Termination of Land Rover Operations Creating

UNCLAS KHARTOUM 000089

SIPDIS

SIPDIS
SENSITIVE

DEPT FOR AF/SPG, AF/EPS, EB/IFD, AND EB/ESC
DEPT PLS PASS TO USAID FOR AFR
TREASURY FOR OFAC
USDOC FOR ANESA

E.O. 12958: N/A
TAGS: BEXP BTIO ETTC ECON EAID PREL SU
SUBJECT: Termination of Land Rover Operations Creating
Difficulties for Company and Customers


1. (U) This is an action request - see para 6.

2. (SBU) Summary: Land Rover has been ordered by Ford Motor
Company to close down all commercial operations in Sudan.
Representatives of Land Rover here believe this action was taken as
a result of pressure from the U.S. Government. The shut down is
creating a "horrendous" situation of liabilities and contract
problems with customers, according to local sources. Customers
affected by the closure include the British Embassy and several
humanitarian agencies. Sudan had been the largest market in
sub-Saharan Africa, outside of South Africa, for Land Rover.
Embassy requests Washington guidance on possible measures to reduce
impact on humanitarian agencies or permit the shut down of sales and
service to be less abrupt. End summary.


3. (SBU) On January 21, Duncan Thomas and Norman Dunkerley met with
Econ Officer. Dunkerley is technical advisor to Awab Motors, the
local Land Rover agent. Thomas is the Executive Director of AES
Support, a UK-based firm engaged in automobile distribution in
several African countries. Thomas and Dunkerley stated that Land
Rover has recently received instructions from Ford Motors, which
owns Land Rover, to shut down sales and service operations in Sudan.
They explained that this will pose a "complete and utter nightmare"
for their businesses, and will create a "horrendous" tangle of
liabilities and breaches of contract with customers. Thomas noted
that Land Rover is a UK company, and its vehicles are not U.S.
sourced. They had asked for a meeting at the Embassy because they
believed the order to cease operations from Ford was a result of
pressure from the USG, specifically from the SEC, on Ford. However,
visiting AF/SPG Deputy Director Small suggested that the decision
might be a result of pressure on U.S. companies to divest from
Sudan.


4. (SBU) Thomas noted that Sudan is the largest market in
sub-Saharan Africa, outside of South Africa, for Land Rover. Sales
for 2006 were about 500 vehicles and projected sales for 2007 were
600 to 1000. Customers include the British Embassy and humanitarian
NGOs, such as Oxfam, Save the Children, and Mines Advisory Group.
Some of the NGOs are implementing partners for USAID. Under the
instructions to shut down operations, vehicles already ordered will
not be delivered, spare parts will no longer be sold, and warranties
will not be honored.


5. (SBU) Thomas and Dunkerley arrived at the meeting at the Embassy
well briefed on U.S. sanctions. They had copies of the executive
order imposing sanctions, and noted that, under the terms of that
order, U.S. firms were allowed six months to shut down existing
operations in Sudan. Based on their assumption that the shut down
came as a result of U.S. Government regulations, they asked if a
similar six-month phase out period would be possible for Land Rover.
They also asked if any exemptions could be provided for sales to
the British Embassy or humanitarian agencies. Econ Officer advised
that if the closing of operations were based on sanctions
regulations, then an application for a license through the
Department of Treasury, Office of Foreign Assets Control (OFAC),
might be an option that Ford should consider.


6. (SBU) Action requested: Embassy requests any information
Washington has on the reason for Ford's decision to shut down Land
Rover operations in Sudan. If the shut down is due to sanctions,
please advise if a six-month phase out or license for sales to
humanitarian agencies might be feasible.

HUME