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Thursday 21 May 2015 42 BUSINESS DAY THOMSON REUTERS EU lawmakers seek ban on “blood metals” in surprise vote • Vote reflect rise of protest, anti-business parties • Parliament’s position seen as too onerous on EU companies U.S. Senator and Republican presidential candidate Marco Rubio (R-FL) laughs as he listens to a comment from U.S. Senator Ron Johnson (R-WI) during a U.S. Senate Foreign Relations committee hearing on U.S.-Cuba relations on Capitol Hill in Washington May 20, 2015. REUTERS Libya’s Lisco keeps the steel mill rolling despite war ULF LAESSING Libyan steelmaker Lisco is struggling to keep its mill rolling in a war zone, no easy feat when the power cuts off every night, shippers are reluctant to dock and foreign contractors are long gone. Lisco Chairman Mohamed Abdelmalik al-Faqih may have an office overlooking the Mediterranean, but the steel plant in Libya’s thirdlargest city Misrata looks more like a military base. A tank guards the melt shops, mills and furnaces, and the nearby port is protected by anti-aircraft guns. “The position of the com- Gulf banks increase lending footprints in Asia, Africa ARCHANA NARAYANAN An $85 million loan taken out by a Ugandan bank this year points to an emerging trend in international capital markets: the rise of the Gulf as a syndicated loan market for Africa and Asia. Stanbic Bank Uganda originally intended to raise $75 million through the 18-month deal in January, but expanded that because of strong interest from banks wanting a slice of the business. The list of participating banks eventually included Dubai’s Emirates NBD, which was sole co-ordinator and bookrunner, mandated lead arranger Al Ahli Bank Kuwait , and Qatar’s Al Khalij Commercial Bank and Commercial Bank of Qatar as lead pany is not good, even worse than 2013 or 2014, (but) we are working,” Faqih told Reuters in an interview. Power and gas shortages are perhaps the biggest day-to-day challenge for the energy-hungry steel business as more than a dozen oilfields across Libya have been forced to shut due to protests, fighting and militant attacks. The Tripoli-based electricity ministry had forced Lisco, one of North Africa’s largest steelmakers, to cut output to one third of capacity for six months to save power. That’s on top of having to shut furnaces down each evening. The Libyan Iron and Steel Company (Lisco) is caught up in the armed struggle that has arrangers, as well as Western heavyweight Standard Chartered. “The Gulf banks have not faced the same regulatory and capital constraints that European banks have faced, so they are able to provide liquidity to African banks,” said Patrick Mweheire, chief executive of Stanbic Bank Uganda. Several years ago, Gulf banks largely participated as junior partners in international syndicated loans; they rarely took most of the key management roles in syndications or dominated them by volume of money provided. Over the last six months, several deals have suggested that picture is changing, for a wide variety of reasons - not all of them under the control of the Gulf banks. enveloped the country as two rival governments vie for control fours years after the ousting of Muammar Gaddafi. “The main problems are shortages of natural gas and electricity,” Faqih said. Yet the company hopes to keep output near steady this year compared to 2014, planning to produce between 500,000 tonnes and 600,000 tonnes of liquid steel, its main base product, in 2015. This is roughly in line with last year’s output, already hit hard by gas shortages. Output at iron plants will reach up to 700,000 tonnes or half of the annual target, Faqih said. Last year, it was around 800,000 tonnes, then only half the intended When ICBC Financial Leasing, a wholly owned unit of Industrial and Commercial Bank of China, raised a $500 million, three-year loan last November, eight of the 10 banks involved were from the Gulf. There were three mandated lead arrangers and bookrunners: Emirates NBD, Qatar National Bank and ICBC itself. South African bank FirstRand raised $235 million in a two-year loan last week; the entire deal was syndicated to nine Gulf lenders, with Emirates NBD the sole arranger. Other Asian companies to have tapped the Gulf loan market since last year include Indonesian auto financing firm Astra Sedaya Finance and airline Garuda Indonesia. Chinese equipment leasing amount. This included around 300,000 tonnes of hot briquetted iron, a steel making ingredient, short of the goal of 500,000 tonnes. Lisco’s bar mill would produce 350,000 tonnes, missing an original plan of 485,000 