Rolls battles quality inspectors who claim it used junk parts

The Sunday Times: 27 July 2014

Nizar Manek and John Collingridge

A CLOUD has lingered over Rolls-Royce’s sprawling industrial complex in Indianapolis for the past six years.

A collection of red brick and grey panel factories covering more than 3m square feet, the company’s biggest manufacturing site outside Britain is home to about 4,500 staff who make and repair small aircraft engines.

Yet since early 2008, the site has been nursing a running sore. Then, a former quality inspector lodged a claim with the district court, alleging Rolls-Royce’s American aerospace arm hid defects in potentially thousands of aircraft engines. Thomas McArtor, who worked at the factory from 1994 to 2006, was joined on the claim in 2011 by another former quality control officer, Keith Ramsey. Together they claim the company cheated the United States government by covering up the use of defective parts in engines for planes, including the F-35 joint strike fighter and the C-130 Hercules, which the company denies.

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Letter from Cairo: from Our Own Correspondent

Private Eye magazine: No. 1371. 25 JULY - 7 AUGUST 2014

AFTER the months of turmoil in Egypt and an ill-advised flirtation with fundamentalism, it’s a relief to know that we are again in safe hands. Our president, Abdel Fattah el-Sisi, may well have spent a lifetime in the military, but he is already showing himself to be a leader who listens.

And where better to start, immediately after his inauguration last month, than a breakfast meeting with the four-term president of Algeria, Abdelaziz Bouteflika? Sisi might have needed to listen quite hard, as the stroke-addled, wheelchair-bound Bouteflika can barely muster a murmer these days, but the new pharaoh would have learnt that if you have the khaki boys with you, paralysis, dodgy elections and international criticism are no bar to a successful political career.

Under the stewardship of Teodoro Obiang Nguema Mbasogo, Equatorial Guinea’s great democrat, the African Union summit in Malabo last month decided it had been wrong to call Sisi’s coup a coup and would be re-admitting us to its band of continental harmony. We intend to take such a lesson in forgiveness fully to heart. Surely it is only a matter of time before Hosni Mubarak, serving a three-year sentence for a generation of kleptocracy, is again a free man.

North of Limpopo

Le Monde diplomatique English edition: 15 JULY 2014

by Nizar Manek

When Mungo Soggot moved from journalism to writing non-public intelligence and investigation reports for corporate clients and investors, he made a miraculous discovery: he could pay his sources for information. Where appropriate, an invoice would be involved. At other times payment would be made through Western Union or MoneyGram. (Sources often don’t want to be associated with the work they’re doing so they don’t want money wired into a bank account.)

Most often, the best information comes from sources that don’t ask to be paid, says Soggot, who used to be a reporter at the South African weekly Mail & Guardian. Talking from the London office of K2 Intelligence, an offshoot of Kroll, an investigations firm founded in 1972 by a New York Assistant District Attorney that went on to become a global pioneer in the field, he said: “It’s not just disgruntled employees. As you develop trust, those long-standing contacts you share a meal with a few times a year are generally more relaxed about telling you things.” Face-to-face meetings are important. “A lot of the countries we’re working in have reasonably energetic security services, so we don’t speak on the phone.”

One recent investigation Soggot and his colleague Hugh Petre were hired to work on was for the legal team of Kumba Iron Ore, a subsidiary of Anglo American, a multinational mining company headquartered in London. It was a politically sensitive and long-running litigation support case in the Northern Cape, South Africa’s largest province. Their client says they previously hired the pair to work on a more traditional political and regulatory risk assignment for a foreign investor in Congo-Kinshasa. At that time with another London-based corporate intelligence consultancy, Risk Analysis, the pair travelled for several months between the Northern Cape capital, Kimberly, and Bloemfontein (“the city of roses”), capital of the Free State Province and judicial capital of the nation. They gathered intelligence and evidence on how a small government department in the Northern Cape awarded rights to a major iron ore concession called the Shishen Mine to a small, politically-connected company. Imperial Crown Trading had clear affiliations to factions of the African National Congress, which has held the Northern Cape in every election since 1994.

Norway | Ethiopia: Oslo cuts its losses

Africa Confidential: Vol 55 N0 14 | 11 JULY 2014

Norway has taken the highly unusual step of cancelling a hydropower research project in Ethiopia that would have been drowned by the Grand Ethiopian Renaissance Dam (GERD, AC Vol 55 No 13). The US$30 million consultancy concerns the proposed 2,000 megawatt Mandaya and 2,100 MW Beko Abo dams.

