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New investigation may further damage troubled firm KGL

MP Abdulla Al Kandari, backed by five other Kuwaiti MPs, has announced plans to investigate former officials at the country’s Ports Corporation who allegedly facilitated the appropriation of state assets at the behest of controversial company Kuwait and Gulf Link Holding Co. K.S.C. (KGL).

For a highly visible firm with hundreds of millions of dollars’ worth of US military contracts, KGL has a remarkably long history of alleged financial malfeasance. For one thing, the Kuwait Port Authority (KPA) has accused KGL of illegally usurping public lands, as well as unlawfully appropriating assets belonging to the Port Fund.

Kuwaiti courts have already ruled against KGL in a number of cases: the Kuwait Court of Appeals ordered the eviction of KGL from KPA lands over the illegal usurpation of more than 1,000,000 square meters of land in Mina Abdullah, while the Kuwaiti judiciary has ordered the eviction of KGL from a storage area in the Doha port. KGL and its affiliates have since been debarred from further contracting with the KPA or undertaking any activities on its lands.

The ripple effects from these Kuwaiti court orders have reached as far as the dining tables of US soldiers in Kuwait, Jordan, Iraq and Syria, after the US Defence Department was ordered to “permanently restrain” from pursuing ties with KGL. Given that the firm was set to take over a $138 million-a-year contract to provide food and water to US troops stationed throughout the Middle East, the KGL debacle has rapidly evolved into an issue of international proportions.

The KGL case has also exposed the deep and far reaching roots of American lobbyists in Middle Eastern affairs. KGL has launched what can only be described as a top-dollar public relations blitz on behalf of its former executives, Marsha Lazareva and Saeed Dashti, who are facing embezzlement charges in Kuwait. The accusations against Lazareva and Dashti are serious— some $200 million in Kuwaiti public funds appear to be missing. According to court documents, it seems the pair allegedly pocketed approximately $57 million through a dubious DIFC case concealed from investors, and they and their lawyers have yet to disclose the whereabouts of the remaining $143 million.

Faced with such troubling allegations, KGL spent no less than $2.5 million in Washington lobbying fees in the first quarter of this year. Former Senate Majority Leader Trent Lott and Bret Boyles of global legal behemoth Squire Patton Boggs are now on retainer, as is Brian Ballard, top fundraiser for President Donald Trump’s campaigns, and Neil Bush, brother of former President George W. Bush. Controversial former congressman Dana Rohrabacher and former FBI director Louis Freeh are also on the list.

The lobbying collective has so far been focused on two key goals: getting nearly $500 million in frozen KGL Investment funds released by the United Arab Emirates, and securing the release of both Lazareva and Dashti. So far, the no-holds-barred campaign has tried to reframe the embezzlement case as one of human rights, while Neil Bush has even weaponised his father’s legacy from the first Gulf War.

The response from Shaikh Yousef Al-Sabah, Director-General of the Kuwait Ports Authority, has been blunt: “The international community continues to perceive Kuwait as a fundamentally sound place in which to invest...however, while Kuwait is a safe place in which to invest, it is not a safe place in which to embezzle public funds.”

Indeed, the expensive campaign has done little to take the heat off KGL, which has also faced American policymakers’ accusations that it created a “ghost structure” with which to bypass US sanctions and deal directly with Iranian companies. According to Senator Marco Rubio, the US military contractor has had “extensive involvement” in the illegal selling of aircraft parts to Iran, as well as suspected money laundering activities to the tune of more than $160 million.

As the icing on the cake of KGL’s woes, the company is also dealing with an ongoing ICC arbitration case whereby KGL has been ordered to pay $74 million in compensation to South Korean firm Doosan Heavy Industries. The case goes as far back as 2006, to a dispute over the building and operating of container terminals at Egypt’s Damietta Port.

In a rare move for international commerce, the old adage of reaping what is sowed seems to finally be ringing true. This fresh investigation led by Kuwaiti MPs may ultimately unearth more details of the tainted seeds sown by KGL, threatening the firm’s already-tarnished reputation.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.

By Sheena Jordan
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