, and maybe in Syria. Meanwhile, Obama is putting together a new army of rebels to continue the job of degrading and destroying the Syrian state – unless, of course, these new fighters just take the money and guns and join ISIS, too.
Glen Ford can be contacted at Glen.Ford@BlackAgendaReport.com.
The decision by US President Barack Obama to dispatch 3,000 troops to West Africa to fight the Ebola epidemic has sparked reactions in Liberia.
“We don’t need guns to protect us for now. What we need now is drugs. We need vaccine to curtail the spread of this virus. So it is unfortunate to hear that America is sending over 3,000 troops,” one Liberian citizen said.
“If it is an armed troop then I will start to question myself whether this virus can be fought by guns or so,” said another Liberian.
On Tuesday, Obama described the Ebola epidemic in West Africa as a threat to the entire world.
In an address from the Centers for Disease Control and Prevention headquarters in Atlanta, Obama called the US effort to fight the virus being part of “the largest international response in the history of the CDC”
“This is an epidemic that is not just a threat to regional security. It’s a potential threat to global security, if these countries break down, if their economies break down, if people panic,” he said.
“That has profound effects on all of us, even if we are not directly contracting the disease,” he added. This outbreak is already “spiraling out of control.”
Earlier, the World Health Organization said the number of Ebola cases in West Africa could start doubling every three weeks and the crisis could end up costing nearly $1 billion to contain.
Ebola has claimed over 2,400 lives so far and nearly 5,000 people have been infected.
The late Dr. Tony Martin’s diligent research had been provoked by several events with faculty members in the educational institutions where he taught. The tactics they tried using to silence the focus of his lessons only motivated him even more.
The UK-listed company, Equatorial Palm Oil (EPO), which is threatening to seize land owned by Liberians in defiance of commitments by Liberia’s President, will today receive a visit from affected communities. Members of the Jogbahn Clan, together with representatives from Liberian and international NGOs, will deliver a petition with over 90,000 signatures, reminding EPO that it does not have community consent to expand onto their lands, and that doing so could escalate violence.  EPO’s past operations in Liberia have triggered allegations of conflict and human rights abuses. The company has maintained that any expansion is legal. 
“EPO’s recent expansion efforts are a brazen example of a company defying international law, government orders and the rights of communities,” said Silas Kpanan’Ayoung Siakor, campaigner at the Sustainable Development Institute. “EPO has no claim to this land, it is owned by the communities who live on it.” 
Residents from the Jogbahn Clan in Liberia’s Grand Bassa County say that EPO has begun demarcating blocks of land in preparation for clearing, and have accused its security officers of threatening community members. These actions defy the March commitment by Liberian President Ellen Johnson Sirleaf that EPO could not expand onto the lands of the Joghban Clan without their permission.  The right of Liberian communities such as the Joghban Clan to give or withhold consent to projects that could have an impact on their land and resources is also provided under international human rights law, as well as the Principles and Criteria of the Roundtable on Sustainable Palm Oil (RSPO) of which EPO is a member.  The Joghban people have refused to give such consent.
EPO has a very poor track record in Grand Bassa County. In September of last year, officers from the EPO security team and the Liberian Police reportedly worked together to assault and beat Joghban community members who were peacefully protesting the company’s operations. Those arrested were soon released after it was determined by the government’s Grand Bassa attorney that there was no justification for continued detention. No government investigation report regarding this incident has been made public. 
EPO denied any involvement in the violence, saying that it had been “falsely accused”, and does not “condone or encourage such described behaviour,” and “never instructed or directed any of its staff or PSU officers to intimidate Jogbahn community members in September or at any time.” However, EPO admitted to Global Witness that it provided logistical support to the Liberian police who are accused of intimidating villagers on the plantation. The company further stated that it “respect[s] the Liberian community rights and land, and ha[s] followed the law and procedures laid out”, had taken “strict steps” to ensure that it only plants oil palm on its concession land and legally-acquired community land, and is “a responsible company and committed to sustainable oil palm development.” 
