Proposed Kuwaiti Investment in Kenya Looks Fishy

UNCLAS NAIROBI 004741 SIPDIS SENSITIVE DEPT FOR AF/E, AF/RSA, S/CT, INL-C-CP DEPT FOR NEA/ARP JACKSON SIPDIS E.O. 12958: N/A TAGS: EWWT EINV KCOR PTER KE KU SUBJECT: Proposed Kuwaiti Investment in Kenya Looks Fishy Ref: Nairobi 1637 SENSITIVE BUT UNCLASSIFIED ¶1. (SBU) Summary: Kuwait's Al Bader International Development Company allegedly asked the Kenyan Government for exclusive rights to develop a port, airport, resort, and oil complex near Lamu on Kenya's north coast, but the project appears impractical. Post is concerned the proposal may instead be cover for large-scale corruption or illicit activities on Kenya's coast near the Somali border and requests input from Embassy Kuwait and Department sources. End Summary. Roola Project... -------------- ¶2. (U) According to articles in the August 14 and October 30 editions of the East African newspaper, Kuwaiti firm Al Bader International Development Company and its Chairman Yousef Abdul Aziz Al-Bader is negotiating with the Government of Kenya (GOK) for sole rights to develop an international port, free trade zone, resort city, railway line, international airport, oil pipeline and oil refinery near the town of Lamu on Kenya's northern coast. Dubbing it the Roola project, Al Bader would sub-contract the projects and arrange the hundreds of millions of dollars of financing needed. Permanent Secretary for Transportation Ikiara is quoted as stating the proposal is still in its early stages, but that the GOK is keen to see it go forward, believing Badr is capable of implementing it. Seems Impractical... -------------- ¶3. (SBU) As per reftel report, Australian firm Woodside Oil is shortly due to start drilling test wells for oil and gas deposits about 100 miles offshore of Lamu, and the Kenya Port Authority (KPA) has talked about developing Lamu into a commercial port to take some of the burden off of Mombasa. However, the Roola project appears totally impractical. According to U.S. military experts at Post familiar with the north coast, Lamu harbor is too shallow and the tidal range is up to 13 feet, requiring massive dredging for port development. Lamu is an island, and its hinterland is almost completely undeveloped, thinly inhabited, and poorly connected to the rest of Kenya. The proposed development would require building a large-scale power plant nearby. Linking a port at or near Lamu to anywhere would require building hundreds of miles of roads and rails across remote, thinly populated regions where security is at risk. Lamu is also a UNESCO World Cultural site because it preserves the old Muslim Swahili coastal culture. A project like Badr's would face serious opposition on cultural and environmental grounds. And Unsafe... -------------- ¶4. (U) Lamu is about 50 miles from Somalia. The border is porous, and the GOK's presence in the border area has always been weak. The GOK is concerned about the expansion of territory under the control of the Islamic Courts, and the possibility of conflict spilling into Kenya. And Unnecessary -------------- ¶5. (U) The Port of Mombasa is crowded, but the KPA is expanding the Port's facilities. Mombasa's connections to Nairoi and the rest of East and Central Africa will be improved by the recent concessioning of the railroad to Kampala to a South African company and donor-funded repairs to the Mombasa-Nairobi-Uganda road. So Why Do It? -------------- ¶6. (SBU) It is difficult to see the commercial benefit to Badr of investing the hundreds of millions of dollars needed to achieve its goals for Lamu. Besides the bureaucratic red tape, weak judicial system and other general barriers hindering investment in Kenya, building the massive infrastructure required in Lamu would face formidable physical challenges. We smell a rat. Request -------------- ¶7. (SBU) Post requests Embassy Kuwait and Department provide any available background information on Al Bader International Development Company and its Chairman Yousef Abdul Aziz Al- Bader. Any insights into what might lie behind Badr's interest in Kenya would be much appreciated. We would also appreciate knowing whether Badr has publicized or justified its Lamu project proposal in the Kuwaiti press. RANNEBERGER