Cablegate: Moroccan Royal Family Holding Ona Fires Ceo
DE RUEHCL #0081/01 1151106
ZNY CCCCC ZZH
P 241106Z APR 08
FM AMCONSUL CASABLANCA
TO RUEHC/SECSTATE WASHDC PRIORITY 8044
INFO RUEHAS/AMEMBASSY ALGIERS 2981
RUEHBP/AMEMBASSY BAMAKO 0273
RUEHEG/AMEMBASSY CAIRO 0874
RUEHRY/AMEMBASSY CONAKRY 0034
RUEHDK/AMEMBASSY DAKAR 0293
RUEHLC/AMEMBASSY LIBREVILLE 0052
RUEHLO/AMEMBASSY LONDON 0367
RUEHMD/AMEMBASSY MADRID 3800
RUEHNK/AMEMBASSY NOUAKCHOTT 2342
RUEHRB/AMEMBASSY RABAT 8291
RUEHTU/AMEMBASSY TUNIS 2101
RUEHFR/AMEMBASSY PARIS 0647
RUEHYD/AMEMBASSY YAOUNDE 0092
C O N F I D E N T I A L CASABLANCA 000081
STATE FOR NEA/MAG AND NEA/PI
EO 12958 DECL: 04/23/2018
TAGS ECON, EFIN, KDEM, MO
SUBJECT: MOROCCAN ROYAL FAMILY HOLDING ONA FIRES CEO
Classified By: Principal Officer Douglas Greene for reasons 1.4 (B) AND (D)
REF: (A) 05 CASA 1220 (B) 07 CASA 169
1. (SBU) Summary: Morocco’s largest conglomerate, the palace-controlled ONA, dismissed its CEO on April 11, charging that he mismanaged Wana, the company’s telecommunications subsidiary. The abrupt nature of the dismissal has been the talk of Casablanca business circles for the past week, and has refocused attention on the king’s business activities. While the timing and manner of Bendidi’s dismissal were unexpected, business contacts in Casablanca did not find it unusual, noting historically high turnover in ONA’s executive suite. End Summary.
ONA FIRES CEO
2. (U) Omnium nord-africain (ONA), Morocco’s largest conglomerate, announced on April 11 that it had dismissed CEO Saad Bendidi for mismanaging Wana, the company’s telecommunications subsidiary. Bendidi had been the CEO of palace-controlled ONA since February 2005. Mouatassim Belghazi, an ex-civil servant and head of the Morocco-Emirates Development Company (SOMED), an ONA affiliate, was named to replace him within hours, prompting speculation that the dismissal was premeditated, despite ONA’s protestations to the contrary.
WHY DID BENDIDI GET THE BOOT?
3. (U) According to the unusually frank statement released by ONA’s Board of Directors, the company decided to fire Bendidi after 2007 results suggested that he had failed to develop Wana adequately. Board members took issue with the ex-CEO’s plan to infuse the telecommunications venture with an additional five billion dirham (USD 688 million) investment, and blamed him for “serious management failings in planning and strategic direction of the enterprise.” ONA reported that operating profits fell 29 percent as a result of Wana’s steep start-up costs. While Wana is only the third largest telecommunications provider in Morocco, behind French Vivendi-controlled Maroc Telecom and the Spanish-Portuguese company Meditel, ONA feels that the market has plenty of room for a successful third player.
4. (U) Reports in Morocco’s leading business paper, “La Vie Eco” on April 18, suggest that Bendidi’s fate was sealed not so much by Wana’s poor results, as by the view of ONA’s powerful board of directors that he had failed to adapt the company’s strategy in the face of the shortfall. In background interviews, company officials noted that slippage from Wana’s business plan was evident as early as October 2007, but that Bendidi failed to react, even after the ONA board engaged four separate sets of consultants to propose possible alternatives. Bendidi’s critics have alleged similar passivity in addressing poor performance in other divisions, including the Acima supermarket chain. A number of our contacts thus see little reason to doubt that Wana was at the root of Bendidi’s dismissal.
5. (SBU) Other contacts caution against taking ONA’s harsh public statements at face value, however. They note that the company’s fixed and mobile phone services have been on offer just over a year, barely enough time to evaluate its potential, and that additional investment is frequently required when companies seek to break into new fields. They add that ONA posted strong earnings in 2007, due in part to strong banking results and the sale of a stake in an insurance company. At the end of March, net income had risen from 959 million dirham a year earlier to 1.7 billion. ONA stock has risen 19 percent in 2008.
6. (SBU) Given such results, many believe there must be more to the story of Bendidi’s dismissal. Some viewed the fact that he was not given the chance to politely bow out, but was publicly fired, as further evidence that something more than poor performance was at play. One individual, for example, ascribed the shift to a desire to give a chance to the much-touted Belghazi, suggesting that poor Wana results offered a convenient pretext for change. Others speculated that a personality clash between Bendidi and Mounir Mahjidi, the King’s special secretary, may have played a role.
7. (SBU) Despite the intrigue surrounding Bendidi’s firing, members of the business community in Casablanca did not find it particularly unusual. A long-time franchise-holder pointed out that Bendidi’s predecessor, Bassim Jai Hokaimi, also did not last more than a few years at ONA’s helm. A piece in the French-language weekly Maroc Hebdo called Belghazi the newest initiate to the “ejector seat,” reinforcing the perception that the top job at ONA is a risky proposition. As one businessperson put it, the palace can be very demanding. When the palace calls, “if you don’t pick up the phone on the first ring, you’re in trouble,” she said.
8. (C) Comment: Whatever the true story, the manner in which Bendidi’s departure was handled has not shown ONA in the best light. As more than one commentator has noted, the flood of recriminations that have accompanied the firing offers a rich vein for Wana’s competitors to mine in months to come. The contretemps has led some to raise broader issues as well, however. “Le Journal’s” lead editorial seized on the dispute to renew the publication’s longstanding call on the king to exit the business world, citing the inherent conflict between his role as ultimate arbiter of the Moroccan system and leading businessman and banker within it. ONA’s “incredible communiqu,” the journal wrote, not only “shattered” the credibility of the group, but also “cast doubt on the transparency of the king’s business affairs,” an “explosive situation” at a time when Moroccans face rising prices for goods whose production and distribution is often assured by the king’s own companies. These issues too have long sparked hushed debate in Moroccan business circles, but few expect the royal role in ONA to change anytime soon. End Comment.