EPO’s concessions in Liberia total 8,900 km2 of land, which the company believes gives it the legal right to use the land to develop a palm oil concession. The company is listed on the London-based AIM stock market, and is now majority owned by Malaysian palm oil giant Kuala Lumpur Kepong Bhd (KLK). Major brands including Kellogg’s, Kraft, Nestle, Unilever, Procter & Gamble, and General Mills have been reported as direct or indirect consumers of KLK palm oil. 
“We demand that EPO stops inciting conflict by preparing to clear our land,” commented Jogbahn Elder Joseph Chio Johnson, “EPO must stop threatening our people and accept that our no means no.”
- Sustainable Development Institute and Friends of the Earth International, Tell Equatorial Palm Oil NO means NO!, Rainforest Rescue, Wir stoppen die Walddiebe!, Friends of the Earth US, Stop an abusive palm oil company from grabbing Liberian land, Milieudefensie, Laat Equatorial Palm Oil weten dat NEE echt NEE betekent!
- Equatorial Palm Oil, Letter to Global Witness, 17 December 2013. EPO’s full response can be found on Global Witness’ website at: www.globalwitness.org.
- Customary land rights are protected under a range of international human rights laws applicable to Liberia, including the African Charter on Human & Peoples’ Rights (1981), the International Covenant on Economic, Social & Cultural Rights (1966), the International Covenant on Civil & Political Rights (1966), the Convention on the Elimination of Racial Discrimination (1965), as well as principles of customary international law expressed in the Universal Declaration on Human Rights (1948) and UN Declaration on the Rights of Indigenous Peoples (2007).
- Sustainable Development Institute, SDI welcomes President Sirleaf’s commitment to protecting Joghban clan’s land from further encroachment by British palm oil company Equatorial Palm Oil, 6 March 2014; Global Witness,NGOs welcome Liberian President’s commitment to stop British palm oil company “taking” community land, 10 March 2014.
- Free Prior and Informed Consent (FPIC) is a key principle of Liberia’s Community Rights Law with respect to Forest Lands (2009), which provides communities with a right to give or withhold their consent to activities planned on community land or which may impact on that land and the community. Article 7 of the Liberian Constitution provides for the maximum feasible participation by citizens of Liberia, in the management of Liberia’s natural resources. FPIC is also an established legal principle supported by numerous regional and international legal instruments to which Liberia is legally bound, including the African Charter on Human and Peoples’ Rights (ACHPR). The decision of the African Commission on Human & Peoples’ Rights in the case of Endorois Welfare Council v. Kenya (276/2003) e.g. at para 209, including with regard to right to property (Art. 14 ACHPR), as well we the right to development (Art. 22 ACHPR). See also ACHPR Resolution 224 on a Human Rights-Based Approach to Natural Resources Governance, the United Nations Declaration on the Rights of Indigenous Peoples as well as numerous other provisions and jurisprudence elaborated under the International Convention on the Elimination of all Forms of Racial Discrimination, the International Covenant on Economic, Social and Cultural Rights and the International Covenant on Civil and Political Rights.
- Sustainable Development Institute, SDI calls on Equatorial Palm Oil to immediately cease land survey in Grand Bassa District #4, 25 September 2013. Sustainable Development Institute, Global Witness, FoE EWNI, FERN, Save My Future Foundation, UK’s Equatorial Palm Oil accused of human rights abuses in Liberia, 20 December 2013.
- Equatorial Palm Oil, Letter to Global Witness, 17 December 2013. EPO’s full response can be found on Global Witness’ website at: www.globalwitness.org. Meeting between Global Witness and EPO in London on 14 November, 2013. EPO, “Letter to Global Witness,” 17 December 2013.
- Rainforest Action Network, Conflict Palm Oil in Practice: Exposing KLK’s role in rainforest destruction, land grabbing and child labour, 2 April 2014.
JOHANNESBURG – At every step, from mine to ring finger, South Africa’s diamond industry is benefitting from royalty and export tax structures riddled with loopholes, shortchanging citizens of one of the world’s premier sources of diamonds of tens of millions of dollars a year in revenue.
