HANNIBAL GOES TO SEA: INSIGHTS INTO ANOTHER AL-QADHAFI FAMILY BUSINESS

C O N F I D E N T I A L SECTION 01 OF 02 TRIPOLI 000642



DEPT FOR NEA/MAG; COMMERCE FOR NATE MASON

ENERGY FOR GINA ERICKSON



E.O. 12958: DECL: 8/12/2018

TAGS: ECON, EPET, EWWT, PGOV, KCOR, CY, LY

SUBJECT: HANNIBAL GOES TO SEA: INSIGHTS INTO ANOTHER AL-QADHAFI

FAMILY BUSINESS



REF: A) TRIPOLI 592, B) TRIPOLI 596, C) BERN 368, D) HOTRWASHIN 06243883 , E) 2006 TRIPOLI 198



CLASSIFIED BY: Chris Stevens, CDA, U.S. Embassy - Tripoli, Dept

of State.

REASON: 1.4 (b),(d)

1. (C) Summary: Libya's maritime business, in which Hannibal

al-Qadhafi (son of Muammar al-Qadhafi) plays a large role,

appears to be another key sector of Libya's economy that

effectively falls under the al-Qadhafi family's sway. Projected

increases in Libya's oil and gas production in the next 5-8

years are expected to generate concomitant growth in the

maritime component of hydrocarbon transportation and production.

Libya's private and state-run companies, which have a majority

of that business, are expected to grow and retain their control

of that lucrative sector. The use of government funding to

capitalize Hannibal's "private" maritime transportation company,

together with the fact that the national maritime transportation

in which he plays a large role quickly halted Libyan oil

shipments to Switzerland in response to Hannibal's recent

detention in Geneva, highlight the close integration of private

and public interests in many of Libya's key economic entities.

Despite the ostensibly egalitarian nature of al-Qadhafi's

"Jamahiriya", the reality is that the al-Qadhafi family and its

close political allies own outright or have a considerable stake

in most things worth owning, buying or selling in Libya. End

summary.



2. (C) Econoff recently met with Talal Arebi, Chairman and

General Manager of the Mariner for Maritime Transportation, Ltd.

company to discuss Libya's oil and gas shipping industry, and to

glean information about the ownership structure of Mariner and

the General National Maritime Transportation Company (GNMTC).

Mariner is reported to be owned and controlled by Hannibal

al-Qadhafi, son of Libyan leader Muammar al-Qadhafi. The GNMTC

is nominally state-owned, although Hannibal reportedly has a

sizeable stake in and effectively controls it. The GNMTC was

publicly linked to Hannibal during the Libya-Switzerland

contretemps over his recent arrest and detention in Bern (refs

A, B); the state-run company announced shortly thereafter that

it was halting all oil shipments to Switzerland (Ref C).



MARINER ON THE GROW ...



3. (C) Mariner was established in 2000 in Cyprus, and merged

shortly thereafter with unnamed Libyan company in a joint

venture structure. It initially served as a broker between

Libya's National Oil Corporation (NOC) and European firms for

offshore oilfield transportation and shipping. The company

subsequently expanded its services to include direct chartering

of vessels. By 2003, it had purchased its first oil product

storage vessel, adding a second the following year. With these

two ships in hand, Mariner began to service offshore oil rigs

operated by TOTAL (France) and Eni (Italy) in Libyan waters.

The company now has three major areas of operation: offshore

oil/gas platform support, shipping management and clean (i.e.,

refined) oil product transportation from Libya to foreign ports.



... AND SO FAR A NEAR-MONOPOLY PLAYER



4. (C) According to Arebi, Mariner now provides up to 75% of

the NOC's requirements for transporting clean products to

market, primarily in Europe. It is seeking to further expand

its offshore support business by adding another 10-15 supply

vessels to match the boom in offshore drilling that is expected

to occur in the next several years. Arebi flatly stated that

Mariner has no Libyan competition; however, it does compete with

Italian and French companies for the offshore support business,

and primarily Greek and Greek-Cypriot firms in the oil

transportation sector. Addressing the role of Maltese

companies, Arebi said Malta's primary competitive advantage was

its shipyard and some re-supply capabilities, but noted that

Maltese firms were limited because they typically did not own

their own vessels.



5. (C) Asked about the company's financing, Arebi stressed that

Mariner is "an entirely private company" that draws on foreign

banks to underwrite major loans. Regarding political support by

the Libyan government and/or regime figures (i.e., Hannibal

al-Qadhafi),Arebi was coy, allowing only that the company has

"enjoyed high-level support". He conceded that such support had

been critical in getting the company launched, particularly with

respect to gaining access to decisionmakers at the NOC and its

subsidiaries, particularly Brega. He maintained that Mariner

did not/not receive any government funding; however, a contact

at the National Engineering and Supply Services Company (NESSCO)



TRIPOLI 00000642 002 OF 002





told us recently that Mariner had received financial support

from the NOC as recently as late 2006. Separately, a prominent

member of Libya's small community of elite businessmen told P/E

Chief that the initial request for funds to capitalize Mariner

had coincided with a decision by Muammar al-Qadhafi to steer

Hannibal, who has had a checkered past, towards business

pursuits in the hope that it would temper his behavior. (Note:

The use of government funds to capitalize entities

owned/controlled by al-Qadhafi's children has become common

practice. Credible reports suggest that Muhammad, Saif al-Islam

and Saadi al-Qadhafi have all benefited from considerable

government financing and political backing in their business

endeavors. End note.)



ANOTHER ANGLE: THE GNMTC AND LIBYAN NAVY



6. (C) In addition to Mariner, Hannibal al-Qadhafi is also

reported to have a controlling interest in Libya's GNMTC.

Hannibal's precise role in the company is unclear. He is

decribed as a "consultant" in some sources; others describe him

as playing a key management role in the company, particularly

with respect to procurement decisions. According to its

website, the GNMTC has a fleet of five crude oil, three "clean

product" and two liquid petroleum gas (LPG) tankers in its

fleet. GNMTC's operating capital was recently expanded to 600

million Libyan dinars (about $480 million),in addition to a new

government-backed loan for $350 million to purchase an

additional nine tankers. Opposition websites document alleged

instances in which Hannibal has used his influence over the

GNMTC to establish himself up as a broker for the purchase of

vessels, thereby reaping millions of dollars worth of personal

profit. Separate reporting (ref D) also address his Mariner

equities and a controlling interest in Libyan naval contracts.



7. (C) Comment: Hannibal's stake in Mariner and prominent role

in the GNMTC afford another example of the kleptocratic nature

of al-Qadhafi's regime. While the Jamahiriya political ideology

espoused by Muammar al-Qadhafi owes an intellectual debt to

socialism and includes hefty doses of pseude-egalitarian

rhetoric, the reality is that the al-Qadhafi family and its

political loyalists own outright or have a considerable stake in

most things worth owning, buying or selling in Libya (ref E).

The extent and nature of the family's economic activities are

deliberately obscured to help deflect public scrutiny and

allegations of corruption; however, Hannibal's stake in Libya's

maritime sector - like those of his siblings in other industries

- is an open secret in Libya's small, closed society. The quick

decision by the GNMTC to halt oil shipments to Switzerland in

response to Hannibal's detention in Geneva throws into stark

relief the seamless private-public nature of many of Libya's key

economic entities, a reality that will complicate nascent

efforts to encourage economic reform and greater transparency.

End comment.

STEVENS