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Risks of going local

duediligence.fr: ABI Capital | 3 JULY 2014

by Nizar Manek

The Federal Government of Nigeria through the Nigerian National Petroleum Company (NNPC) recently awarded 60 percent of its 2014-2015 crude oil lifting contracts worth approximately US$40bn. to local oil companies (LOCs) as per the Nigerian Oil and Gas Industry Content Development Act (NOGICD) 2010. The announcement came in a 27 April 2014 statement by the Minister of Petroleum Resources Diezani Alison-Madueke. A year earlier, Alison-Madueke noted that some indigenous contractors ‘lack proper business structure; they are small, fragmented and often times incapable of packaging or attract loans. Only a few of them can deliver turnkey projects without resorting to some form of partnership agreement for equipment, expertise or technical support.’

The NOGICD affects operating companies, contractors, sub-contractors, and service providers, given minimum requirements for non-indigenous companies to use local services and materials. International companies must partner with local companies in joint venture (JV) arrangements. The NOGICD requires ‘Nigerian independent operators’ (i.e. with not less than 51% equity shares owned by Nigerians, as per section 106) to be given first consideration in the award of oil blocks, oil field licences, oil lifting licences, and all projects for which a contract is to be awarded in Nigeria’s oil and gas industry. As per section 3(2), the Act also requires ‘Nigerian indigenous services companies’ to be given exclusive consideration for contracts and services works on land and swamp operating areas in if they can demonstrate ownership of equipment Nigerian personnel, and capacity.

The NOGICD has its roots in former President Olusegun Obasanjo’s plan to create a new policy to push the country’s industrial development forward through indigenous ownership and operation of assets in the oil and gas industry. The policy sought to increase local employment levels and help develop and diversify the local manufacturing sector. Following Nigeria, the local content philosophy is gaining traction with the Republic of Congo, which has been producing oil since 1957 and is now considering driving up the participation of indigenous companies in the supply chain. In November 2013, Ghana passed its Petroleum (Local Content and Local Participation) Regulation, under which Ghanaian companies will be given first preference in bids for petroleum licences. A five percent minimum equity stake for local companies in every oil contract awarded to an international investor will be mandatory.

Nigeria | Liechtenstein: The trade-off

Africa Confidential: Vol 55 N0 13 | 27 JUNE 2014

The Alpine principality is returning some of Sani Abacha’s loot after the Nigerian government drops charges against his son Mohammed

In what bears the hallmarks of a backroom political deal, Liechtenstein is to return 167 million euros (US$228 mn.) stolen by General Sani Abacha in the 1990s. This follows the decision a day earlier by the Nigerian government to drop criminal charges against his son, Mohammed Sani Abacha, 46. Gen Abacha, military ruler of Nigeria from 1993 until he died in 1998, is reckoned to have stolen over $4 billion from the Nigerian state, much of which has been claimed by his family.

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Egypt | Ethiopia: The extra Nile

Africa Confidential: Vol 55 N0 13 | 27 JUNE 2014

Egypt’s President Abdel Fatah el Sisi was due to meet Ethiopian Prime Minister Hailemariam Desalegn in Malabo, Equatorial Guinea, on 26 June to try to resolve their differences over the Nile. They are attending the summit of the African Union, to which Egypt was re-admitted after El Sisi’s election victory. Egypt was suspended following the overthrow of President Mohamed Mursi a year ago, a fate that has not befallen all other coup-makers.

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When Sisi met Desalegn

Le Monde diplomatique English edition: 24 JUNE 2014

by Nizar Manek

The guests had been seated at the tables of the great hall in Addis Ababa, and fanfares rang out as the Emperor Haile Selassie walked in with President Gamal Abdel Nasser of Egypt at his right hand. Nasser was a ‘tall, stocky, imperious man, his head thrust forward and his wide jaws thrust into a smile,’ next to him Selassie’s ‘diminutive silhouette,’ his ‘thin expressive face, his glistening penetrating eyes’ worn by the years. Behind the extraordinary pair, the remaining leaders also entered in their pairs, writes Ryszard Kapuściński in his chronicle of the fall of the Abyssinian monarchy and the intrigues at Selassie’s court. The audience rose; everyone was applauding. ‘Ovations sounded for unity and the Emperor. Then the feast began.’