In 2011, South Africa produced diamonds whose uncut, or rough, value was $1.73 billion, or 12 percent of global production, according to the most recent government data available. Yet from 2010 to 2011, diamond-producing companies paid South Africa’s government just $11 million in mining royalties, according to the latest Tax Statistics report, produced by the South African Treasury and the South African Revenue Service.
A 100Reporters investigation of the diamond trade in South Africa has found that companies here pay a royalty rate far lower than that of other African states. Companies can also reduce or cancel out export taxes if they offer locally-mined diamonds to the state for purchase—even if the South African government never buys the gems, often due to formidably high prices.
In an apparent conflict of interest, De Beers Consolidated Mines Ltd., the dominant player until 2010, ‘donates’ paid staff to the State Diamond Trader, charged with assessing diamonds offered by De Beers and other companies to the State for purchase. Provided 10 percent of domestic diamonds are offered, these companies may then receive export tax exemptions.
The main beneficiary of a system tilted in industry’s favor is De Beers, the sprawling multinational cartel that accounts for 35 percent of global rough diamond production, mainly from Africa. Until recently, De Beers dominated the South African diamond industry.
In 2011, De Beers accounted for $1.34 billion of South Africa’s production, and it remains the country’s primary diamond importer and exporter. The only other significant player, Petra Diamonds, with whom De Beers controls 97 percent of the local diamond industry, neither imports nor exports.
From 2005 to 2012, diamond exporters, primarily De Beers, appear to have downplayed the market value of their rough diamond exports by $3 billion, according to an analysis* of declarations in corporate filings under the Kimberley Process Certification Scheme, the rough diamond tracking system used to keep conflict gems off the world market. The same undervalued gems were then sold at market prices around the world.
Lynette Gould, head of media relations for De Beers, declined to comment on the findings, or to address questions about the valuation, sales and import and export volumes of diamonds from South Africa. In an email, Gould wrote that the “values and volumes of De Beers production is . . . proprietary.”
A Broken System
To ensure that the government gets its share of revenues from the extraction of the country’s diamonds, the South African government relies on a national agency, the Government Diamond Valuator (G.D.V.), charged with determining the quality, and thus worth, of diamonds. But highly-placed sources in the diamond industry said that the G.D.V. seldom issues independent assessments of the country’s diamonds, opting instead to echo the valuations that De Beers puts forth in the company’s price lists.
“The gap between the industry’s presence in South Africa and its contributions to the country’s coffers has its roots in how diamonds are valued in South Africa and who controls the process,” said Claude Nobels, a former government diamond valuator.
“We had a plan to create a system, under the Nelson Mandela government, that would generate fair revenues for all parties involved,” Nobels told 100Reporters. But to date, “the diamond mining and trading industry has not truly benefitted South Africans. The loss to the state is billions of dollars,” he said.
Calculating diamond revenue losses to the South African budget is complicated by a dearth of data, particularly concerning how diamonds are valued. Valuation, in turn, drives royalties and export taxes, as well various forms of tax exemptions. For example, companies can receive credits for importing diamonds to be cut and polished in South Africa, which in turn may reduce or even cancel export taxes.
Until 2012, government reports on diamonds generally showed blank spaces rather than reveal value and volume of local and export sales. Reports for other commodities such as gold and platinum, however, teemed with data. Martin Kohler, Deputy Director of Statistics for the Department of Mineral Resources (D.M.R.), said the government withholds diamond data to protect big producers, the largest among them De Beers, unless the companies authorize the release of the information.
“De Beers, who had a predominant share of the diamond market in the past, authorised us to publish the aggregated production data only (but not sales data),” Kohler said in an email. According to Kohler, the recent sale of De Beers’s mines to other owners meant that, “the predominant position of De Beers has been diluted, and we are able to publish sales data with effect from January 2013 (but not before that date).”
Kohler said such information was strictly confidential “where one company has more than 75 percent market share, or where there are less than three producers of a mineral, unless all such producers have granted permission to publish the data.”
