Posts tagged "misappropriation"

A Balanced Strategy: Reprogramming Ngos and Enhancing Their Relevance as Development Partners in Sierra Leone

What should be the defining principle of the Koroma administration National Development Strategy is balance. President Koroma cannot expect to eliminate national development challenges through a unilateral political agenda, to do everything and coordinate everything based on his All People’s Congress (APC) party ideology. His APC party with its “corporate agenda” for Sierra Leone rolled over the incumbent Sierra Leone People’s Party (SLPP) in a run-off that reflected the expectations and desires of a majority of Sierra Leoneans for far-reaching socio-economic change, institutional reform and full inclusion of the mostly youth and indigenous poor. If Koroma is to succeed to reduce Sierra Leone’s grinding poverty and the creation of a more effective, inclusive and just state, however—and he must if his leadership is going to be different from the SLPP administration it replaced—he will need to set priorities and consider trade-offs and show understanding and offer support as he grapples with explosive issues of judicial reforms, corruption and development policy.

The strategy strives for balance in three areas: between trying to prevail in eliminating corruption in his government and preparing for other contingencies; between institutionalizing capabilities such as nongovernmental engagement and supporting the relevance of NGOs as development stakeholders and maintaining NGO’s existing organizational independence and strategic edge in terms of advancing national development objectives through community involvement; and between retaining those cultural traits that have made grassroots involvement in development work possible and discouraging behaviors of NGOs that hamper their ability to do what needs to be done. “In its broadest sense, the term “nongovernment organization” [NGO] refers to organizations (i) not based in government; (ii) not created for financial or material gain; but (iii) created to address concerns such as social and humanitarian issues of development, individual and community welfare and well-being, disadvantage, and poverty, as well as environmental and natural resources protection, management, and improvement” (Asian Development Bank).

Strategic Thinking

The Koroma administration’s ability to deal with performance problems of NGOs will depend on its capacity in handling corruption in government. To be blunt, to fail—or to be seen to fail—in addressing corruption in government would be a disastrous blow to the APC party credibility, both among party supporters and voters and among opposition adversaries. Sierra Leoneans want to see serious effort to address corruption and the injustices of the legal system in the country—and the people of Sierra Leone have lost all patience in this regard. Still, there will continue to be high expectations for Koroma’s zero-tolerance against corruption to be seen to work in Sierra Leone.

Given its endemic nature, corruption, poverty, and the tragic history of violence, Sierra Leone in many ways poses an even more complex and difficult long-term challenge—one that, despite a strong rhetorical effort, will require significant determination and commitment to punish drastically for crimes of corruption for some time. And given the country’s ever changing political game, the resounding victory of Ernest Koroma in the 2007 run-off elections could prove just another wrong turn along the road going nowhere. Sierra Leoneans have already started to question the leadership of Koroma, who in his inauguration in September 2007 announced his zero-tolerance stance against corruption, but “has not had a lot of luck with his cabinet” (The Africa Report). The instances of presumed corruption and shady dealings [the controversial Income Electrix power deal, the suspended Transport Minister Ibrahim Kemoh Sesay 700kg haul of cocaine deal, and the Attorney General Abdul Serry-Kamal Seventy Five Billion Leones Wanza saga] confirm the self-seeking and predatory activities of APC officials, “and that despite the best intentions announced by President Koroma, he [seems to] lack the moral standing and political backbone to implement his ‘zero-tolerance’ policy for corruption and his call for accountability of his cabinet” (The New People Newspaper).  Koroma still has to demonstrate he is following a drummer different from that of every Sierra Leonean leader of the past 45 years.

What is dubbed the war on corruption is, in grim reality, a prolonged, nationwide conventional campaign—a struggle between the forces of blatant corruption and those of moderation. Direct ACC engagement will continue to play a role in the long-term effort against corrupt officials in government and the private sector. But over the short term, a determined leadership may have to use draconian rules of engagement to ending corruption in Sierra Leone. Where possible, what the ACC calls prompt service in addressing corruption cases  should be subordinated to concrete measures by a strong presidency aimed at definitely promoting better governance, economic programs that spur development, and efforts to address the grievances among the discontented which justified the civil conflict that so badly destroyed the social fabric of Sierra Leone over the years. It will take the active engagement as well of NGOs in a collaborative effort over a long time to educate, rebuild and advance infrastructural development objectives.

Sierra Leone is unlikely to experience another civil war—justifiable by the injustices resulting from bad governance and rampant corruption—anytime soon. But that does not mean it may not face similar challenges in a variety of locales. Where possible, a government strategy is to employ indirect approaches—primarily through building the capacity of partner NGOs and their administrative processes—to prevent festering problems from turning into crises that require costly and controversial direct civil conflict. In this kind of effort, the capabilities of the government’s allies and NGO partners may be as important as its own, and building their capacity is arguably as important as, if not more so than, the partisan bickering the government has to deal with.

