US embassy cable - 05NDJAMENA901

C O N F I D E N T I A L  NDJAMENA 000901 
 
SIPDIS 
 
DEPARTMENT FOR AF, AF/C, EB, LONDON AND PARIS FOR 
AFRICAWATCHER, TREASURY FOR OTA, ENERGY FOR GPERSON AND CGAY 
 
C O R R E C T E D  C O P Y - CLASSIFIED BY STATEMENT AND 
REASON ADDED 
 
E.O. 12958: DECL: 06/07/2015 
TAGS: ECON, ENRG, EPET, CD, Economic Trends 
SUBJECT: ESSO CONTRACTOR IN COMMERCIAL DISPUTE 
 
CLASSIFIED BY: KFITZGIBBON, REASON: 1.4(B) 
 
 1.  (SBU) Summary:   The Esso-led oil project is facing 
another commercial dispute involving one of its contractors. 
Members of a Chadian labor union took the contractor to court 
claiming the company did not pay them overtime salaries over 
a four-year period.  According to Esso, TCC paid all of the 
salary payments due the workers and has the salary slips to 
prove it.  TCC received a verbal judgment in its favor, but a 
second court subsequently changed the decision and ordered 
TCC to pay 12.5 million USD in compensation on May 23.  The 
jubilant workers marched to the ruling Movement for Patriotic 
Salvation (MPS) headquarters to celebrate their court 
victory.  However, the written judgment has apparently not 
yet been issued.  Esso is concerned about the precedent the 
manipulated, and apparently politicized, court procedures 
will set for future investments.  Esso officials have relayed 
their concerns and a written description of the facts of the 
case to the National Coordinator for the Doba Oil Project, 
Haroun Kabadi, on May 26.  They explained the issues at stake 
to Embassy officials on June 1.  The Ambassador met with 
Presidential Cabinet Director Mahamat Annadif June 3 to 
discuss the flawed court proceedings and their negative 
impact on U.S. investment.  End Summary. 
 
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CASE BACKGROUND 
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2.  (SBU) On June 1, Esso's Public Relations Director Miles 
Shaw and Chief Negotiator Lindsey Peromdelon told the 
Ambassador and P/E officer about a serious commercial dispute 
between its contractor, TCC, which is a subsidiary of 
Kellogg, Brown, and Root, and its former workers.  The origin 
of the dispute began in November 2004 when TCC began 
demobilizing its work force.  The workers claimed that they 
had not been paid salaries for overtime.  In 2001, TCC 
applied for and received approval for some of its workers to 
work more than the 39 hours and up to the 72 hours permitted 
by Chadian law.  TCC kept within these regulations, and 
overtime payments for those employees working over 39 hours 
appeared in the employees' payslips.  At the end of 2004, the 
workers claimed that TCC had not paid them overtime since 
2001.  They claimed that they should have received pay for 
the 33 hours difference between 39 and 72 hours even though 
they had not worked those 33 hours. 
 
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TWISTS, TURNS, AND REVERSAL IN COURT 
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3.  (SBU) The workers called for labor arbitration on the 
issue, while TCC claimed that the workers' charges were not 
valid.  In February 2005, the President of the Labor Tribunal 
in N'Djamena referred the matter to the President of the 
Chamber for Social Affairs.  The judge determined that the 
issue was beyond the prescribed limits of time and wrote this 
on the side margins of the letter referring the matter to 
her.  She did not write a full letter.  The President of the 
Labor Tribunal held a hearing in late February 2005, but was 
transferred that month and a new President was appointed. 
The new judge appointed two assessors, one on behalf of the 
employees and a second for TCC.  This judge was then 
transferred in April 2005.  One of the assessors that had 
been appointed was Rakis Manani, the President of the 
Employers Union and Director of Star National Insurance 
Company.  According to Manani, during two court hearings on 
May 10 and 12, the judge rejected the workers' claims on the 
grounds that he could not legally accept a collective claim 
from the employees.  Manani told Esso that the judge and 
assessors found the case to be very unclear and therefore 
decided to reject it.  However, no written judgment was given 
at the time. 
 
