Propaganda tool?
London-based Gulfsands Petroleum is operating as a propaganda tool for the Assad regime. In an interview from last Wednesday, the company’s communications director Ken Judge made statements that
- claimed Islamic extremists had infiltrated protests against President Bashar al-Assad’s 11-year rule.
Yet the Syrian uprising is evidently supported by a broad swathe of the country. Scaremongering about “Islamic extremists” who “infiltrate” protests is an attempt to affirm the dictatorship’s distortion. (“Syrian govt claims Islamic extremists infiltrate rebel movement“)
- defended Syria’s “efficient bureaucracy”, which allowed Gulfsands to sign a 35-year contract with fiscal terms “the best of any country in the Middle East” in only eight days.
Signing a 35-year contract in eight days is not evidence some much of efficiency, but of a dictatorship and corruption. Good practice involves publishing contracts and debating them within parliament and the public sphere, not making major economic decisions wi
th no public oversight, transparency or accountability.
- described their experience of working in Syria with the Syrian Government as “tremendous. [...] And we see every evidence of that continuing right to this very day.”
This last is from an interview two weeks earlier.
Dodging sanctions?
Serious questions needs to be asked as to whether Gulfsands are currently ignoring EU sanctions. The company based on Cork Street near Piccadilly, has close ties to individuals and organisations under sanction. 5.8% of Gulfsands shares are held by Al-Mashrek Global Invest Ltd, a fund recognised as tied to public corruption in Syria and controlled by the Syrian tycoon Rami Makhlouf, a central figure in Assad’s regime and cousin of the president. These shares were issued in 2007 in a special deal to accelerate extraction in Syria.
Al-Mashrek has been subject to EU sanctions (an asset freeze and a travel ban) since June, with Rami Makhlouf also listed individually by the EU and the US.
Gulfsands also holds a “strategic partnership” signed with Rami’s main Syrian front company, Cham Holdings, described by Gulfsands as “one of Syria’s most important business groups.” Through Cham Holdings, Makhlouf has dominated the Syrian economy in recent years, taking advantage of no-bid tenders and his relationships with key ministers to become the richest man in the country. As a result, Rami Makhlouf himself is the top hate-figure in Syria alongside Bashar and Maher Assad, with protests (including this photograph) denouncing his role and attacks on Syriatel, owned by Cham.
When the Gulfsands-Cham deal was signed in 2007, Gulfsands Chairman Andrew West was excited about the benefits of being formally allied with Assad’s top business crony: “We are optimistic that, in partnership with Cham Holding, Gulfsands will be able to acquire direct and indirect interests in several potentially high-value energy projects which have already been identified in Syria and Iraq.”
Cham’s Chairman Nabil Kuzbari – now also under sanctions – added, “For some time now, we have enjoyed a close working relationship with Gulfsands’ management and directors”. The joint venture – created as an acquisition vehicle for energy assets – was widely recognised as providing Gulfsands with the”influence necessary to achieve its aims in the region.”
Despite the EU sanctions on Makhlouf and Al-Mashrek, Gulfsands continues “business as usual” in Syria and has offered no public statement explaining how it will end co-operation or payments to either.
This is unsurprising, as Gulfsands has a history of dodging sanctions. The company was itself once a Houston, USA, based oil company with American directors. When in 2008 the US Treasury Department designated Makhlouf as a person benefitting from corruption who “used Syrian intelligence officials to intimidate” and whose “close business associations with some Syrian cabinet ministers have enabled him to gain access to lucrative oil exploration”, Gulfsands chose to maintain its alliance with Makhlouf. With US imposed sanctions on companies and US citizens dealing with Makhlouf, the company upped sticks, moved to London and sacrificed both its CEO and CFO.
The company does not set out the potential impact of EU sanctions in its annual report published in April 2011. The “Principal Risks and Uncertainties” leaves the issue untouched, an irresponsible lack of rsik assessment towards its shareholders.
Oil companies, possibly including Gulfsands, have also raised the issue of demanding compensation for sanctions. This creates an economic disincentive to further sanctions on oil exports or sales.
Gambling on repression
In his interview, Kenneth Judge sees no issues with aligning his company with the regime. Beyond that, the company is seeking to profit from instability, from its preparedness to work with a dictatorship that tries to cling to power:
“We’re a little further on the front foot in looking for new business opportunities elsewhere in the MENA region. And we are working quite earnestly to try to take advantage of perhaps the nervousness of some companies, or the inability of some companies, to finance themselves in the Middle East at the moment.”
The company’s main political concern in its annual report is that a “host country seeking to expropriate assets or change the terms of existing contracts.” But Gulfsands directors feel this is covered as “In the case of Syria we have successfully developed such relationships through Mahdi Sajjad as a result of our longstanding presence in the country.”
Rami Makhlouf will have given the Gulfsands board further reassurance with his statement that
“We will sit here. We call it a fight until the end. [...] They should know when we suffer, we will not suffer alone.”
Drilling as usual
Ken Judge also stated
“Whilst security is maintained at these facilities, we will remain able to operate our business.”
This is relevant, as parts of Syria’s oil infrastructure have begun to be targeted by the popular uprising, as people have realised that the crude produced by Gulfsands and Shell is the lifeblood for Assad’s regime. Gulfsands is relying on the Syrian military – now responsible for over 1,500 killings in recent months – to keep people away from the oil fields and pipelines.
Judge is happy to boast that at this point of crisis, Gulfsands is drilling and pumping at record levels:
“Having just returned from Syria with my colleagues, as I was there all last week, we’ve continued our activities whether they are in Damascus or in the field in the north east, uninterrupted throughout this period that you’ve seen on television or in the press. Without interruption, without interference or any consequence to our production, which has reached record levels. So in recent days we’ve been setting record levels of production for the company, and we’re actively working on projects to expand that production up to 24,000 barrels a day, in the second half of this year.”
Twelve wells are to be drilled in 2011, bringing extraction up to 33,000 barrels per day by 2012.
Gulfsands’ operations are concentrated in BLock 26, in the far north-eastern corner of Syria. This is the predominantly Kurdish part of the country, where the local population has long been subject to discrimination and repression.
Tomorrow the Supreme Court of the United States hears Kiobel v Shell, a case that alleges Shell aided and abetted human rights violations and crimes against humanity committed by the Nigerian military against the Ogoni people from 1992 onwards. The case has significance for the global movement for corporate accountability. The outcome in Kiobel will determine whether corporations can be sued in the US by victims of human rights abuses overseas.