The recent past vividly demonstrated the consequences of failing to address adequately the dangers posed by bad governance. Rebel networks found sympathy among Sierra Leoneans and strength within the chaos of social breakdown. The small-arms infested State quickly collapsed into chaos and criminality and the worst of catastrophes befell the Sierra Leone homeland—towns and villages were reduced to rubble by rebel attacks as a result of the failed State. The kinds of capabilities needed to deal with such a historically dismal scenario cannot therefore any longer be played down with political rhetoric. Even the smallest of crimes of corruption should require stringent and uncompromising methods of investigations and punishment to avoid this failed State scenario. As Transparency International chair Huguette Labelle has noted, “Stemming corruption requires strong oversight through parliaments, law enforcement, independent media and a vibrant civil society. When these institutions are weak, corruption spirals out of control with horrendous consequences for ordinary people and for justice and equality in societies more broadly” (NGLS Go Between).

In many ways, the country’s national development capabilities are still coping with the consequences of the 1990s, when, with the complicity of the civil war, key instruments of the government of Sierra Leone regulatory mechanisms were reduced or allowed to wither on the corridors of power.  

“Sierra Leone has been a major recipient of foreign aid since the end of a devastating 11-year civil war in 2002. But government, donors and citizens are all questioning how effectively this aid is being used. Allegations of misappropriation of donor funds, both by government actors and NGOs, threaten this inflow. One of the government’s principal partners, the British Department for International Development, withheld aid in protest against such anomalies, for most of 2007 and early 2008 (Fofana/IPS, Freetown). Besides, the Government of Sierra Leone has not maintained a constructive relationship with NGOs.  However, the global push towards reducing poverty has created a new convergence among development practitioners and policymakers as the means of increasing access to new initiatives that will promote good governance and help reduce poverty. Citizen participation has increasingly been taken seriously to increase opportunity for lower income and other excluded populations whose interest are marginalized in classic representative institutions to influence policymaking processes. The government is beginning to appreciate the relevance of civil society in development—that community development lies at the heart of a strong, association-based civil society.

In this regard, the Koroma administration can assume more of the tasks of fostering effective collaboration with local and international NGOs for peace, security and development. To truly achieve victory as the High Level Forum on Aid Effectiveness defined it –“to bring new voices into a review of how aid is managed, and to sketch out a course for greater transparency, accountability and ultimately impact on the lives of the world’s poor—to attain a political objective” (Fofana/IPS, Freetown)–the Sierra Leone Government needs an NGO Coordination Unit whose ability to facilitate the diversion of huge donor funds to the NGO community is matched by its ability to use active evaluations and reviews as learning tools for itself and its development partners.  “The role of the Sierra Leone Association of NGOs (SLANGO), formed in January 1994, to coordinate NGO activities in order that efforts are not duplicated and resources not wasted” (BNET Business Network) has to be differentiated from what the NGO Unit at MODEP is doing; also to understand SLANGO’s relevance in development work.

Given these realities, the NGO Unit of MODEP has, however, been seen to make some impressive strides in recent years. “The revised National NGO Policy following the wide range of consultations held at national and regional levels with the involvement of all stakeholders especially the NGO Community, Line Ministries and Civil Society in the preparation of the policy [was a laudable effort]. The NGO Unit facilitated several meetings with other ministries particularly the Ministry of Finance, the National Revenue Authority (NRA), the Ministry of Labor and other stakeholders to discuss among other things: Duty Free Concessions, Resident/Work Permits and Taxation etc.” (NGO Unit/MODEP).

It can also be suggested that a New Development Operations Manual for a New National Development Strategy is developed to incorporate the lessons of recent years in NGO service delivery doctrine. “Train and equip” programs will allow for quicker improvements in the development capacity of partner organizations. And various initiatives should be undertaken that will better integrate and coordinate government efforts with civilian society agencies as well as engage the expertise of the private sector, including nongovernmental organizations and academia.

Organizational Problems in Perspective

Even as international NGOs hone and institutionalize new and modern management methods, the Sierra Leone Government still has to contend with the organizational challenges posed by local NGOs. The images of NGOs seen by many local people as corrupt and undeserving of support are a reminder that these Civil Society Organizations (CSOs) and their management processes do still matter.  NGOs in the country should be seen to improve their and several partners’ documentation of results, including the development of good monitoring indicators.

In addition, there is the potentially toxic mix of inadequate financial management of NGOs and inadequate reporting on budgetary issues to the Government of Sierra Leone’s NGO Unit. What all these problems portend is that the monitoring of development aid continues to be a major challenge for Sierra Leone and that a thorough framework of monitoring both recurrent and development activities must be put in place. The Government of Sierra Leone cannot take these organizational issues of NGOs for granted and needs to invest in the programs, platforms, and personnel that will ensure their relevance as development stakeholders.

But it is also important to keep some perspective. As much as the MODEP’s NGO Unit has come up with revised policy regulations with collated information in respect of funds disbursed by donors to NGOs for the implementation of programs it must be remembered that what is driving MODEP is a desire to exorcise the sloppy performance of NGOs over the years and to make them more relevant as development stakeholders—not an ideologically driven campaign to micro manage NGOs in the country. “Understandably, the logic behind massive NGO presence in Sierra Leone was to create a civic culture, pluralize the political, economic and social arena and bridge the gap between the masses and the State. So NGOs thus act as intermediaries between, what donors call ‘the unorganized masses’ and the State and are expected to represent the people and express their voices in policymaking. In fact, among NGOs is a small sector of voluntary organizations that genuinely monitor regimes, engage in advocacy on behalf of the poor and serves as watchdogs in ensuring that government contractors deliver services”.