In November 2013, the company moved its sorting, valuing, and selling center to Gaborone, Botswana from London. According to a knowledgeable source, the South African government pressured De Beers to shift sales activities to Africa, specifically South Africa. De Beers caved in to the pressure but preferred Botswana as a partner. The company signed a ten-year agreement relocating global production sales to Gabarone. South Africa, wary of being seen as a domineering neighbor, acquiesced, the source said.
“Bricks in the Wall”
To understand South Africa’s diamond industry and the system of taxation that now governs it, it helps to look to the industry’s origins, which are synonymous with De Beers. Historically, the apartheid regime cultivated close relations with South Africa’s diamond industry. John Vorster, an apartheid-era prime minister, once described corporate support from De Beers and other large companies as “bricks in the walls of the regime’s continued existence.”
De Beers was formed in 1888 by colonialist Cecil Rhodes and acquired by Ernest Oppenheimer’s Anglo-American in the 1920s. By 1987, Anglo-American PLC controlled over 60 percent of the wealth listed on the Johannesburg Stock Exchange, through an estimated 80 listed entities.
Despite its dominant role in the global diamond trade, De Beers has a history of running afoul of the law in important markets. In 2008, the European Union forced De Beers to end decades of price fixing with Russia’s Alrosa, another dominant diamond producer. At the time, De Beers controlled 50 percent of global rough diamond production.
Meanwhile, for more than 60 years, De Beers was banned from directly trading in the United States because of price fixing, despite the fact that the U.S. accounts for half the world’s diamond jewelry sales. In 2012, a settlement of $295 million was reached between the U.S. government and Anglo-American, which currently owns 85 percent of De Beers.
In South Africa, De Beers functioned in a protected niche even after the end of apartheid. For instance, it paid no export taxes on diamonds until 2007. According to Parliamentary documents, De Beers extracted the advantage in a twist worthy of a B-movie: for years, it held the government at bay by citing a smudged, unsigned document generated under the apartheid regime, just prior to the first democratic elections, that allegedly provided the company with an export tax exemption for 13 years.
Further, extractive industries in South Africa, including diamonds, did not pay royalties until 2010, with the adoption of the Mineral and Petroleum Resource Royalty Act.
According to the African Development Bank, South Africa was the “only major mining country on the continent without a royalty on mining” until the act’s passage. To address the gaps in the system, the act mandated that companies pay royalties at rates ranging from 0.5 to 7 percent. Royalties, calculated against criteria such as gross sales and the company’s net operating mining profits, are compensation to the nation for the permanent loss of non-renewable resources.Yet in crafting and applying the royalty rate, the diamond industry, rather than the South African government, has had the upper hand.
Take the rate itself, for example. Botswana and Namibia, major diamond-producing states, have royalty rates fixed at 10 percent. Yet because of its sliding royalty scale, South Africa averages an annual royalty rate of about 2 percent, which netted the government a total of $57.5 million from 2010 to 2012.
“The revenues from diamond royalties are very low – just 1.1 percent of sales for 2011,” said Mark Curtis, a U.K.-based development finance consultant for global non-governmental organizations. “If diamond companies paid the mid-royalty range of 3.5 percent, royalties would have amounted to $24.8 million more than the state actually received,” he said.
The explanatory draft of the act originally pegged royalties at 10 percent of the value of diamonds at the ‘mine-gate’ and at 8 percent after processing. But the government reduced the rate following pressure from the diamond industry. Created around a complex profit-based system, royalties are considered a “cost” by business, and depend on the value of minerals sold.
Though diamonds are valued by their clarity, the same cannot be said of South Africa’s diamond industry or its largest player, De Beers.
Unlike other South Africa diamond companies, De Beers does not allow the government to publish key information about the value of the diamonds it extracts. As a result, the state and the public cannot verify the fairness of the royalty De Beers ultimately pays.
In addition, to determine the value of a diamond, DeBeers and other companies use complex and closely-held pricing formulas, that they do not permit the government to review. De Beers’s pricing formula counts 12,000 categories.
According to one European valuator who worked closely with De Beers, the company’s price book was not a single listing, but rather an “elaborate system used to value diamonds for different purposes. By manipulating various categories with price points, they can increase or decrease the value of diamonds . . . These figures have nothing to do with fair market prices.”
