DJIBOUTI'S MOST PROMINENT BUSINESSMAN AT ODDS WITH FIRST

C O N F I D E N T I A L DJIBOUTI 000148 SENSITIVE SENSITIVE SBU DELIBERATIVE PROCESS DEPARTMENT FOR AF/E E.O. 12958: DECL: 2019-02-26 TAGS: PGOV ECON EINV EWWT PINR DJ AE SUBJECT: DJIBOUTI'S MOST PROMINENT BUSINESSMAN AT ODDS WITH FIRST COUPLE CLASSIFIED BY: E. Wong, CDA; REASON: 1.4(B),(D) ¶1. (C) SUMMARY. Abdourahman Mohamed Mahamoud Boreh, long considered the richest and most influential businessman in Djibouti, is increasingly embroiled in a bitter dispute with President Guelleh and First Lady Khadra Mahamoud Haid. Boreh's status as Guelleh's perennial confidante and business partner was reportedly damaged by a series of disputes over investments, payment for projects, and tax assessments. More broadly, the First Lady reportedly sees Boreh as a potential political rival, both for her husband, and for herself and her selected proteges, many of whom belong to her own Issack clan, a minority in Djibouti. President Guelleh and Boreh are Issas, the majority group among Djiboutian Somalis. The ongoing power struggle has noticeably escalated in recent weeks, as a brother of Boreh was reportedly jailed for a week without official charges, and the ensuing family stress allegedly led a nephew to commit suicide. In the wake of these developments, Boreh's son Alla Abdourahman Boreh reached out to EmbOffs, and asked to put his father-who has been exiled in Dubai since October-in direct contact with Ambassador. Boreh has extensive investments in multiple sectors of Djibouti's economy, and an ongoing dispute between him and the First Couple could continue to be significantly disruptive. END SUMMARY. ¶2. (C) CDA and EmbOffs had lunch with Alla Abdourahman Boreh (Alla) February 25 at the Embassy. The invitation was issued after Alla reached out to Embassy contacts, and expressed his desire to meet with the Americans and be "seen walking into the American Embassy." Alla was born in France, studied in Djibouti, spent a year in the U.K. to improve his English, and returned to Djibouti in 2001 to work with his father. He is a dual French-Djibouti national, as is his wife, a Djiboutian woman of Arab origin. The couple live in Djibouti with their two small children. By his own admission, Alla was "never very close" to his father, with whom he had not spent much time growing up. Alla is currently overseeing business interests in Djibouti for his father, who left Djibouti in October for Dubai, and has not returned since. At the end of the meeting, Alla asked to set up a phone call between his father and Ambassador. -------------- BOREH GROUP DEEPLY INVOLVED IN DJIBOUTIAN ECONOMY -------------- ¶3. (C) Alla did not give a monetary estimate of the Boreh Group's investments and activities in Djibouti. However, he said that these investments, while only a small fraction of his father's total worldwide assets, were wide-ranging and substantial. Through various subsidiaries, Boreh is or was involved in construction and housing (SOPRIM),packaging and supply of food to Air France (SODRAS),storage of petroleum products (SOMPEC),transportation (SOTRAM),distribution of British American Tobacco products (Red Sea Central),security (NOMAD),and other international trade ventures (Boreh International). Alla explained that his father had taken the profit from SOPRIM's involvement in the construction of Camp Lemonier (home to the Combined Joint Task Force - Horn of Africa, the only U.S. military base in Africa),and invested in purchase of heavy machinery for use in other Djibouti projects. Notably, SOPRIM partnered with the Brazilian company Odebrecht for the construction of the newly inaugurated USD 400 million Doraleh Container Terminal (DCT),with the Nakheel Group and a Lebanese company to build several dozen villas, and again with the Nakheel Group and a Japanese firm to complete the first phase of the luxury Kempinski hotel. For the Kempinski project, Alla said, SOPRIM's contribution had been primarily in logistics, manpower, heavy equipment, concrete, and-most of all-interface with the GODJ. -------------- WHAT TRIGGERED THE RIFT? -------------- ¶4. (C) Djibouti's rumor mill has posited several theories about what came between Boreh and the First Couple. Most explanations invoke disagreements over investments, including general suspicion that Boreh was benefiting disproportionately in some joint ventures. Another leading theory is that the First Lady was furious over a botched deal involving an office building in downtown Djibouti, refusing to pay Boreh for its construction when he failed to attract a lucrative tenant. Other