It is true that the Poverty Reduction Strategy Paper (PRSP) with clear link to the Millennium Development Goals (MDGs) is the main focus of Government and its development partners. “The PRSP calls for pro-poor sustainable growth. However, achieving this means maintaining macro-economic stability IMF-style with low inflation and strict fiscal deficits, despite research by CSOs and development agencies which seriously question the poverty impact of these types of policies” (European Network on Debt and Development). NGOs’ participation was recognized in the process. NGOs could now play an active role in the implementation process by shifting their interventions and assistance from relief/humanitarian programs to sustainable infrastructural development programs. Answerability and transparency, adequate financial management and adequate budgetary reporting are to be the watch words in the new dispensation.

NGOs in Sierra Leone may have their organizational problems, but they can be quite relevant stakeholders in promoting people’s participation in poverty reduction programs. Use of funds has not been cost effective for most NGOs but the thematic areas most of these NGOs focus on (health, education, skills development, micro-finance, skills training, etc.), are relevant for the end users that are often poor and vulnerable children, youth and women. These are priority support areas that are in accordance with Sierra Leone’s development priorities and the PRSP as well international development agencies’ priorities.

Now that the performance bar has to be raised for the government and NGOs following their dismal performance in terms of handling aid money, the Sierra Leone Government must now endeavor to maintain a credible strategic relationship with NGOs through effectively evaluating, reviewing and monitoring their activities. Toward this end, the steps the NGO Unit at MODEP is taking to return excellence and accountability to NGO stewardship are commendable. Presidential and Parliamentary oversight may also be necessary for a more reliable and sustainable NGO Unit coordination effort.

When thinking about the range of strengths, weaknesses, opportunities and threats (SWOT) of non-governmental organizations as development partners in Sierra Leone it is reasonable to understand that NGOs come in many shapes and sizes. Data used in the SWOT analysis stem from multiple sources including statistical reports, literature review, regulations and policies, and research articles by NGO professionals. These findings should provide a valuable reference for the Government and the international development community who are interested in developing excellence in the civil society organization which interestingly can provide some feed back into the effectiveness aspects of the development analysis.

Strengths

Grassroots (local) NGOs

• Have a positive presence on the ground.
• Demonstrate ability to seek common ground and commitment to poor and marginalized grassroots populations.
• Enjoy confidence and trust of local populations.
• Have experience-based knowledge of cultural, political and socio-economic conditions of indigenous populations.
• Understand vulnerabilities unique to local beneficiaries.
• Can achieve extreme flexibility with fewer resources and lower costs.
• Possess valuable experience, content and fundamental working knowledge about local trade issues and business contacts in their field.

International NGOs

• Have global appeal and have developed industry-wide reputation for positive work.
• Good at generating and mobilizing resources and core competencies for their operations.
• Ability to resolve issues of legitimacy and to address political and policy constraints.
• Ability to harness expert opinion to influence public opinion and policy-makers.
• Have paid core staff to ensure the quality of project work.
• Possess valuable experience, content and fundamental working knowledge about international trade issues and the labor market and business contacts in their field.

Weaknesses

Grassroots (local) NGOs

• May have limited financial and expert resources to support end-user development.
• May have limited strategic perspectives and weak linkages with other actors in development.
• May have limited managerial and organizational capacities.
• May sometimes miss the big picture on macro perspectives on capital markets, economy and geopolitics vis-à-vis community development.
• Indigenous NGO operators may be prone to corruption.
• Because of their voluntary nature, there may be questions regarding their accountability and credibility.
• May have difficulty managing operations on financially sustainable basis.
• Are not sustainable on membership fees alone.

International NGOs

• Some advocacy NGOs working to influence the policies and practices of governments, development institutions have limited implementation capacity.
• Questions sometimes arise concerning their motivations and objectives, and the degree of accountability they accept for the ultimate impact of policies and positions they advocate. Sometimes accused of “selling out” when they work with government or corporations.
• May find it hard to placate or manipulate special interests.
•  Suffer fluctuations in maintaining non-profit donations revenue streams.
• May have limited experience with poor populations and operations may not reflect the needs of communities.

Opportunities

Grassroots NGOs

• Can effectively work with community partners to assess local problems and opportunities and to promote export development programs.
•  Ability to implement successful training programs and advance participatory development.
• Ability to integrate their local expertise and experience in health and education initiatives in community development programs.
• Can be clearing-houses for local trade information.

International NGOs

• Ability to work out credible partnerships with government and private corporations to mobilize public opinion to increase influence on poverty reduction programs and trade issues.
• Effective at bringing the voice of efficient organizational practices into NGO work in developing countries.
• Ability to contribute sector-specific expertise to help producers add value, improve quality and find new export markets.
• Quite familiar with political and social accountability mechanisms that complement their interventions and advocacy work.