Their corresponding persons, President Abdel Fattah El-Sisi of Egypt and Ethiopia’s Prime Minister Hailemariam Desalegn — a pair less extraordinary, their relations less gregarious — will find themselves seated together tomorrow at the 23rd Ordinary Summit of the African Union in Equatorial Guinea. During his presidential campaign, El-Sisi spoke of his interest in travelling to Ethiopia “not once, but ten times” for the mutual benefit of the two countries. As El-Sisi addressed the crowd at his presidential inauguration ceremony at the Qubba Palace in Cairo, Ethiopia’s Foreign Minister Tedros Adhanom Ghebreyesus looked on among Arab royals, the First-Vice President of Sudan, Lieutenant General Bakri Hassan Saleh, and heads of state, from Chad’s Idriss Déby and Eritrea’s Isaias Afwerki to Teodoro Obiang Nguema Mbasogo, who has held power in Equatorial Guinea even longer than El-Sisi’s military predecessor, Hosni Mubarak. El-Sisi professed to the crowd he would protect pan-Africanism, and he wouldn’t allow Ethiopia’s self-financed Grand Ethiopian Renaissance Dam (GERD) to “cause a crisis or a problem with sisterly Ethiopia.” Over centuries, the Nile has tied the two countries together. Ethiopia’s priority now is power generation, while Egypt, a desert country, prioritises irrigation against the Nile water source countries on the Central African and Ethiopian plateaus, which have greater rainwater.

The GERD is a major issue of peace or war. As he summits in Malabo with Adhanom over Egypt’s Nile water crisis, El-Sisi finds himself confronted with deep and changing historical forces. As Britain occupied Egypt in 1882, Britain immediately understood it had become “ruler of a hydrological society,” and that the irrigation question was central to maintaining stability along its Suez Canal, notes Terje Tved, professor at the universities of Bergen and Oslo and an authority on the Nile. Then everything changed after the First World War, the collapse of the Ottoman Empire, and the Egyptian revolution of 1919, and yet Britain’s strategic interests remained the same. This trickled into a series of colonial treaties, including the 1959 Nile Waters agreement, which contributed to Sudan becoming Egypt’s downstream hydro-political ally, and safeguarded Egypt and Sudan’s over 90 percent share of Nile waters. Ethiopia, the source of the Nile, was left only with ghosts of discord. Selassie himself was left affronted by Nasser’s marginalisation of Ethiopia in the 1959 agreement, and was to be overthrown in a 1974 coup d’état. At the same time, notes a March 21 2011 memorandum from the international businessman and dam engineer Dr Ibrahim Mostafa Kamel submitted to the first post-Mubarak government of Essam Sharaf, since 1969 Egypt has lost an estimated 100 million tons annually of silt, ‘creating a 4.1 billion silt dump which lies over the Egyptian-Sudanese border.’

From the Elysée to beyond

Le Monde diplomatique English edition: 24 JUNE 2014

by Nizar Manek

One of Ghislain de Castelbajac’s young apprentices invites me to enter a range of codes, take an elevator half-way up a baroque building nestled at the end of a mew in Paris. It is a grand entrance, and I am told simply to knock at an unnumbered door next to the elevator. There is no marking outside, but Ghislain, a due diligence operative and lobbyist who began his career as a member of the Secrétariat général de la défense nationale (SGDN) as a Chargé de Mission, is waiting and opens the door just as I knock. We sit in a spacious, dimly lit room amongst family heirlooms, which include an eighteenth century embroidered rug behind us, which is a rendition of the three phases of womanhood depicted in Raphael’s Les Trois Grâces, a Flemish painting of a Napoleonic camp, and an antique clock from the period following Napoleon’s return from Egypt in 1810.

Ghislain is also an associate professor in international risks management and due diligence techniques in emerging markets at the Ecole de Guerre Economique in Invalides, from where he plucked his young confrère Tristan out of 80 students last year to join in his ‘enhanced due diligence missions,’ 180 so far in 45 countries around the world, from Egypt to Nigeria, Turkey to Russia. “I counted yesterday,” he tells me with as much surprised eagerness as unhurried nonchalance. Others among his students go to offer the lay of the land to corporate compliance departments, others to the military and government intelligence. “In general, the students enjoy it.”

One thing he tells them is not to be impressed by anyone, “especially those New York hedge fund guys coming to the Middle East who try to trick you with their lingo. You just need to step back and read between the lines.” Following his own graduate studies, Ghislain says the National Security Council, founded in 1962 as an inter-ministerial body under the Prime Minister of France, called him. “I was about your age, I didn’t even know about the service, but they called me because they knew about me,” he says, and they asked him to become a Chargé de Mission on international affairs, where he was to focus on transnational risks. “My area was the globe.”

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