Speaking on behalf of De Beers, Gould said, “I’m afraid the information on pricing is proprietary and therefore confidential.”
Other companies also maintain proprietary pricing systems. In an email, the Government Diamond Valuator confirmed that it did not “have access to the pricing policies of other diamond companies,” but asserted that the Government Diamond Valuator assessed “each parcel imported or exported to determine a value deemed to be fair market value.”
However, highly placed sources in the diamond industry, including a former government valuator, said the G.D.V.’s relies on random spot checks, and verifies only the size of diamonds, not their quality. One official close to the Department of Minerals and Resources confirmed that mispricing of diamonds was easily possible due to what was considered the “very subjective nature of pricing.”
In 2007, the South African government established an export tax of 5 percent on diamonds. But from 2009 to 2013, according to the latest Tax Statistics report, it yielded only $21.9 million to the national purse.
The state has pulled in little revenue due to exemptions built into the 2007 Diamond Export Levy Act. The exemptions were created ostensibly to encourage mining companies to make quality diamonds available to domestic industry, before shipping abroad. Companies that offer rough diamonds to local buyers for cutting and polishing, or beneficiation, through a government mechanism called the State Diamond Trader system can obtain breaks on export taxes.
Large companies like De Beers can get the exemption if they sell 40 percent of their South African rough diamonds to buyers in South Africa, and offer 10 percent to the State Diamond Trader.
The State Diamond Trader, however, often cannot afford to purchase rough diamonds because the price is too high. The trader’s annual reports disclose that purchasing diamonds for the local beneficiation industry was difficult due to, “unsustainable rises in prices at producer level” and “limited rough supply.”
De Beers further provides fully-paid staff to the trader to conduct diamond valuation, according to reports of the State Diamond Trader, which describe the presence of De Beers staff at the government agency as a “donation.”
In an email, De Beers said, “the arrangement between De Beers and the S.D.T. is subject to confidentiality and information relating to this arrangement cannot be provided without the S.D.T.’s consent.”
Futhi Zikalala, C.E.O. of the State Diamond Trader, told 100Reporters that each parcel was individually valued. “The process is legislated. We do valuations for the 10 percent offered to the S.D.T. It takes four or five days at a time, with 10 cycles a year.”
Asked whether she would comment on the apparent conflict of interest in the State Diamond Trader’s long-standing use of De Beers’s donated staff, she responded, “Actually, no. I do not understand why you are asking that question.”
A source close to the Department of Mineral Resources said that use of De Beers’s staff was for practical reasons: the S.D.T. was under-resourced and in need of diamond experts.
In October 2013, the Minister of Minerals Resources, Susan Shabangu, said that the State Diamond Trader system had failed and would require an overhaul.
Companies can also win export tax exemption if they import rough diamonds for local beneficiation. The higher the value of the imported gems, the greater the import credits a company can generate to ultimately offset their export taxes, creating a system vulnerable to price manipulation.
But the arrangement appears to have done little to nurture domestic cutting and polishing industry. According to figures cited in a South African parliamentary report (2013), South Africa currently hosts just 300 polishers, down from 3,000 in 2008, when 140,000 carats, maximum, were locally beneficiated (see sidebar).
The report cited diamond industry officials who stated that the local cutting and polishing industry was “in distress.” While the 2008 recession had impacted the global diamond industry everywhere, beneficiation industries elsewhere–including India, China and neighboring Botswana–bounced back, even expanding training facilities as well as cutting and polishing labor. In 2013, African Romance, a medium-sized state-backed beneficiation diamond company, was liquidated. Reasons cited included the absence of consistent quality diamond supplies.
Until 2013, De Beers exported gems from its mines in Namibia, Botswana and South Africa to London for valuation and then imported them into South Africa for sale to select buyers called sightholders. The sales values declared to sightholders are confidential, the company said.
South Africa boasts curiously high import prices for diamonds. While higher import values are said to correspond to the quality of select rough diamonds, South Africa’s import price appears significantly more than the price of diamonds imported to other countries such as Israel, arguably one of the world’s leading gem quality cutting and polishing centers.