Threats

Grassroots NGOs

• Isolated and poorly coordinated efforts may have negative program outcomes.
• Lackluster relationship with trade and export development corporations causing unsustainable initiatives and lack of trade development solutions.
• Lacks technical capacity to connect poor people with trade and export opportunities.I

International NGOs

• Tendency to ignore the voices of the poor represented by the experience and professional input of local agencies when defining the dialogue and public understanding of trade and development issues.
• Inclination to compete by lobbying against one another thereby distracting policy-makers on major issues.
• Often accused of hijacking the macroeconomic policy making dominated by technocrats and external consultants in the process.

Overall, by sorting the SWOT issues of grassroots (local) and international NGOs into planning categories one can obtain a system which presents a practical way of assimilating the internal and external information about NGO work in Sierra Leone, delineating short and long term priorities, and defining and developing coordinated, goal-directed actions, and allowing an easy way to build management teams which can achieve the objectives of development growth and the essence of civil society. In reality, as the philosopher Michael Ignatieff has noted “without civil society, democracy remains an empty shell”. One can expect to see the efficacy of Civil Society Organizations to influence members of the wider public that adhere to their values and beliefs to engage in development programs at State and community levels.

Therefore, notwithstanding local NGO’s relatively dismal record they are still clearly quite relevant to the development equation. NGOs strengths can be harnessed with well coordinated capacity building programs.  Conversely, international NGOs can develop a partner strategy of supporting and working through strong professional local partners as an effective tool for having a greater development impact than being a self-implementing agency. NGOs can also be very effective as learning organizations by providing important support to build their own staff’s and partners’ capacities, through individual training activities, annual partner meetings and conferences, learning exchange between partners, and partner self-assessments of training needs.  Moreover, NGOs can also be very effective with regular active evaluations and reviews as learning tools for themselves and their partners.

Just as one can expect learning should be at the heart of these organizations, so too, should the Government of Sierra Leone seek a better balance in the portfolio of capabilities it has—the types of programs against corruption in government fielded, the punishment in place for crimes of corruption, the training done.

Moreover, given the development challenges Sierra Leone is struggling with—and given, for example, the struggles to field up hospitals and clinics, schools and colleges, maintenance of urban and rural roads, and the HIV threats to the society—the time has come to think hard about how to institutionalize the capabilities of NGOs and get them adequately fielded quickly. The NGO policy modernization programs of the NGO Unit at MODEP should seek a 99 percent solution to the organizational limitations of NGOs in the country and to build the kind of innovative thinking and flexibility capable of supporting rigid development processes.

Sustaining Organizational Performance

The ability to fight corruption in government and empower NGOs sometimes simultaneously fits squarely within the finest traditions of good governance, more so because adequate financial management, including adequate reporting on budgetary issues is key to sustained organizational performance of NGOs. For most NGOs in Sierra Leone, unsatisfactory practices with regard to vehicle and fuel use, procurement procedures and weak financial reporting and accounting are weaknesses which are also typical issues in bad government. Improving documentation of results, including the development of good monitoring indicators is also essential for sustaining organizational performance. The non performance of NGOs is coming at a frightful human, financial, and political cost. There has to be organizational improvements in government so that NGOs can be more resourceful and relevant to the development equation.

One of the enduring issues the NGO Unit at MODEP’s struggles with is whether personnel and organizational systems designed to coordinate the work of NGOs in the country will be able to reflect the importance of advising, training, and equipping NGOs in Sierra Leone—something still not considered a career-enhancing path for the best and brightest organizational development experts.  Another is whether the revised policy regulations can be adapted well enough and fast enough to empower NGOs—or, more significant, to build the capacity of local NGOs to make them more resourceful.

One can make the argument in favor of institutionalizing NGO skills and the ability to conduct stability and support operations. This has to be done and is necessary for maintaining the current advantage of the relevance of NGOs as development partners. Apart from recent revisions of NGO policy regulations there has been no strong, deeply rooted constituency inside MODEP or elsewhere for institutionalizing the capabilities necessary to support NGO work in Sierra Leone—and to quickly meet the important needs of civil society organizations engaged in development work in Sierra Leone.

Think of the important work of NGOs in Sierra Leone.  NGOs often make the impossible possible by doing what governments cannot or will not do especially when new challenges crowd the national agenda. Increasingly, NGOs operate outside existing formal frameworks, moving independently to meet their goals and establishing new standards that governments, institutions, and corporations are themselves compelled to follow through force of public opinion.