4.  (SBU) However, the court was reconvened on May 19, while 
Manani was traveling to Libya with President Deby.  The court 
adjourned until May 23 at which time a new assessor was 
appointed to replace Manani.  The hearing was set for the 
same day.  TCC protested, but was overruled by the judge. 
The judge was presented with stolen TCC documents and 
information from its databases.  A list was created with all 
of the employees names from 2000/2001, which included 
employees who had died and those who were not eligible for 
overtime, including TCC employees in N'Djamena.  A 
 
calculation was done for 33 hours of overtime not worked for 
all of these employees.  This information was presented in 
court on forged TCC letterhead.  The judge accepted it and 
ordered TCC to pay the employees 12.5 million USD.  According 
to Esso, the written judgment has been issued. 
5.  (SBU) Press releases on the radio during the same week 
stated that the judgment was fair and equitable.  On May 28, 
the TCC workers marched to the ruling Movement for Patriotic 
Salvation (MPS) headquarters in N'Djamena to celebrate and 
share their victory.  On May 30, the Government newspaper 
featured a picture of the celebration and quoted several 
former TCC employees pledging to work together with the MPS. 
Others declared that they will join the ruling party as well 
as make a financial contribution to the referendum campaign. 
(Note: The ruling party had mobilized for the public 
referendum set for June 6 on constitutional amendments which 
would remove presidential term limits.  End Note.)  On May 
30, another press release on the radio declared that TCC owed 
the workers money and that because TCC has closed in Chad, 
Esso has a moral obligation to pay the money. 
 
6.  (C) The story has another troubling political twist.  One 
of the former TCC employees in the case is the current 
Minister of Labor, Mahamat Nour Mallaye.  Esso described its 
past dealings with Mallaye as "very good".  His role in the 
case is not yet clear, but Esso officials are surprised that 
Mallaye has not removed himself from the case due to conflict 
of interest. 
 
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NEXT STEPS 
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7.  (C)   The written judgment can be appealed through a 
court in Abidjan.  However, TCC would have to make the 12.5 
million USD payment before the appeal is heard.  According to 
Esso, it is unlikely TCC would ever get this money back, even 
with a favorable judgment.  Based on its past experience with 
the Taylor case, Esso is concerned that once a written 
judgment is handed down, the court bailiffs will be on the 
doorstep of Esso because TCC has pulled out of Chad.  Esso is 
considering its options at this point.  Esso has presented 
all of the case documents to Haroun Kabadi, Coordinator for 
the National Petroleum Project at Doba, who in the past has 
been a key point of contact with access to President Deby for 
Esso.  The Ambassador told Esso that he would see what could 
be done prior to the judgment being issued in writing. 
 
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CABINET DIRECTOR LOOKING INTO ISSUE 
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8.  (C) Following the meeting with the Esso representatives, 
the Ambassador requested a meeting with the Minister of 
Justice, but that minister, like all other ministers, was 
outside N'Djamena campaigning for a "yes" vote on the public 
referendum.  On June 3, the Ambassador and P/E officer met 
with President Deby's Cabinet Chief, Mahamat Saleh Annadif, 
to raise the issue of the TCC labor dispute, the flawed 
judicial process, and its implications for future foreign 
investment in Chad.  The Ambassador explained that TCC had 
documented the salary payments, but that the decision of the 
arbitrator in a dubious court process was against TCC.  The 
Ambassador gave Annadif a copy of the documents related to 
the case and expressed hope that a solution could be found 
before the rendering of a written decision.  The Ambassador 
also showed Annadif the photograph of the TCC employees 
rallying for a "yes" vote on the referendum in the government 
newspaper.  The Ambassador also told Annadif that if a 
solution cannot be found for the case, it would send a bad 
signal to other potential investors.  Annadif appeared to 
quickly grasp the consequences of the situation and promised 
to read the case information carefully. 
 
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COMMENT 
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9.  (C)  We will continue to follow up on this case with 
relevant government officials, such as the Minister of 
Justice.  As of June 7, Esso representatives told us they 
 
understood the judgement has been drafted, but had not yet 
seen the decree.  If the case stands, it will send the wrong 
signals to U.S. and other outside investors.  First, the 
retroactive attempt by former employees to extort salary 
payments when no work was performed means that no U.S. 
company can be sure that it will not be taken to court by 
labor unions for the same reasons.  Second, the apparent 
manipulation of the judicial process against a partner of a 
major foreign investor in a key sector also means that no 
company is safe from political harassment.  Finally, because 
TCC has left Chad, Esso, as the primary contractor, will be 
forced to pay on behalf of its contractor, a creeping 
expropriation that Esso fears could become the norm, rather 
than the exception. 
WALL 
 
 
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