Identifier
Created
Classification
Origin
07ANTANANARIVO426
2007-05-03 05:08:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Antananarivo
Cable title:  

Seaboard Reaches Verbal Agreement to Extend Lease

Tags:  MA 
pdf how-to read a cable
VZCZCXRO4069
RR RUEHJO RUEHLMC
DE RUEHAN #0426 1230508
ZNR UUUUU ZZH
R 030508Z MAY 07
FM AMEMBASSY ANTANANARIVO
TO RUEHC/SECSTATE WASHDC 4725
INFO RUEHNR/AMEMBASSY NAIROBI 0394
RUEHJO/AMCONSUL JOHANNESBURG 0099
RUCPDOC/USDOC WASHDC
RUEHLMC/MILLENNIUM CHALLENGE CORP WASHINGTON DC
UNCLAS ANTANANARIVO 000426 

SIPDIS

SENSITIVE
SIPDIS

STATE FOR AF/EPS AND AF/E
USDOC FOR RASHIDA PETERSEN
JOHANNESBURG FOR SCO
NAIROBI FOR SCO
TAGS: MA
SUBJECT: Seaboard Reaches Verbal Agreement to Extend Lease

REF: A) ANTANANARIVO 0074

B) 06 ANTANANARIVO 1425

UNCLAS ANTANANARIVO 000426

SIPDIS

SENSITIVE
SIPDIS

STATE FOR AF/EPS AND AF/E
USDOC FOR RASHIDA PETERSEN
JOHANNESBURG FOR SCO
NAIROBI FOR SCO
TAGS: MA
SUBJECT: Seaboard Reaches Verbal Agreement to Extend Lease

REF: A) ANTANANARIVO 0074

B) 06 ANTANANARIVO 1425


1. (SBU) SUMMARY: After over a year of intense lobbying, including
Ambassador McGee insisting on a level playing field in a meeting
with President Ravalomanana, the U.S. company Seaboard reached an
oral agreement with Tamatave Port Director Botozaza April 27 to
extend the company's lease on silos and facilities at the port. At
a ceremony the same morning, Prime Minister Lt-General Charles
Rabemananjara and Transport Minister LaPorte knowingly quipped to
the Ambassador, "Hope you are satisfied," no doubt referring to
their instructions to Botozaza to negotiate with Seaboard's
representative. As of April 30, Seaboard and the Port were
preparing to hold negotiations on the terms of the new lease. In
the interim, both Botozaza and Lopes signed an official text of the
minutes of their April 27 meeting to confirm for both sides what was
agreed to. END SUMMARY.

Background: Seaboard vs. TIKO
--------------


2. (SBU) Since entering the Madagascar wheat milling market in
partnership with local company KOBAMA in early 2006, Seaboard
Corporation has sought talks to extend their access to silos and
port facilities in Tamatave. In particular, Seaboard sought fair
access to a multimillion dollar conveyor system constructed by the
port under its modernization program. While operating a profitable
enterprise during this time, Seaboard was repeatedly rebuffed by GOM
officials in submitting written proposals and requests for
meetings.


3. (SBU) During the same period, President Ravalomanana's TIKO
company constructed a new grain silo in Tamatave to enter the wheat
market. With possible sole access to the conveyor system, and
without a lease extension to allow Seaboard to stay in the market,
it appeared the GOM was allowing - or engineering - a wheat monopoly
for the President's company. It is also notable that much of
Madagascar's wheat imports are PL 480 commodities shipped for
monetization and sold at attractive prices.


4. (SBU) Ambassador McGee traveled to Tamatave in early September
2006 to force Director Botozaza'a hand and secure a meeting for
Seaboard. In that meeting, Botozaza repeatedly stated he was
against a monopoly and assured the Ambassador he would consider a
lease renewal. In the intervening months, Botozaza, the former and
current Ministers of Transport, and the Presidency made themselves
unavailable to meet with Seaboard. In a heated January meeting with
the President, the Ambassador asked that the Seaboard case receive a
level playing field. Ravalomanana professed himself to be "neutral"
and insisted his Minister would handle the case. Four months later,
it appears that persistent Embassy advocacy has convinced the GOM
that Seaboard cannot be so easily chased away from the Madagascar
market.

Not Quite Home Free
--------------


5. (SBU) Post will not be convinced Seaboard actually has a viable
deal until they are still seen to be operating when the current
lease expires in November. Part of the deal involves the Port
taking back part of the land under Seaboard's management and
providing a substitute - a compromise the Seaboard representative
has agreed to. At present, Seaboard is telling the Embassy that the
oral and written confirmation so far provided will allow them to
stay in business. The devil will be in the details of finalizing
the new lease agreement; given the Prime Minister's comment to the
Ambassador, we are cautiously hopeful.


6. (SBU) COMMENT: Post repeatedly communicated to the GOM that even
if they are entirely in the right, the perception of corruption will
be unavoidable when an American company pulls out of a market
leaving the President's company with a monopoly. We often
discreetly asked, "What is more important: an advantage for TIKO in
the million dollar wheat market or Madagascar's reputation as it
actively seeks billions of dollars in aid and investment?" Somewhat
unhelpfully, it seemed at times that Seaboard was using this same
leverage to secure a sweetheart deal for itself. Nonetheless, when
the new lease is signed, Post will conclude the GOM and President
Ravalomanana can put the country's interests ahead of TIKO's; if
pressed. END COMMENT.

MCGEE