Some humanitarian and development NGOs, for instance, have a natural advantage because of their perceived neutrality and experience. Amnesty International – Sierra Leone Section, for example, (as listed on the webpage directory of NGOs maintained by UNDP Sierra Leone promotes and protects human rights through advocacy and human rights education—maintaining documentation on human rights abuses and violations carried out during the ten year rebel war in Sierra Leone which proved helpful to the TRC in Sierra Leone. Other groups such as the Campaign for Good Governance (CGG) is a democracy-supporting NGO in Sierra Leone which promotes the building of democratic institutions, transparency and accountability in government, active citizen participation in the political process, voter education, human rights, and the rule of law. The Catholic Youth Organization (CYO) organizes religious, educational, social and cultural programs to meet the spiritual, mental and recreational needs of members. The Centre for Coordination of Youth Activities provides training in leadership, peace building, skills development, and community development. The Kailahun District Development Foundation (KADDF), a district-wide non-governmental organization offers viable solutions to the pervasive problems of poverty and serves as a clearinghouse for outside agencies interested in carrying out programs in the Kailahun district. The Sierra Leone Adult Education Association (SLADEA) helps to reduce the high rate of illiteracy among adults in the non-formal sector; to enlist the co-operation and support of other NGOs with a view to motivating various forms of people’s participation especially women and youth in national development; to achieve public recognition and support for non-formal education sector. FORUT’s thematic areas (health, education, skills development, micro-finance, skills training, etc.), are relevant for the end users that are often poor and vulnerable children, youth and women. Action Aid is one of the largest NGOs operating in Sierra Leone promoting food security through agricultural programs to ensure seeds are available and crop production continues.

There is no doubt, therefore, that modernization programs will continue to have, and deserve, strong institutional and parliamentary support. There has to be the enabling environment needed to make sure that the capabilities needed for the complex organizational issues of NGOs also has strong and sustained institutional support over the long term. The need for an NGO Unit establishment that can make and implement decisions quickly in support of NGOs working in Sierra Leone is necessary.

In the end, the NGO capabilities needed cannot be separated from the cultural traits and the management structure of the institutions the Sierra Leone Government has: the signals sent by how funds are managed, what projects are funded, what skills are used to implement projects and how personnel are trained. As Foreign Minister Lloyd Axworthy has said, “Clearly, one can no longer relegate NGOs to simple advisory or advocacy roles. . . . They are now part of the way decisions have to be made.”

As Yale professor Steve Charnovitz has observed, NGO involvement seems to depend on two factors: the needs of government and the capabilities of NGOs. A good democracy encompasses all NGOs which strive to create formal but flexible systems fostering dynamism and self-adjustment. NGOs ought to be a part of the alternative development paradigm, because the State, its institutions, and public policy, are unable to address a host of issues of underdevelopment all alone.

Evidently, there are many NGOs today in Sierra Leone in different shapes and forms with substantial amounts of donor and individual funds being diverted through them for developmental purposes. These NGOs are thought to be participatory, community-oriented, democratic, cost effective, and better at targeting the poorest of the poor, although in recent years, the nimbus of righteousness around NGOs has almost disappeared, and there is wide acknowledgement of their inability to deliver what is expected from them. Many lessons, however, about NGOs in Sierra Leone present themselves. Two of the most important are an understanding of organizational challenges and a sense of determination to change. The determination and national reach of NGOs has been an indispensable contributor to national peace and stability. The NGO Unit at MODEP should be clear about what effective organizational management by competent operators of NGOs can accomplish. No matter what their aims, all organizations share two things in common: They are made up of people, and certain individuals are in charge of these people. NGOs therefore need strong managers to lead its staff toward accomplishing development goals. And these managers are more than just leaders—they are problem solvers, cheerleaders, and planners as well.

Think of the intricacies of management, for instance. No matter what type of organization they work in, NGO executives are generally responsible for a group of individuals’ performance. As leaders, they must expect their fellow workers to work earnestly to reach common NGO goals. As the management guru Peter Drucker said, “Executives owe it to the organization and to their fellow workers not to tolerate nonperforming individuals in important jobs.”

In national affairs, “aid can work where there is good governance,” the United States Congressional Representative Lee H. Hamilton wrote in his book on – A Legacy of Honor: The Congressional Papers of Lee H. Hamilton, U.S. House of Representative 1965-1998 Indiana Ninth District, “… and usually fails where governments are unable or unwilling to commit aid to improve the lives of their people.” It is thus believed any responsible National Development Strategy for Sierra Leone should provide a balanced approach to enhancing responsibilities and preserving the relevance of NGOs as development partners.

Kenday S. Kamara
http://www.articlesbase.com/non-profit-organizations-articles/a-balanced-strategy-reprogramming-ngos-and-enhancing-their-relevance-as-development-partners-in-sierra-leone-741482.html

Dr. Shirley Moore (CA): Court Corruption, Part 1

Family Preservation Rally 2007, Lincoln Memorial, 8/18/07; Dr. Moore, Nat’l Dir., Legislative Affairs, AFRA; Pres., Praying Hands for Justice, speaks about how to clean up court corruption from her own experience in helping to open up 30,000 foster care cases in L.A. County. DrshirleyM@aol.com, http://www.drshirleymoore.com/index.html
Radio Programs:

http://www.blogtalkradio.com/DrShirley

http://www.blogtalkradio.com/Justice4us

See Attorney Richard I. Fine’s website: http://www.disclosurewatch.us
Disclosure Watch Townhall Meeting:

Sign Petition: http://www.thepetitionsite.com/1/requesting-for-all-united-states-cases-to-be-revisited#signatures

Duration : 0:9:36

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Cma-cgm: Jacques Saade’s Involvement in “damietta Gate”

Free translation of the article published in the egyptian daily « Massaeyat » of October 17th 2006

Jacques Saade’s involvement in “Damietta Gate”

New developments in the case of the Damietta company next November

The General Prosecutor launches new investigations in relation to public funds and other irregularities perpetrated after the arrest of Ali Massaad

The appearance of the accused and the lifting of the sequestrations are the main issues of this case

This case locally known as the “great corruption case of the Damietta Containers” and internationally named the “Damietta Gate” has shaken the Egyptian, Arab and international public opinion.