tonnes, he said. The hot-strip mill would reach 250,000 tonnes, short of a plan of 332,000 tonnes. SHIPPERS RELUCTANT The firm has also struggled to persuade foreign shipping companies to dock at Misrata after the commercial port in the free zone was hit in January by war planes. “Sometimes it is difficult to fix a ship but eventually we succeed,” Faqih said. company Far East Horizon is currently arranging a Gulf loan. “Recently the leading banks in the GCC (Gulf Cooperation Council) have started to expand their footprint into Asia and Africa, and this development is providing a new source of bank liquidity in those markets,” said Jonathan Macdonald, global head of syndicated finance at National Bank of Abu Dhabi . LIQUIDITY The rise of the Gulf banks as syndicated lenders is partly a natural result of their growth over the last several years. They have opened opened branches and offices in Asia and Africa to take advantage of rapidly expanding trade and investment ties between those areas and the Gulf. ROBIN EMMOTT The European Parliament voted on Wednesday to ban all products that contain “blood metals” sold by African warlords, but the legislation is likely to be blocked by EU governments who fear it would impose an unrealistic burden on business. The surprise result marked a defeat for the probusiness European People’s Party (EPP), the parliament’s biggest grouping, who need fellow centrist allies to pass laws following last year’s EU elections where protest parties did well. The European Parliament voted 402 in favour versus 118 against with 171 abstentions on a proposal to require companies, including electronics firms, that buy gold, tantalum, tin and tungsten to certify imports do not finance warlords in Africa. “Parliament votes for mandatory transparency against conflict minerals. Big success!” tweeted German Green Ska Keller after the vote in Strasbourg as some lawmakers broke out in applause while others stood in huddles, surprised by the result. The result is set to paralyse the bill because European Union governments say firms across the 28 EU countries cannot track materials from small mines all Tiger Brands’ Kenyan business hit by fraud allegations TJ STRYDOM Tiger Brands, South Africa’s biggest consumer foods manufacturer, said executives at its Kenyan business had cheated to reach targets as it reported flat first-half earnings also weighed down by a weak naira currency in Nigeria. Disciplinary action had been taken against senior personnel at the Haco Industries operation in Kenya, in which the company bought a 51 percent stake in 2008, Tiger Brands Chief Executive Peter Matlare told investors on Wednesday. Matlare said Geoffrey Kiarie, Haco’s managing director, had left the company and that the company planned to take legal action against him. Kiarie could not be reached for comment. the way through commodity exchanges to component manufacturers and the final product. Greens, centre-left and protest lawmakers from the far-left and far-right gained critical mass in the vote to challenge a more pro-business proposal from the European Commission that would make blood-free certification only voluntary. While party discipline is traditionally poor in the European Parliament, the result bodes poorly for the grand coalition that the centre-right and the centreleft had hoped to form to channel European Commission proposals through the 751-seat body. Rights groups lobbied EU lawmakers to toughen up the Commission plan for a voluntary scheme, in a campaign backed by filmmaker Edward Zwick, whose hit “Blood Diamond” chronicled how gemstones financed war in Sierra Leone. Campaigners and some EU lawmakers said Europe should echo the U.S. law that requires companies such as Apple to check their suppliers use only “conflictfree” metals. But centre-right EU lawmaker Iuliu Winkler, who wants only smelters and refiners to be required to certify their imports, said the U.S. law was a failure because U.S. companies now try to avoid doing business with sub-Saharan Africa. “They were key executives right at the top. It was difficult to pick this up,” Matlare said, noting that auditors had failed to uncover the irregularities. Haco’s top executive allegedly influenced his colleagues, who had since faced disciplinary hearings, to pre-invoice sales and move stock to third party warehouses to make it look like they had hit their performance targets. Tiger Brands’ shares fell 4 percent at 295.40 rand at 1450 GMT after the disclosure of the Kenyan problems. Tiger Brands, which makes cereal, energy drinks, pasta and rice, also said it incurred significant foreign exchange losses in Nigeria, where its Dangote Flour Mills business was hit by a 25 percent devaluation in the naira.