For example, South Africa’s average import prices, at $544 in 2009 and $773 in 2010, were significantly higher than Israel’s at $165 and $156, respectively, according to certificates filed under the Kimberley Process.
In 2007, South Africa’s import price hit a staggering $1,706 per carat with a total import value of $2.1 billion. Yet only $670 million would be sold to De Beers’s pre-approved South Africa-based purchasers, known as Diamond Trading Company (D.T.C.) sightholders. Though these figures were published in a De Beers report, when asked for annual D.T.C. local sales, Gould responded that the information was proprietary.
According to a diamond specialist previously employed by the South African government, who spoke on condition of anonymity, import and exported diamonds were often “mispriced” by an average of 20 percent or more.
The other countries with similarly high import averages were those where De Beers also held a large presence, such as Namibia.
“South Africa’s import figures are improbable,” said a European Government Diamond Valuator. “These prices are exceptionally high as an average price.”
Most imported diamonds appear to be re-exported uncut and unpolished. While imports make up relatively small volume, or carats, they drastically increase the value of rough diamond exports. Subtracting the values and volume of imported diamonds shown on South Africa’s K.P. certificates from corresponding exports, the actual price per carat of rough diamonds being exported for the first time falls dramatically.
When asked about the anomalies in reported trade figures for diamonds under the Kimberley Process (K.P.) in South Africa, where De Beers is a dominant player, Gould responded, “The primary purpose of the K.P. process (or the issuing of the certificates at least) is for Governments to certify the origin of diamonds, not to keep track of the volume and value of diamonds imported or exported; that is the function of the relevant Regulator and G.D.V.”
The Government Diamond Valuator
While the Government Diamond Valuator is responsible for independently appraising gems and for monitoring the trade in diamonds, it remains questionable whether the South African valuator is able to provide an independent assessment. Such assessments are critical for the South African government, and public, to secure royalties and export taxes that reflect the true worth of the country’s diamond trade.
Former De Beers director Bertie Lincoln, in a rare quote under oath to a South African court 17 years ago, described the Government Diamond Valuator as “an auditor. The value is the price which is in the [De Beers] Price Book. So the government valuator has got no input into the value of a diamond.”
The Government Diamond Valuator did not respond to follow-up questions about the source of information informing the G.D.V.’s Price Book, the size of the agency or office, the amount of time available for valuation of imported and exported diamonds, and other questions.
“The significant differences between the dollar-per-carat for South African rough diamond imports and exports suggest possible price manipulation for the purposes of aggressive tax avoidance,” said public finance specialist, Len Verwey. Companies like De Beers, he stated, may indeed have a plausible explanation, in which case, “diamond companies as well as the Government Diamond Valuator should provide more transparent reporting to society on the factors that determine such valuations.”
Verwey stated that the Government Diamond Valuator’s credibility “in ensuring fair market value for diamond transactions is essential to its success.”
But critics of South Africa’s current royalty and taxation system are skeptical that the government will impose greater transparency on De Beers and other major producers.
“Inevitably,” stated one former De Beers employee, “the company will stonewall and the G.D.V. will run a mile” from transparency and accountability in the diamond valuation system.
He added, “No one will want this brought into the open.”
*The information on transfer pricing manipulation of diamonds comes from a report by Sharife and Sarah Bracking, published by the Leverhulme Center for the Study of Value, University of Manchester, and supported by a grant from Oxfam Great Britain.
Khadija Sharife is the lead Africa forensics researcher for Investigative Dashboard (ID) and a senior investigator for African Network of Centers for Investigative Reporting (ANCIR). She is the author of Tax Us If You Can: Africa.
President Paul Kagame’s 20 year reign of terror is characterised by a distorted and deceptive narrative that he saved Tutsi from genocide perpetrated by Hutu; over-reliance on violence and war-making nationally and regionally; ‘Tutsi-fication’ of the leadership of the military while eliminating real and potential competitors; transformation of the ruling Rwanda Patriotic Front (RPF) into a rubber stamp to enforce his will while eliminating real or perceived contenders to power; usurping legislative, executive and judiciary powers; closure of political space for political parties, civil society, independent media and intellectual activity; personal control of a financial empire that is spread across public and private sectors; and, a mindset of a serial killer and mass murderer who relentlessly acts with impunity.