From the first audience, three of the six accused confessed, the third, the fifth and the sixth and acknowledged having been involved in the briberies paid to Ali Massaad, whereas the latter denied at the beginning the whole matter.

The six accused, Ali Massaad, chairman of the board of directors of the Damietta Container Company, Jihad Anis Dagher, employee of Leader Company, Nabil Elie Bassil, CMA-CGM regional Finance and administrative director, Mostapha Mohamad Khalil Abdel Monhem, Director of the Damietta subsidiary, Jamal Abdel Razek Abdel Sadek and Ahmad Mahmoud Ahmad Yacoub have been referred to the Penal Court by the General Prosecutor (financial section), and the second hearing is set for November 9th for a contradictory debate and confrontation with the prosecution’s witnesses who will appear before the court for corruption and misappropriation of public funds.

The most surprising aspect of this case it seems is that Ali Massaad’s successor as head of the Damietta Container Company is following the same methods as his predecessor, a matter which compelled the General Prosecutor to launch a second investigation pertaining to the period following Ali Massaad’s management of the company. This investigation has been postponed following the juridical holidays and the promotion of prosecutor Wadih Hanna Nached.

Ali Massaad, known as the “Bey”, is now in prison.

This case is about corruption, account manipulations, financial fraud and a plot between the Damietta Container Company and French company CMA-CGM presided by Lebanese national Jacques Saade whose corporate headquarters are in Marseille. The file that is being dealt with by the Court of State Financial Security in Egypt pertains to the misappropriation of funds that could reach up to 20 million dollars.

The main accused is being held in temporary custody while awaiting the outcome of this case.

This case is of major interest in its Egyptian, Lebanese and French ramifications.

The Egyptian media has released important pieces of information revealing that this is not an isolated corruption matter in the shipping sector in Egypt. The former General Prosecutor Maher Abdel Wahed has already ordered the chairman of the board of directors of the Damietta Container Company, Ali Massaad, to be placed in custody and his personal assets seized until the end of the investigation; the latter decision has been notified to the Central Bank of Egypt, the Finance Directorate and the land registry.

The General Prosecutor opened an investigation following a declaration presented by the president of the Central Accounting Agency regarding the statements of accounts pertaining to the company owned by the holding company for land and shipping transport presided by the General Mohammad Youssof already indicted in the case of the seizure of the “Salem 2” vessel in the port of Alexandria. The president of the Court of Appeal of the district of South Cairo, Adel Joumaa had set the next hearing to last May 29th in order to take a decision as to the verdict of the General Prosecutor.

The investigations have revealed a plot between engineer Ali Massaad and the managers of the foreign shipping company regarding the signature of an agreement according to which the foreigh company could benefit from exceptional rebates to the detriment of the Damietta Public Company that could reach up to 5,5 million dollars.

This scandal is worrying Egyptian public opinion as well as the political scene, as it happens to occur after other scandals such as the one related to the Directorate of Transport, the Bank of Cairo and the robbery of steal and other metals.

The investigations have proven the existence of a plot between the first accused Ali Massaad Saad and the President of the foreign shipping company, which resulted in the disappearance of 6 million dollars from the Egyptian treasury. It has been established, following the house search, that the accused regularly received briberies from France.

In a surprising rebounce, the investigation revealed that the managers of the international shipping company based in Marseille (France) reimbursed the amount of 3,1 million dollars by bankers cheque to the Damietta Company following a compromise aimed at smothering the case, after that the General Prosecutor started a legal action against this company and seized the assets of Ali Massaad. This payment did not put an end to the legal actions but led to the discovery of another aspect of this case namely the direct involvement of the French company in corrupting Egyptian officials.

Despite CMA-CGM’s denial of any involvement in this corruption case declaring that an internal investigation is underway in coordination with the Egyptian authorities, the Sunday Express newspaper revealed that CMA-CGM presided by Jacques Saade, paid 10,000 dollars per month to Massaad, and has reimbursed as reparation 3.1 million dollars to the Egyptian port of Damietta.

In a statement made by Jacques Saade to the same newspaper, he mentioned that these people were paid by the CMA’s Egyptian subsidiary, that no transfers were made by the French head office and that his company was investigating in coordination with the Egyptian authorities. Various managers were heard including the accountancy manager.

According to the Sunday Express, this is an extremely serious situation and other countries, including the United States, are being worried. It seems that political pressures have been exerted in order to prevent CMA-CGM from acquiring from the English company P&O its shares in the American port of Dubai for security reasons. The American authorities are undertaking an investigation regarding this matter.

Other pieces of information collected in parallel to the secret investigation indicated that many points in this case were still not clear. The most important element that has been discovered until now is the false contract -which is the main aspect of the investigation- signed by Farid Salem, CMA-CGM general manager and brother-in-law of Jacques Saade.