Thursday 21 May 2015 THOMSON REUTERS BUSINESS DAY 43 Burundi president appeals for ethnic harmony, soldier killed • President urges ethnic unity between Hutus, Tutsis • “Blood spilt a lesson to us all” - Nkurunziza GORAN TOMASEVIC AND EDMUND BLAIR Burundian President Pierre Nkurunziza appealed for ethnic harmony on Wednesday, addressing fears that weeks of political unrest could trigger another bout of bloodletting between Hutus and Tutsis in the heart of Africa’s Great Lakes. In an address on national television, Nkurunziza, who is under pressure from street protesters to end his bid for a third term, said the risk of the former Belgian colony descending once again into genocide or civil war was too great. “No Burundian wants to revive the tensions of ethnic division or any other nature,” Nkurunziza, who has mixed Nigeria’s outgoing president approves 2015 budget Outgoing Nigerian President Goodluck Jonathan has approved the 4.5 trillion naira ($22.6 billion) budget for 2015, which was passed by parliament in late April, the president’s spokesman said on Wednesday. The budget is 3.2 percent smaller than last year’s as Africa’s biggest oil producer is facing a cash crunch following the halving of global crude prices in the past year. It was passed later than BHP Billiton Plc will pay $25 million to settle charges that it violated a U.S. anti-bribery law by failing to properly monitor a program under which it paid for dozens of foreign government officials to attend the 2008 Summer Olympics in Beijing. The accord resolves U.S. Securities and Exchange Commission charges that BHP, one of the world’s biggest mining companies, violated the Foreign Corrupt Practices Act when it sponsored the attendance of Hutu-Tutsi parentage, said. “The blood that was spilt in the past has taught us a lesson.” More than 20 people have been killed in the unrest, which includes a failed military coup a week ago, and there are fears of more bloodshed as determined anti-Nkurunziza demonstrators confront an intensifying crackdown by security forces. There have been few signs so far of the struggle being driven by anything other than the desire of urban Burundians to stop Nkurunziza seeking another term, which they say breaks the constitution and a peace deal that ended civil war in 2005. An estimated 300,000 people died in the conflict in Burundi, which has the usual in part due to the presidential election on March 28. “I can confirm to you that Mr. President had signed the 2015 budget into law some days back without the usual fanfare,” spokesman Reuben Abati said. There could be supplements to the budget after incoming president Muhammadu Buhari takes office next week. He has yet to outline his economic policy although he is expected to crack down on excessive officials who were “directly involved with, or in a position to influence” its business and regulatory affairs. BHP, which has offices in London and Melbourne, Australia, neither admitted nor denied wrongdoing in agreeing on Wednesday to settle the civil case. It also said the U.S. Department of Justice ended a related criminal probe without taking action, and that all U.S. investigations into the matter are complete. The SEC said BHP invited 176 government officials to attend the Olympics at company expense, including 98 who worked for state-owned same ethnic mix as neighbouring Rwanda, where 800,000 - most of them Tutsis and moderate Hutus - were killed in a 1994 genocide. However, with people being killed almost daily on the streets of Bujumbura and more than 110,000 seeking refuge in Tanzania, Rwanda and Democratic Republic of Congo, rights groups fear it is only a matter of time before ethnicity spending by government officials, including the use of official cars. The finance ministry was forced to revise down the assumed oil price in the budget several times before submitting it at $65 a barrel in December. Lawmakers ultimately passed the budget at an even lower level of $53 a barrel. The fuel subsidy, a heavy burden on the nation’s purse, was also subsequently slashed by 90 percent because of low income. The government relies on oil sales for up to 80 percent of revenues and an expensive election campaign helped drain its already limited rainy day fund. The finance ministry said earlier this month that it has already been forced to use up half of its budgeted borrowing allowance to pay overheads and salaries and has not released any funds for capital expenditure so far this year. U.S. SEC fines BHP Billiton $25 mln in 2008 Olympics bribery probe JONATHAN STEMPEL Workers clean up an oil slick along the coast of Refugio State Beach in Goleta, California, United States, May 20, 2015. A pipeline ruptured along the scenic California coastline on Tuesday, spilling some 21,000 gallons (79,000 liters) of oil into the ocean and on beaches before it could be secured, a U.S. Coast Guard spokeswoman said. REUTERS becomes a factor. “The situation is so unstable and volatile that every day appears to be a flashpoint,” said Carina Tertsakian, Human Rights Watch’s senior Burundi researcher. “The demonstrators are not backing down and the government is intensifying its crackdown.” On Wednesday, a soldier was shot dead on the streets of the capital, with witnesses saying he had enterprises that were customers or suppliers, under a “global hospitality” program tied to its sponsorship of the games. According to the SEC, 60 invitees plus some spouses and guests ultimately attended, mainly from Africa and Asia, and enjoyed packages worth $12,000 to $16,000 that included luxury hotels, event tickets and sightseeing. The SEC said BHP did not properly monitor the invitation process or train employees to ensure that the program would remain untainted by bribery. “BHP Billiton recognized that inviting government officials to the Olympics created a heightened risk of violating anti-corruption laws, yet the company failed to implement sufficient internal controls to address that heightened risk,” said Andrew Ceresney, director of the SEC enforcement division. In one illustration, the SEC said BHP extended an invitation to a provincial governor in the Democratic Republic of the Congo who the company thought “could be the key” to a copper exploration transaction it was negotiating. The governor accepted the invitation but later canceled, the SEC said. been hit in the chest by a round fired by police, an incident that could inflame tensions between different wings of the security forces. Army spokesman Gasper Baratuza could not confirm details of the soldier’s death. In another incident in the volatile Musaga neigbourhood of Bujumbura, a Reuters photographer monitoring protests heard a loud explosion in an area from which a slightly injured South African union says 2,000 workers strike at mobile group MTN TIISETSO MOTSOENENG About 2,000 South African workers of MTN Group went on strike on Wednesday demanding more pay, the first major industrial action to hit Africa’s biggest mobile phone operator since its formation in 1994. About 700 workers, clad in red T-shirts and carrying placards with slogans such as “MTN integrity is gone,” temporarily blocked the main road leading to MTN’s head office, where they delivered their demands. South Africa’s mostly black labour force is increasingly restive two decades after the end of apartheid, with perceptions prevalent that the earnings made in a range of industries have not flowed fairly to workers. “MTN continues to rake in profits as the biggest mobile operator on the continent and cannot deny the very people who make it possible to prosper the right to share in its success,” Thabo Magalane, deputy general secretary of the Communications Workers Union, said in an address to workers. The CWU wants a 10 policeman walked away soon afterwards. “The protesters have thrown a grenade,” an officer at the scene shouted. “ARMY NOT DIVIDED” Nkurunziza, a 51-yearold former sports lecturer, has so far yielded no ground to the protesters, whom his government has tried to associate with the failed military takeover, a tactic that has made no dent in the numbers on the streets. percent pay rise, a 16 percent bonus payment and higher allowances for work done over weekends and holidays. “We can no longer tolerate the arrogance and plain refusal of the company to meet legitimate, reasonable demands of workers,” Magalane said. Ahmad Farouk, head MTN’s South African operations, had to be escorted by police back to the company’s offices through the crowd of protesters. MTN, along with rivals in Africa’s most advanced economy, is trying to contain costs in the face of tough competition that has hit profit margins. The company, which reported a 9 percent increase in full-year profit in March, employs about 6,500 people in its home market, where it trails rival Vodacom by subscribers. MTN spokesman Chris Maroleng had no comment. MTN’s shares slid 3.3 percent to 228.01 rand by 1231 GMT, on track for their biggest daily percentage decline in about two months and lagging closest rival Vodacom Group which was down 1.4 percent.
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