SOMETHING FISHY: JUNTA ANNOUNCES NEW "INVESTMENTS"

C O N F I D E N T I A L SECTION 01 OF 04 NOUAKCHOTT 000168

SIPDIS

E.O. 12958: DECL: 02/26/2019
TAGS: EAID ECON EFIS EINV PROP MR
SUBJECT: SOMETHING FISHY: JUNTA ANNOUNCES NEW "INVESTMENTS"

REF: 08 NOUAKCHOTT 599

Classified By: Charge d'Affaires Dennis Hankins for reasons 1.4 (b) and
(d).


1. (C) Summary: The junta announced three new fisheries
investments during January and February. These include a 20
million euro loan from Spain to expand Nouadhibou port, $120
million FDI by a South African company to build a fish
processing factory, and a new fishing agreement with the
Government of Algeria. The junta is trying to demonstrate
that it can still attract foreign investment, bilateral aid,
and create economic growth. However, the Junta's "facts"
regarding these investments are misleading or false. In the
case of the Spanish loan for the fishing port, the Embassy of
Spain in Nouakchott issued an official statement saying that
there was no such agreement or loan between Spain and
Mauritania. For the fish processing factory, it appears
highly unlikely that there was an agreement between the South
African government and the junta and there are doubts as to
whether the investor is legitimate. For the Algerian fishing
agreement, the junta is trying to portray an agreement signed
by the two countries in May 2008 as new. In addition to the
investments, the junta also made an amendment to its policy
banning the export of six types of fish by awarding a fish
export permit to a Mauritanian fishing company, allowing it
to export three of the banned specimens. While the company
says that it received the export permit because it was in
compliance with all tax obligations, one of the major
investors in the company is reportedly a close cousin of
General Aziz and the license may simply be a family favor.
End Summary.

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SPANISH LOAN TO EXPAND THE FISHING PORT
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2. (U) Mauritanian official press announced February 4 that
Spain's Institute of Official Credit granted Mauritania a
loan worth approximately 20 million euros to expand the
fishing port in Nouadhibou. According to the official press,
the agreement was signed by "Minister of Economy and
Development" Sidi Ould Tah and Spanish Ambassador Alejandro
Polanco February 4 in Nouakchott. According to statements by
the junta, the port expansion would lead to economic
development in the fishing sector. The "Council of
Ministers" ratified the agreement at its February 5 meeting
and the Parliament voted to approve it February 22.


3. (C) In response to the official press reports, the Spanish
Embassy in Nouakchott issued a statement February 4 declaring
that the reports in the press were false. The statement from
the Spanish also said that Ambassador Polanco and Mauritanian
"Minister of Economy and Development" had not signed any
agreement to provide financing for the expansion of the Port
of Nouadhibou. Spanish Cooperation Coordinator Juan Pena
Fernandez also confirmed to post that the statements issued
by the junta in the official press were false. He said that
Spain had allocated funds to Mauritania almost two years ago
to fund the expansion of the Port of Nouadhibou, but the
project had never moved forward and there was no movement on
it at this time.

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$120 MILLION FISH PROCESSING FACTORY
--------------


4. (U) The junta announced January 27 that "Minister of
Fisheries" Hacenna Ould Ely signed an investment agreement
with his South African "counterpart" in Pretoria, later
reported to be Minister of Environmental Affairs and Tourism
Marthinus Van Schalkwyk. According to official press, under
the agreement South African company Salene Fishing Limited
will invest $120 million to build a fish processing factory
and new wharf in Nouakchott. The majority of the investment
will be made by Salene Fishing Limited but it will also be
open to private Mauritanians. The Government of the Islamic

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Republic of Mauritania (GIRM) will be a minority shareholder
in return for providing the land (50 hectares) for the
project. The factory is supposed to produce 45,000 tons of
seafood per year plus fish oil and fish meal. The junta
states that the new factory will create 1,500 jobs. The
Ministry of Fisheries released a statement saying that the
agreement is "a major step forward in cooperation between
Mauritania and South Africa and will open new horizons to set
up other economic development projects."


