THE mother of all crimes is what we refer to as the “Dow Chemical deal”, a case that was unprecedented in the history of Kuwait since its inception. This scandal was quite huge in terms of the size of losses that the public funds incurred illegally, estimated at $2.5 billion (KD 2,500 million).
Dear esteemed reader, just imagine someone receiving from you such a huge sum of money without breaking a sweat.
This scandal is “the mother of all crimes” because its contractual articles were phrased, from A to Z, in favor of one party – the foreign company.
What did the legal consultants and advisors in the Kuwaiti company do about this unfair contract? In fact, the entire agreement of the project, which was to be executed in Kuwait, was based on the Scottish law.
According to the “liberal” legal experts, this law stands with both parties’ equality. This prompts us to ask the question – “Why didn’t the contract stipulate that the prevailing law should be the ‘Kuwaiti law’ because the project is to be executed on Kuwaiti land, and instead of the law that favors the foreign party?”
The contract was signed by the Petrochemical Industries Company (PIC), and was presented and approved by its board of directors. The same board owns Kuwait Petroleum Corporation (KPC). This board as well as Ministry of Oil were headed by the same person from the “Brotherhood” fanatic faction, who was a Cabinet member and a member of the Supreme Petroleum Council which also had approved the deal.
Nonetheless, the deal received stiff opposition from the strongest faction within the National Assembly – the Popular Action Bloc – and others who said despicable things. However, no one in that bloc possessed technical or industrial or financial background to demand the cancelation of the contract.
The most amazing, and shocking too, aspect is that no one among the relevant officials and authorities explained to the Cabinet or Parliament or public or even protested about the catastrophic outcome which would follow if one of the contracted parties decided to pull out from the deal.
This meant that the party that cancels the deal will be demanded to compensate the other party under the “Penalty Clause” stipulated in the contract, which is one of most generous compensations in the world for such contracts.
I am not sure whether the concerned Kuwaiti company paid the astronomical amount, which is $2.5 billion, to please the other party or as the consequence, or to heed to the decision of the arbitrary panel. This was because defending the decision to cancel the contract has no legal hiccups, as the company submitted to the decision issued directly by Kuwait’s Council of Ministers, which is the highest executive organ in the country, and the government that owns the companies involved in the deal.
This is known in French as “Fait de Roi” (the act of the authorities), and it can place a hurdle which cannot be overlooked when executing obligations.
This, and many other questions, resonate in the head. We wish our brothers in the Fatwa and Legislation Department will raise these questions before the Court of Cassation. We hope there will be no problem in seeking the assistance of legal consultants and experts of the Scottish law which governs the deal.
The mistake, or rather the heinous crime, committed in canceling the “Dow deal”, and the huge financial losses incurred from such a cancellation, can be considered as the mother of every crimes committed against Kuwait, its government, people and public wealth.
By Ali Ahmed Al-Baghli
Former Minister of Oil