It has been revealed that Abdel Razek is the financial manager of CMA-CGM in Egypt, presided by Jacques Saade, as indicated by the social security registers.

All the evidence indicates that the financial offenses have been perpetrated by the chairman of the Damietta Company, in addition to the irregularities within the contract signed with the shipping line in Marseille.

In an Al-Ahram article of May 26th 2006, it seems, according to the investigations undertaken by the financial control services [official body], the principal accused perceived important amounts on a regular basis in exchange for those irregularities. The former General Prosecutor Wadih Hanna Nached issued search-warrants in the offices of the said shipping company (CMA-CGM) in Alexandria, which resulted in the seizure of numerous pieces of evidence confirming the transfer of important amounts from the accounts of the latter company in favor of the accused.

According to the “magazine Rose El Youssof” that published the result of a long investigation on the subject, the chairman of the Damietta Company is the owner of two palaces in the city of Damietta on the river Nile as well as a dozen estates and three villas in the touristic village of Yasmina in Port Said, in addition to five hectares of agricultural land in the latter city, 20 million Egyptian pounds deposited in bank accounts in his name, his wife’s and children’s and a number of bank accounts abroad which inventory is not yet known.

It was mentioned in the article that Ali Massaad had a nickname, “the Bey”, to the order of whom checks were drawn up.

The investigations revealed that the number of containers CMA-CGM sent in transit through the port of Damietta, did not exceed 70,000 teus for the last 12 months allowing the French company to benefit from rebates of the amount of 5,5 million dollars. This led them to illegally modify the contract with the Damietta Company by paying briberies in addition to the monthly remuneration of Ali Massaad.

Rose El Youssof added that Ali Massaad pretended that he made his fortune in Saudi Arabia, where he worked for 12 years, and in Bahrein, where he worked 5 years; but was not able to keep the evidence that would clear him.

A surprising aspect is that he appeared before the court, which ordered the seizure of his assets and his wife’s, wearing bad quality clothes, in an attempt to conceal his wealth. The most astonishing is that the law firm handling his defense is one of the major firms specialized in shipping matters in Egypt.

The investigation is moving forward with the hope to shed light on other thorny aspects of this case. There is a strong probability that the General Prosecutor would prosecute Jacques Saade, chairman of CMA-CGM; one more element that adds up to the conflict as to the ownership of this company and increases the legal stranglehold around Jacques Saade.

Damietta “Gate” to date is the last link in a series of legal proceedings facing Jacques Saade.

If this case is taking an official aspect in Egypt given that it involves a number of irregularities, corruptions and misappropriation of public funds, other legal proceedings have been launched in many countries in which the conflict between the brothers Jacques and Johnny Saade is raging around the ownership of CMA-CGM, the first shipping company in France and the third worldwide.

Six years after the signature of a contract on September 16th 2006 between the two parties aimed at ending the conflict but which deprived Johnny Saade of his legitimate rights due to a deceitful set-up, new facts could reveal unexpected developments in the coming months very probably in favor of the latter.

The internet site www.mistralholding.com owned by Johnny Saade’s company Mistral Holding s.a.l., contains a huge amount of documents, compromising reports and legal evidence, that explains in detail the conflict between the two brothers which is being reported at the top of the news in the Lebanese, arab and international press. Among these documents a report issued by the financial expert Antoine Gaudino explaining the circumstances that led to the said conflict.

One can read in the report that the conflict between the two Saade brothers as the major shareholders of the CMA-CGM Group is mentioned by the media as a family feud due to Jacques Saade’s statements, but Johnny, who owns 48.44% of CMA’s shares accuses his brother of hiding information in general and more specifically regarding transactions initiated by Jacques Saade in France and elsewhere.

The conflict actually starts by the lack of transparency during the acquisition of CGM by CMA, and Jacques Saade’s attempt at controlling the group for his sole personal benefit.

The preliminary investigations undertaken by Gaudino on August 29th 1997 at the request of Mistral holding, revealed that the management system established by Jacques Saade on behalf of CMA made Johnny Saade fearful, as major shareholder, of the company’s future.

With further investigations, various fiscal irregularities and others have been discovered, and are part of the conflict between the brothers.

The main historical stages of this conflict are the following:

The Limited company CMA (Compagnie Maritime d’Affretement) was created by brothers Johnny and Jacques Saade on September 8th 1986 and registered at the RCS of Marseille on April 8th 1987 under number 340 353 911.

The initial capital was FFr.250,000. It was to be increased following various share capital increases in 1986, 1987 and 1993 as well as on May 26th 1994 further to an extraordinary general assembly to reach FFr. 60,000,000 divided in 600,000 shares with a nominal value of FFr.100.

At the latter date and according to the shareholders’ registry, the shares were distributed between three Lebanese companies: Merit s.a.l., owned by Jacques Saade, 48.41%; Mistral Holding s.a.l., owned by Johnny Saade, 48.41%.

The six shares attributed to the “Jacques Saade Family” are held by Mr. Jacques Saade, his spouse Mrs Nayla Salem, his daughter Tania, his son Rodolphe, his brother-in-law Mr. Farid Salem and Mr.Tristan Vieljeux.