sources blame a general growing unhappiness on both sides-from the First Couple that Boreh was profiting unduly, and from Boreh that he was not being paid for a significant number of projects completed for the GODJ. For example, Alla specifically maintained that for some time, his father had sold imported cooking gas (propane) at a loss, under direct instructions from Guelleh, who was worried about popular discontent at rising prices. Now, Alla said, Boreh Group was still selling cooking gas, and was making about 200-300 DJF (USD 1-1.50) profit on each bottle. Alla said that his company did not have a monopoly on selling cooking gas, and attributed recent recurrent shortages of cooking gas in Djibouti to congestion at Dubai's Jebel Ali port. ¶5. (C) A disputed tax bill might well have been another proximate cause of the dispute. Alla said that the tax office had recently levied a tax adjustment of two billion DJF (approximately USD 11 million) against SOPRIM. According to Alla, his father had been willing to negotiate on a reduced price, but the GODJ had not. He said that his family had filed a civil suit against the GODJ two weeks ago, disputing the bill. He added that Alain Martinet, Boreh's regular lawyer, had told him that he could not represent Boreh in this case, since Martinet was already representing the government. Martinet, a French national, also serves as the British honorary consul, and as legal counsel to many prominent individuals and institutions in Djibouti, including British American Tobacco and DP World. (NOTE: Martinet is also the Embassy's local legal consultant. END NOTE.) -------------- - OCTOBER: BLOCKED ACCESS AT DCT -------------- - ¶6. (C) Festering disagreements reportedly came to a head in late October, while Guelleh was abroad attending the Francophonie summit in Canada. During her husband's absence, the First Lady reportedly blocked SOPRIM's access to the Doraleh Container Terminal by sending the police and elite Republican Guard. This situation reportedly triggered a frank message to President Guelleh from Dubai Ports World (DP World) Chairman Sultan Ahmed bin Sulayem, who wanted assurances that this kind of incident would not imperil the estimated USD 400 million Doraleh project. -------------- -------------- NOVEMBER: BOREH PUSHED OUT OF THE PORT -------------- -------------- ¶7. (C) In a further fall from grace, President Guelleh issued a decree on November 27 removing Boreh as the President of the Djibouti Ports and Free Zone Authority, and replacing him with Ahmed Aden Doualeh. Doualeh formerly served as the GODJ's representative to the Port of Djibouti, and also as Djibouti Airport Director during the 1980s. He has studied in the U.S., holds several advanced degrees, and is regarded as a capable technocrat. At the same time, he is also a member of President Guelleh's Issa Mamassan sub-clan, and reportedly enjoys Guelleh's full trust. -------------- -------------- UPPING THE ANTE: AN ARREST AND A SUICIDE -------------- -------------- ¶8. (C) Alla told CDA that one of his uncles (Boreh's brother) had been arrested on February 17, allegedly for insulting the honorary consul of Morocco over a land dispute. Alla admitted that his uncle had been drunk at the time of the altercation, but maintained that the arrest had been politically motivated, and that his uncle had been kept in jail until February 23 (almost a week) without charges. Furthermore, Alla blamed the February 19 suicide of his 26-year-old cousin Ismael Ahmed Mohamed partly on the increasing pressure on the Boreh family. While his cousin, the son of a deceased brother of Boreh, had suffered from depression, Alla also thought that he had been upset over his uncle's arrest and the family's situation. ¶9. (C) Alla himself was visibly shaken by recent events. He admitted that he had thought very carefully before reaching out to the Embassy, and had finally decided to do so because he was frightened that the GODJ would use him to get at his father, and said that he "didn't want to go to jail." Alla said that he had already gone to the French Consulate to ask for assistance, but had been told that as a dual Djibouti-French national, the French authorities would consider him a Djiboutian national while he was resident in Djibouti. Throughout lunch, Alla appeared fairly agitated at times, and made several sweeping generalizations against the GODJ, including that it was "full of spies" and "corrupt from top to bottom." -------------- BOREH: PURELY A BUSINESSMAN- OR POSSIBLE POLITICAL RIVAL? -------------- ¶10. (C) Alla painted the underlying cause for the dispute