London, Feb. 22, GNA – The government of Djibouti has lost an arbitration case in which it claimed that Dubai Port World (DP World) paid bribes to win a concession to run a container terminal in Djibouti.
The order by a tribunal in London is yet to give another blow to the government of President Ismail Omar Guelleh, which has been locked in litigious battles in the British courts over the past few years – all of which have now been lost.
In this latest case, the Djiboutian government claimed that DP World bribed Djiboutian businessman Abdourahman Boreh, who was then head of the country’s Port and Free Zones Authority, to run the Doraleh Container Terminal (DCT).
The Port Autonome Internationale de Djibouti (PAID), now known as Port de Djibouti SA, and the Djibouti Port Free Zones Authority, as well as the government, had made claims against Mr Boreh related to the redevelopment in 2000 of the rundown and outdated facilities at the country’s main port.
The cash-strapped government turned to Mr Boreh, who was a close friend of President Guelleh, to find investors to help raise the port’s standards.
This had become necessary following the 1998 conflict between Eritrea and Ethiopia, which saw the former close its port facilities to the latter.
Ethiopia began using the port in Djibouti and the government quickly saw the financial advantage of upgrading the facilities.
The international financial institutions had refused to provide funding for the projects so Mr Boreh stepped in, using his own money to bring investors from Dubai.
He oversaw the construction of a new oil storage facility known as the Horizon Terminal and the new state-of-the-art DCT on wasteland.
Mr Boreh brought in the experienced DP World to manage the facilities, thus transforming the commercial fortunes of the port.
But the government, realising the financial might of Mr Boreh’s shareholding in the projects claimed that he wrongfully acquired shares and was bribed by DP World to give the management contract to the Dubai-based port management company, all of which Mr Boreh had denied.
In March last year, the High Court in London dismissed all claims of corruption, bribery and fraud brought by the government of Djibouti against Mr Boreh – a decision that seemed on the cards once the claimants dropped all but three of 16 of claims, while the case over control of the port facilities in the country progressed.
Although the government of Djibouti revoked the DP World contract in 2014, the company, the world’s third largest container terminal operator, continued to manage DCT while the court proceedings were going on.
In the findings against the government, the tribunal ordered Djibouti to pay costs, while DP World, which runs 77 terminals in 40 countries, is now waiting to see whether it can continue to operate the DCT part of the Port of Djibouti, which now contributes some 40 per cent to the country’s GDP.
All along, Mr Boreh had contended that the government’s actions against him were politically motivated.
In dismissing the bribery claim, the judge, Mr Justice Flaux, had said that payment by DP World to Mr Boreh were legitimate because he “provided genuine service to DP World”.
He said that the
government of Djibouti sought “to portray him as a greedy, unscrupulous,
corrupt businessman who would stop at nothing to make himself money, including
the betrayal of his country, by agreeing to soft terms in the [container]
In 2009, Mr Boreh, who has been based in Dubai since 2008, was found guilty in absentia for a grenade attack in Djibouti and sentenced to 15 years in prison, a pretext that the government used to apply to the High Court in the UK to freeze his global assets worth $100 million.
But it eventually turned out that lawyers representing the government of Djibouti had misled the High Court and they had to apologise in court for giving a false account of what happened and the claims were thrown out while Mr Boreh’s assets were unfrozen.
Mr Justice Flaux was critical of the Djiboutian government’s long campaign against Mr Boreh, which began with the false conviction of treason against the businessman.
The corruption case was the second attempt by the government to destroy Mr Boreh financially and politically, the court heard.
It was clear that once Mr Boreh had been exonerated, it would just be a matter of time before the DP World, too, would be cleared of any wrongdoing.
The DP World was exonerated by Justice Flaux who said: “None of the payments and agreements of which the claimants complain was a bribe or corrupt payment or a promise of a bribe or corrupt payment… I have concluded that neither the payments made to Mr Boreh or his companies by DP World, nor the proposed shareholding in DCT nor the finder’s fee for DDP which were never paid constituted a bribe or a promise of a bribe to negotiate or agree to soft terms in the DCT agreements.
“Furthermore, none of those matters alleged by the claimants establishes that these were corrupt payments for Mr Boreh’s personal gain which harmed the interests of the Republic,” Mr Justice Flaux added.
DP World was positive about the outcome of the case last year, saying in its own statement: "We have invested significantly in Djibouti over the past 14 years and are proud of the major contribution we have made.
“We are therefore pleased that the English courts have rejected the allegations made against Mr Boreh, and indirectly against DP World.
“We remain disappointed that the government commenced these proceedings and its arbitration against DP World, which is based on essentially the same charges the court has now rejected.
“We look forward to continuing to contribute to Djibouti’s economy and its community, and building on our successful and proud record in this region.
“We will now move forward in earnest to defend our position but we hope that is not necessary as a result of today's judgment."
Indeed, as Justice Flaux noted, “within four years of DCT becoming operational in December 2008, the original investment had been repaid.
“PAID’s combined dividends and royalties from DCT are more than $46 million per year in relation to a terminal with a life of between 30 and 50 years”.
The DP World-managed 1.6 million 20-foot equivalent units (TEU) DCT is the most technologically advanced container terminal on the African east coast.
Just 11 kilometres south of Djibouti, and with direct road links to Ethiopia, DCT, or DP World Doraleh, enjoys a strategic location at the crossroads of the main shipping lanes connecting Asia, Africa and Europe.
The port lies on the major east-west trade route and provides a secure hub within the region for transhipment and relay activities.
As of last year, the terminal employed 927 staff, of whom 99 per cent were Djiboutians.
After this week’s tribunal decision in favour of DP World, Mr Boreh told the GNA: “I feel vindicated by the ruling, although the sad thing was that having brought a world-renowned port management company to Djibouti to help in its port development, the government then decided to make allegations against me and DP World that were not true.”