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)

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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