5. (C) There are many questions as to whether this fish
processing factory is a bona fide investment or propaganda on
the part of the junta. Most notably, the only information
that has been provided about it has come from the junta
itself and the official press. There have been no statements
or information coming from the investors behind the deal or
by the South African government (SAG),and there has been no
coverage in the South African press. Normally, when there is
a new investment in Mauritania, the signing of the agreement
takes place in Nouakchott amid great fanfare. Pictures and
statements from the signing ceremony are plastered all over
the media. The few investment and prospection agreements
that have been signed between the junta and private investors
since the coup have all followed this format. However, in
this case the agreement was reportedly signed in Pretoria.
There were no pictures of the event and the only statements
have come from the junta. Furthermore, because the agreement
is between the GIRM and a private company, it is unclear why
the agreement would be signed between the two governments and
not between the GIRM and Salene.


6. (C) Given the SAG's strong opposition to the coup and its
refusal to recognize the junta, it is unclear why it would
choose to sign an agreement with the junta at this time.
Furthermore, it is unclear if Ely actually traveled to South
Africa. South African Charge d'Affaires Dumolomzi Duma told
EconOff that the South African Ministry of Foreign Affairs
has declined all meeting requests with the junta. He said
that South Africa has already denied visas to an official
Mauritanian delegation from the mining industry and has
refused to put any visas in Mauritanian diplomatic or
official passports since the coup. He said that prior to the
AU sanctions announcement, members of the junta were able to
travel to South Africa on regular passports as ordinary
citizens. However, they were not granted any of the
privileges normally accorded to visiting officials or granted
any official meetings. While all South African visas for
Mauritanians are issued by its embassy in Dakar, Duma said
that the embassy in Dakar consults with him before issuing
visas to Mauritanians. Duma said that he was not aware of
any visa being issued to "Minister of Fisheries" Hacenna Ould
Ely. He had no information to indicate that Ely had met with
any SAG officials as the official press claimed or that any
agreement had been signed between the two governments. He
said that the prospect of official meetings and an agreement
seemed very unlikely to him. Embassy Pretoria reported that
it was not aware of any visit by Ely to South Africa and that
it had seen nothing in the South African press regarding his
trip.


7. (C) Duma said that the SAG had signed a declaration of
intent with the GIRM in 2005 to assist Mauritania in
protecting its coastal waters against illegal fishing, which
included providing it with equipment. While the two
governments signed the declaration of intent several years
ago, no substantive action has been taken to date. Regarding
any agreements between the GIRM and South African companies,
Duma said that he was also not aware of any agreements since
the coup. He said that he had met with a South African group
interested in investing in the Mauritanian fishing sector in
early 2008, but had heard nothing from them since then. He
said he understood that the deal had either been put on hold
or fallen through since the coup. He noted that an agreement
between the GIRM and a private South African company was
outside the scope of the SAG, so it was possible that some
sort of agreement was possible, but there was certainly
nothing between the two governments.

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8. (C) While there are doubts as to whether the SAG and GIRM
signed any agreement, there are also questions about the
investor. There is no record of Salene Fishing Limited or
its purported parent company Salene Technology online.
Embassy Pretoria confirmed that there is no company
registered under the name of Salene Fishing Limited or Salene
Technology in South Africa. Under growing pressure from
local media to respond to questions about the investment,
Deputy Director of Traditional Fishing at the Ministry of
Fisheries Sidi El Moctar Ould Mohamed Abdellahi provided more
information. However, it did little to clear up doubts about
the investment. In an interview carried by several local
media outlets, Abdellahi said that Salene Fishing Limited was
a subsidiary of the "very well-known South African company
Salene Technology which does have a website." He said that
while both companies operate in South Africa, they are
registered in Cyprus. Embassy Nicosia confirmed that a
company called Salene Fishing Limited is registered in
Cyprus, but noted that it is extremely easy to register
companies in Cyprus and it does not necessarily mean that it
is a legitimate company. Embassy Nicosia found no records of
companies called Salene Technology or Salene Group, which
according to Abdellahi are tied to Salene Fishing and are
also registered in Cyprus. Embassy Pretoria reported that it
was not aware of any "well-known" companies called Salene
operating in South Africa. Abdellahi also said in the
February 4 interview that "a high ranking delegation will
visit Nouakchott in the coming days" for further discussions
regarding the project. However, there has been no visit by
any delegations from the fishing industry to date.


