US embassy cable - 04DJIBOUTI1586

C O N F I D E N T I A L SECTION 01 OF 02 DJIBOUTI 001586 
 
SIPDIS 
 
STATE FOR AF, AF/E, AND DS/OSAC 
STATE ALSO FOR AF/EPS COMMERCIAL COORDINATOR ADA ADLER 
 
E.O. 12958: DECL: 12/13/2014 
TAGS: PREL, ECON, ETRD, PGOV, SCUL, DJ 
SUBJECT: MOBIL AND GOVERNMENT OF DJIBOUTI OUTSTANDING 
ARREARS 
 
 
Classified By: AMBASSADOR MARGUERITA RAGSDALE. 
REASONS 1.4 (B) AND (D). 
 
1. (C) Mobil Oil's Chief Executive in Djibouti, Alain Adam, 
met late on December 8 on an urgent basis with Ambassador to 
report that he had been approached at his office only an hour 
earlier by two representatives of Djibouti's security forces. 
 They had come to arrest him at the behest of Djibouti's 
Director of Finances at the Ministry of Finance, Abdullahi 
Guedi. 
 
2. (C) According to Adam this action was an outcome of the 
decision Adam had taken to terminate all fuel and oil 
supplies to the Government of Djibouti effective December 6 
until Djibouti made an effort to settle its nearly 
112,000,000 Djiboutian Francs ($633,000) indebtedness to 
Mobil for fuel and oil already delivered under contract to 
the Government of Djibouti.  At a minimum, Mobil was seeking 
immediately 40,000,000 Djiboutian Francs ($226,000), a 90-day 
arrears.  Adam said he had told the security officers that 
there was no basis for the Director's move to have him 
arrested and that he had merely attempted to collect a 
legitimate government-owed debt.  Adam presented evidence to 
the police of the indebtedness.  He said the security 
officials told him that they would depart but would return 
after they had further consulted with their superiors.  Adam 
left his office immediately after the security officials, to 
meet with his attorney, Alain Martinet, and subsequently with 
Ambassador.  Ambassador urged Adam to follow his attorney's 
advice and to keep the Ambassador informed on developments. 
As Mobil is an American company she stood ready to assist the 
company work with Government officials, if Mobil wishes her 
to do so.  Adam thanked Ambassador and pledged to keep her 
informed. 
 
3. (C)  Fortunately, Djiboutian security officials did not 
return to complete their arrest of Adam.  However, Adam, as a 
follow-up, sent a letter the next day, with copy to the 
Ambassador, outlining Government of Djibouti arrears to Mobil 
for fuel deliveries extending back to February, 2004.  On 
December 13, Adam met with Hassan Said, Director of National 
Security Services, who, according to Adam, confirmed sending 
the security forces to have him arrested.  Adam said he told 
Said that he understood Djibouti was in temporary financial 
difficulty, but that Mobil was a company that also had 
responsibilities.  Said had been attentive, Adam reported. 
He told Adam he would raise the matter directly with 
President Guelleh.  There should, Said had stated, be a 
response in a couple of days. 
 
4. (C) The evening prior, French Ambassador Phillippe Selz 
approached Ambassador at a reception and advised her of his 
plans to raise the threat of arrest and deportation of Adam 
with Djiboutian authorities.  Selz explained that as Adam is 
a French citizen, he had an obligation to move to avoid an 
incident posed by his possible arrest and deportation. 
Ambassador told Selz that as Mobil is a U.S. company, she is 
very concerned by the security forces' actions and was 
prepared to intercede with the Government of Djibouti, if 
Mobil requests that she do so.  Her concern, of course, would 
be reassurance of equitable and fair treatment for this U.S. 
company which is seeking payment of an outstanding bill for 
services rendered. 
 
5. (C) Summary:  Adam and Director of Finances Guedi have 
little rapport at this point.  Guedi has threatened Adam that 
Mobil will "never" receive its money owed if it doesn't 
continue with fuel deliveries. Adam pledges to continue to 
refuse delivery.  Guedi is facing pressure from a government 
constantly forced by budgetary difficulties to juggle its 
creditors and accounts.  Adam, a business person, is looking 
at the bottom line and business purpose.  Might the 
Djiboutians look elsewhere for fuel needs?  Adam insists that 
Mobil has been the sole company among the three suppliers in 
Djibouti willing to provide fuel on credit to Djibouti. There 
are, nevertheless, reasons to be optimistic that the 
Government of Djibouti will not move further to carry out its 
threat to arrest Adam.  Adam has done a fairly good job of 
informing key players of his dilemma and the optics of an 
arrest on grounds of a demand for legitimate payment are not 
at all good for Djibouti.  Our guess is that at least part of 
the arrears will be settled in the coming days, although we 
are not sure out of what financial hat this rabbit will 
eventually be pulled.  End comment. 
RAGSDALE