It is out of this anti-people, sectarian and anti-democratic domestic policy that Kagame’s dangerous foreign policy is derived, characterized by belligerence, aggression, war-making and plunder in the Great Lakes region; blackmail, grand deception and intimidation that preys on international guilt from failure to prevent or stop the 1994 genocide; an anti-African posture masquerading behind pan-Africanist language; and above all, an immoral foreign policy, founded on the premise that opponents, whether heads of state or ordinary citizens, must die or be jailed.
The Kagame doctrine is not simply wrong. It is anti-Rwandan, militaristic, deceptive, predatory, belligerent, anti-African and immoral. In short, it is dangerous for Rwanda, the Great Lakes region, Africa and the international community.
This predatory and highly criminalised foreign policy is executed through its embassies abroad: Burundi, Ethiopia, Kenya, South Africa, Sudan, Tanzania, Uganda, Senegal, DRC, Nigeria, Belgium, Germany, The Netherlands, United Kingdom, Sweden, Switzerland, France, Canada, China, India, Japan, USA, United Nations, South Korea, Singapore, Russia, Turkey, and multiple consulates.
Kagame and about a dozen Tutsi military officers, all former refugees in Uganda, preside over this global criminal enterprise to assassinate opponents. Over the last twenty years, agents of the criminalised Rwandan state have struck terror in the Democratic Republic of Congo and Rwanda, killing millions of Congolese and Rwandans. His assassins have struck in Kigali, Nairobi, Dar es Salaam, Kampala, Bujumbura, Maputo, Johannesburg, West Africa, Kinshasa, London, Brussels, and Stockholm. Victims of this criminal crusade include Heads of State, opposition politicians, human rights activists, journalists and ordinary Rwandan citizens. According to Kigali sources, confirmed by a number of foreign security agencies, Kagame is poised for even more daring criminal moves in the heart of the United States, Canada, and the rest of the world, as he intensifies hiring assassins from far-flung areas of eastern Europe and the Middle East.
To do that, he is directly or indirectly enabled by money accumulated from the state treasury, his companies Crystal Ventures and Horizon Group, and aid mainly from generous benefactors like the World Bank, IMF, European Union, United States and United Kingdom governments. He is enabled by the rich and powerful in the West, notably former U.S. President, Bill Clinton, former British Prime Minister Tony Blair, American Pastor Rick Warren, Jewish Rabbi Shmuley Boteach and scores of western consultants making money from Rwanda’s, and the region’s, open veins. In Africa, his principal backer and co-accused in regional adventures is President Yoweri Museveni of Uganda.
Rwanda’s embassies abroad have become the staging grounds for criminal activity. In addition to so-called military attachés and secretaries, officially accredited as diplomats, there are many other agents deployed informally to hunt down, intimidate, divide, corrupt, and assassinate Rwandans. Non-Rwandans critical to Kigali’s domestic and foreign policies have occasionally been victims, and will increasingly be targeted according to Kagame’s new desperate directives.
Rwandans must get more united, mobilised and organised to stop these murderous schemes once and for all, through a regime change that must allow sustainable societal transformation to take place.
The international community can no longer claim not to know the depth and extent of criminal activities by Kagame’s regime. The international community may choose to remain silent, insensitive and frozen in inertia as in the past.
Alternatively, we urge Africans and the rest of the world community to support Rwanda’s struggle for freedom, human rights, democracy, justice for all, genuine unity and reconciliation, healing, peace and prosperity for all Rwandans and the Great Lakes region.
Dr. Theogene Rudasingwa was President Paul Kagame’s Chief of Staff, Rwanda’s Ambassador to the United States, and Secretary General of Rwanda’s ruling party, RPF. He is currently the Coordinator of Rwanda National Congress (RNC) and the author of ‘Healing A Nation: A Testimony’