The three Lebanese companies are all registered at the Beirut registrar of Companies and domiciled in the same city and the same address.The company Rodolphe Saade & Co is owned by Jacques Saade and Johnny Saade, 50% of the shares each, respectively through Merit s.a.l. and Mistral Holding s.a.l.

CGM s.a. (Compagnie Generale maritime), with a capital of FFr. 1,275,948,600 and registered at the RCS of Nanterre under number 562 024 422, has been transferred by the French government to the private sector by ministerial decision on October 21st 1996.

The capital of CGM is distributed as follows: 90% of the shares came to be held by CMA, 6% personally by Jacques Saade and 4% between three other shareholders.

CMA got 96% of the CGM shares whereas the 4% remaining were held by three other shareholders; and Jacques Saade’s stake reached 51% whereas Johnny’s, through Mistral holding, did not reach 49.9%.

The first findings revealed a certain number of irregularities, the most important of which related to general assembly meetings.

An extraordinary general assembly was held at CMA head offices on December 12th 1996 without letting Mistral Holding s.a.l. have the opportunity to participate. This assembly was aimed at granting the board of directors the right to increase the share capital, in one or many times. This authorization to the board of directors was valid for a period of five years and aimed at increasing CMA’s capital from FFr. 60,000,000 to a maximum of FFr. 135,000,000.

The report added that until December 12th 1996 CMA’s management has always convened Mistral holding s.a.l. by rapid courier (DHL) and simultaneously by fax, given postage delays to Lebanon. In an unusual manner, the convening to the extraordinary general assembly meeting of December 12th 1996 was sent to Mistral Holding s.a.l. on November 26th 1996 by recommended letter with acknowledgement of receipt.

Everything was done in order to prevent Johnny Saade to be informed in due time and therefore to participate to the main decisions to be taken including the share capital increase.

It is within the above-mentionned context that Johnny Saade seized the Tribunal of Commerce of Marseille who designated on December 23rd 1996 a judicial “huissier’ in order to get the documents pertaining to general assemblies and board of directors held by CMA.

Following this judicial decision, Mr Johnny Saade was able to raise various irregularities. Four Board of Directors meetings were held on June 7th, September 20th and November 14th & 15th 1996 without Mistral Holding s.a.l. being ever convened whereas the minutes of meetings stipulated that Mistral Holding s.a.l. was “absent and excused”.

A general assembly was held on March 27th 1997 in cancellation of the share capital increase decided by the general assembly of December 12th 1996.

This did not however erase the irregularities due to the share transfers and the acquired majority to the benefit of Jacques Saade which jumped from 48,41% to 50,001%.

Irregularities were noticed regarding the presentation of balance sheets. It appears from CMA’s balance sheets in the offer for the acquisition of the CGM of October 3rd 1996, that CMA was in good financial health, that it increased its shareholders’ equity funds, reaching FFr. 700 million and the CGM acquisition project would allow the financial rehabilitation of the latter no later than 1999.

The findings made on certain accounting entries called in question the validity of the level of CMA’s shareholders’ equity which were lower than the reality. These shareholders’ equity funds were much lower than the FFr. 200 millions and CGM’s takeover was a juicy business deal that Jacques Saade wanted to keep for himself to the detriment of his brother Johnny.

This report mentioned, backed by the necessary documents and figures, that the filed balance sheets were false and did not reflect the truth about CMA’s accounts, a matter that was to jeopardize the future of the company and the interests of Johnny Saade, its main shareholder.

This report mentionned that Jacques Saade made his brother Johnny become a minority shareholder through successive steps and by premeditation in order to prepare the acquisition of CGM to his sole personal benefit; the report also summarized the various attempts of Jacques Saade to escape legal proceedings which were accumulating every day.

Of importance in this conflict is the re-opening of a financial investigation by the Paris Tribunal regarding the accounting irregularities and fiscal fraud perpetrated by Jacques Saade in managing CMA-CGM.

Other information indicate that Egyptian courts of law are entangled in an important corruption file involving the Port of Damietta since the 90s and are attempting to determine the scale of corruption involving the representatives of the French shipping line on behalf of their managers in France. While awaiting new developments, the director of the Port of Damietta has in the meantime been arrested.

On another level and following the penal lawsuit filed by Mistral Holding, Paris Tribunals (France) have launched legal investigation regarding the CMA-CGM balances sheets that are allegedly false. The investigation has been entrusted to two prominent magistrates in France. The aim of this investigation is to shed light on the possible fiscal fraud and concealment of the real profits, a matter that goes back to the signature of the contract that has put an end to the conflict between brothers Jacques and Johnny Saade.

Finally, we can add to this multi-faceted judicial file that is surrounding Jacques Saade, a matter that is worrying investigators near the General Prosecutor of Lattakia in Syria. It involves the falsification of official documents, the use of false documents and usurpation of legal capacity, involving Choucri el Khoury that seems to have acted on behalf of Jacques Saade.

andrew barns
http://www.articlesbase.com/business-articles/cmacgm-jacques-saades-involvement-in-damietta-gate-80435.html