between his father and the First Couple as a power struggle over influence and succession. He predicted that Guelleh would first confirm his intention to leave public office at the end of his term during an upcoming March 4 ruling party (People's Rally for Progress, RPP) congress. Then, Alla anticipated, Guelleh would subsequently accede to "popular demonstrations" calling for a constitutional amendment allowing him to run for a third term. Whether or not this happens, Alla said, depends on if the "U.S. and other members of the international community" object to it. Alla said that the First Lady, especially, considered his father a threat to this sequence of events. If Guelleh does not stand for a third term, Alla said, the First Lady might prefer for Minister of Transport Ali Hassan Bahdon, who is married to her daughter, to become President, allowing the First Couple to still "run the show." Alla called the Minister of Transport "weak" but well-connected, and mentioned that he also had a family connection to Boreh through his mother. Alla emphasized that the First Lady especially views sees Boreh as a political rival since she is a minority Issack, while Boreh and Guelleh are majority Issas. ¶11. (C) Asked whether his father indeed had political ambitions, Alla was more circumspect. While he repeated that his father had always been a businessman, and never a politician, Alla said that he simply "did not know" if his father was considering a run for the Presidency or any other political activity. -------------- -------------- WHAT NOW BETWEEN GODJ AND DP WORLD? -------------- -------------- ¶12. (C) Alla repeatedly described his father as a crucial intermediary between the GODJ and DP World. Boreh, he said, had initially "developed a relationship with Sultan [bin Sulayem] and had been the one to convince DP World to invest in Djibouti. While he said he didn't know if Sulayem had taken or would take sides in this dispute, Alla claimed that DP World was now concerned that Djibouti was "not respecting their deal" with DP World. But now, he said, DP World has too much invested in Djibouti to pull out. DP World had entered Djibouti as through the narrow mouth of a "wine bottle," expanded inside the bottle, and now found it difficult to extricate themselves. Nevertheless, Alla said, the overall world financial situation made it unlikely that DP World would move forward with new Djibouti projects, including former plans to invest in a marina, an airline, and a resort at Lac Assal. Officially, Alla said, the GODJ and DP World have an agreement to arbitrate any disputes in U.K. courts, although no issues have ever come that far. -------------- NO SUCCESSOR IN THE WINGS -------------- ¶13. (C) COMMENT. As the First Couple attempts to curb Boreh's influence, they have anointed no clear successor to take over his position in Djibouti's business world. Ibrahim Lootah, a prominent Emirati businessman who had recently invested in a water factory, greenhouse project, construction, a poultry farm, and other Djibouti projects, had been seen as close to Guelleh, but has recently absented himself from Djibouti, and was rumored to be on the outs with the GODJ. Alla also reported that Lootah was having "similar problems" to his father's. Likewise, whereas Boreh once ran Djibouti's premier private security firm in collaboration with National Security Chief Hassan Said Khaireh, Alla reported that business is now more diffuse, with Guelleh partnering unofficially with a French businessman (Bruno Pardigan) who was recently given a presidential monopoly on issuing licenses to provide maritime security services, and Hassan Said's son running the country's most visible private security firm. ¶14. (C) COMMENT CONTINUED. Alla said that his father had, for the moment, chosen to "wait" instead of to "fight." However, he warned that waiting could mean losing everything in Djibouti, and said that if the Boreh Group indeed closes shop here, it will mean a real loss of jobs, and might prompt other investors to follow suit. Whether his prediction is right depends greatly on whether and how this dispute is resolved. While Guelleh may view Boreh as a threat, attracting substantial foreign investment has long been a cornerstone of the President's overall development strategy. Having successfully courted at least an estimated USD 800 million in investment from DP World, the GODJ has a vested interest in demonstrating--both to current and potential investors--its continued good faith, transparency, and openness to business. END COMMENT. 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