9. (C) Post has spoken with several different officials from
the Ministry of Fisheries about the investment, but each
official seems to provide different and conflicting
information. The nature of the agreement and the parties to
the agreement vary from official to official. The
information coming from Abdellahi himself has also been
conflicting. Abdellahi told the press that Ely traveled to
South Africa to sign an agreement with the SAG for a $120
million investment in a fish processing factory. However, in
a conversation with LES he said that the visit to South
Africa was to discuss a partnership between the SAG and the
GIRM to improve the fishing sector and modernize the
Mauritanian industrial fishing fleet. Abdellahi added that
the GIRM needed something to make the visit appear to be a
success, so it used the visit to sign an agreement with the
private company. He said that the GIRM tried to involve the
SAG in the agreement to give it greater importance.

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"NEW" FISHING AGREEMENT WITH ALGERIA
--------------


10. (SBU) The junta announced a new agreement with the
Government of Algeria to operate a joint venture fishing
company. However, this "new" agreement was actually signed
by the two sides in May 2008. What the junta framed as a new
agreement was in fact just the ratification by the GIRM of
the 2008 agreement. Algeria has long been active in the
Mauritanian fishing sector and the 2008 agreement was a
resumption of its prior activities in Mauritania.

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PERMIT ACCORDED TO EXPORT FISH PREVIOUSLY BANNED FOR EXPORT
-------------- --------------


11. (U) The junta outlawed the exportation of six species of
fish in October 2008 in an effort to make fish more
affordable and available to Mauritanians (Reftel). Prior to
the export ban, much of the catch of these particular species
was being exported to neighboring countries such as Senegal
and Mali. Since the export ban was implemented in October,
fish has become more available on the domestic market but
demand has remained relatively stagnant because much of the
population is not accustomed to consuming fish. Many in the
fishing industry have been devastated by this new policy

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because there has not been enough increased demand in
Mauritania to make up for the loss of revenues from exports.
While the policy likely made the junta popular with those few
Mauritanians who consume fish regularly because prices
dropped slightly, it created bigger problems for it in the
fishing industry and at the Central Bank because income
decreased and there has been less foreign currency coming in
from fish exports.


12. (U) The junta made a slight reversal to its policy
February 3 when it announced that the Mauritanian company
Afrifish would be allowed to export three of the species
previously banned: white grouper (thiof),grouper, and sea
bream. The contract is valid for three months and will allow
Afrifish to export three tons of white grouper, 0.5 tons of
grouper, and unlimited amounts of sea bream during the
duration of the contract. The contract can be renewed every
three months. The export ban for the six affected species
still applies to all other Mauritanian companies.


13. (C) Afrifish is majority owned by a Portugese investor,
but it also has several influential Mauritanian investors,
notably Mohameden Salama Hafed, who is reportedly a close
cousin of General Aziz. The general manager of Afrifish told
LES that the company was given this special export permit
because it was in complete conformity with its tax and
environmental obligations. He claimed that Afrifish was the
only company in conformity and thus the only company
eligible. He argued that the junta was also trying to create
an incentive for other fishing companies to comply with tax
obligations. In exchange for the permit, Afrifish reportedly
guaranteed that it would repatriate all of its revenues
through the Central Bank. Afrifish normally exports its
products to Portugal, Spain, and France and could be expected
to repatriate its earnings in Euros on a regular basis.


14. (C) Comment: As legitimate foreign aid and investment dry
up, the junta has turned to distortions and propaganda to
give the impression that it is attracting new aid and
investment to Mauritania. This appears to be an expansion of
a tactic that it has used before when it took credit for
projects that were actually financed and carried out by UNDP.
These efforts are likely part of the junta's broader
campaign to win popular support by showing that it is
recognized by the international community and able to create
economic development. The biggest questions remain about the
$120 million investment to build the fish processing factory.
Post cannot say for sure if the investment is legitimate,
but at the very least, many of the facts surrounding it have
been falsified or distorted. Post will continue to follow
developments to see if the investment does materialize. As
for the junta's amendment to its export ban on certain types
of fish, it is highly unlikely that Afrifish was awarded the
export permit because it was in full compliance with its tax
obligations. Mauritanian companies normally pay only a very
small percentage of the taxes that they actually owe and
enforcement of tax laws is limited. It seems likely that the
junta amended its policy in this case to reward a cousin and
supporter of General Aziz and to try to bring more foreign
currency into the country. End Comment.
WALSH