Cablegate: Proposed Kuwaiti Investment in Kenya Looks Fishy

VZCZCXYZ0001
PP RUEHWEB

DE RUEHNR #4741 3091259
ZNR UUUUU ZZH
P 051259Z NOV 06
FM AMEMBASSY NAIROBI
TO RUEHC/SECSTATE WASHDC PRIORITY 5295
INFO RUEHKU/AMEMBASSY KUWAIT PRIORITY 0116
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS NAIROBI 004741

SIPDIS

SENSITIVE

DEPT FOR AF/E, AF/RSA, S/CT, INL-C-CP
DEPT FOR NEA/ARP JACKSON

SIPDIS

E.O. 12958: N/A
TAGS: EWWT EINV KCOR PTER KE KU
SUBJECT: Proposed Kuwaiti Investment in Kenya Looks Fishy

Ref: Nairobi 1637

SENSITIVE BUT UNCLASSIFIED

1. (SBU) Summary: Kuwait's Al Bader International Development
Company allegedly asked the Kenyan Government for exclusive rights
to develop a port, airport, resort, and oil complex near Lamu on
Kenya's north coast, but the project appears impractical. Post is
concerned the proposal may instead be cover for large-scale
corruption or illicit activities on Kenya's coast near the Somali
border and requests input from Embassy Kuwait and Department
sources. End Summary.

Roola Project...
-------------
2. (U) According to articles in the August 14 and October 30
editions of the East African newspaper, Kuwaiti firm Al Bader
International Development Company and its Chairman Yousef Abdul Aziz
Al-Bader is negotiating with the Government of Kenya (GOK) for sole
rights to develop an international port, free trade zone, resort
city, railway line, international airport, oil pipeline and oil
refinery near the town of Lamu on Kenya's northern coast. Dubbing
it the Roola project, Al Bader would sub-contract the projects and
arrange the hundreds of millions of dollars of financing needed.
Permanent Secretary for Transportation Ikiara is quoted as stating
the proposal is still in its early stages, but that the GOK is keen
to see it go forward, believing Badr is capable of implementing it.

Seems Impractical...
----------------
3. (SBU) As per reftel report, Australian firm Woodside Oil is
shortly due to start drilling test wells for oil and gas deposits
about 100 miles offshore of Lamu, and the Kenya Port Authority (KPA)
has talked about developing Lamu into a commercial port to take some
of the burden off of Mombasa. However, the Roola project appears
totally impractical. According to U.S. military experts at Post
familiar with the north coast, Lamu harbor is too shallow and the
tidal range is up to 13 feet, requiring massive dredging for port
development. Lamu is an island, and its hinterland is almost
completely undeveloped, thinly inhabited, and poorly connected to
the rest of Kenya. The proposed development would require building
a large-scale power plant nearby. Linking a port at or near Lamu to
anywhere would require building hundreds of miles of roads and rails
across remote, thinly populated regions where security is at risk.
Lamu is also a UNESCO World Cultural site because it preserves the
old Muslim Swahili coastal culture. A project like Badr's would
face serious opposition on cultural and environmental grounds.

And Unsafe...
-----------
4. (U) Lamu is about 50 miles from Somalia. The border is porous,
and the GOK's presence in the border area has always been weak. The
GOK is concerned about the expansion of territory under the control
of the Islamic Courts, and the possibility of conflict spilling into
Kenya.

And Unnecessary
----------------
5. (U) The Port of Mombasa is crowded, but the KPA is expanding the
Port's facilities. Mombasa's connections to Nairoi and the rest of
East and Central Africa will be improved by the recent concessioning
of the railroad to Kampala to a South African company and
donor-funded repairs to the Mombasa-Nairobi-Uganda road.

So Why Do It?
-------------
6. (SBU) It is difficult to see the commercial benefit to Badr of
investing the hundreds of millions of dollars needed to achieve its
goals for Lamu. Besides the bureaucratic red tape, weak judicial
system and other general barriers hindering investment in Kenya,
building the massive infrastructure required in Lamu would face
formidable physical challenges. We smell a rat.

Request
-------
7. (SBU) Post requests Embassy Kuwait and Department provide any
available background information on Al Bader International
Development Company and its Chairman Yousef Abdul Aziz Al- Bader.
Any insights into what might lie behind Badr's interest in Kenya
would be much appreciated. We would also appreciate knowing whether
Badr has publicized or justified its Lamu project proposal in the
Kuwaiti press.

RANNEBERGER

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