In the weeks since Algerian President Abdelaziz Bouteflika launched a probe into Sonatrach, the country’s largest state gas company, a different, more compelling narrative has emerged which points to the powerful Department of Security Intelligence (DRS) as the origin of the probe. That is, the investigation and removal of Sonatrach’s top officials is seen as a direct affront to Bouteflika’s civilian control over Algeria’s lucrative oil and gas industry, which accounts for 98 percent of exports. Why on earth would Bouteflika launch an anti-corruption drive which weakens his own Minister of Energy, Chakib Khelil, who is one of his closest allies?
If civilian-military power struggles are a central feature of Algerian political dynamics, this latest corruption probe—dubbed the “earthquake”—has greater implications beyond the arduous balancing of competing factions necessary to maintain stability. For one, it tarnishes a well-needed flushing out of one of the country’s most corruption-riven companies. If Sonatrach’s house cleaning is carried out for political motives and not grounded in holding officials accountable to the rule of law, then such moves are likely to replace the bad apples with other corrupt officials loyal to the military instead of the president.
Secondly, this probe also has an international component; investigators are looking into Sonatrach’s deals with foreign companies. The Italian firm Saipem SpA, Europe’s largest oil services company, is currently being investigated over a $580 million procurement contract. Still, any anti-corruption probe that seeks to hold Europe’s largest firms accountable for their privileged access to markets and plush contracts in their perceived “backyard” is not likely to sit well with European leaders.
Algeria finds itself in an awkward situation whereby actions taken to nominally increase transparency in major firms actually work to scare off much needed Foreign Direct Investment.
Published Date: March 01, 2010