In this, the fourth in a series of six articles on foreign investment in Sierra Leone, Joan Baxter profiles another of five billionaire investors, Swiss national Jean Claude Gandur and his investment in Sierra Leonean farmland to produce ethanol for export to Europe.
King of Sugar and Bioenergy
While some foreign investors focus on underground riches in Sierra Leone, other moneyed foreign investors are seeking to further their fortunes by acquiring large tracts of arable and well-watered land for industrial agriculture in the country. They’re part of what has been called a global land grab that began after the combined financial and food crises of 2007 and 2008, when investors sought safe and profitable places to park their wealth. The land rush is also being driven by and capitalizes on the increased production of agrofuels or biofuels, as well as fears of future food and water shortages caused by climate change, environmental degradation and population growth.
Land- and water-hungry investors have found welcoming arms with the Government of Sierra Leone [pdf], which has resulted in a spate of large land deals in the country. Despite a great lack of transparency in many of the deals, it can be estimated using actual leases and investor fliers that in the past few years, foreign investors — primarily from Europe, the UK, China, India — have taken out leases of 50 years, some with possible extensions up to 99, on more than 1.2 million hectares of land, nearly a quarter of all the arable land in Sierra Leone. [i]
One of the first to take advantage of the government love-in with large-scale agricultural investors was Swiss tycoon Jean Claude Gandur, Executive Chair and 75 per cent owner of the Addax & Oryx Group (AOG). [ii] Worth US$ 2.1 billion and number 704 on the 2013 Forbes List, [iii] Gandur first built his fortune in African oil, particularly in Nigeria and other turbulent or democratically deficient countries on the continent.[iv] His modus operandi is “buying assets on the cheap” and “making nice with strongmen”.[v] In 2000, two former employees of AOG were convicted and fined in Switzerland for laundering of embezzled funds linked to the late Sani Abacha, former president of Nigeria who is believed to have stolen more than US $ 3 billion from Nigeria’s state coffers.[vi]
AOG has offices in Switzerland, the “grandfather of the world’s tax havens” and number one on the Tax Justice Network’s global financial secrecy index, [vii] and in Malta, another popular fiscal haven. In 2008, a new AOG offshoot, Addax Bioenergy, began acquiring massive land holdings in Sierra Leone with leases for half a century. According to the agreement the company signed with the Government of Sierra Leone in 2010, the idea was to convert up to 20,000 hectares of arable land into sugarcane plantations, irrigated with water from the Rokel River. The sugar was to be processed into ethanol for export to Europe, where quotas ensured a ready and lucrative market for agrofuels. Gandur himself flew to Sierra Leone and joined President Koroma for a grandiose signing ceremony to seal the deal, which the head of state enthusiastically endorsed.[viii]
Gandur may have been feeling quite flush around this time; in 2009 Addax Petroleum had been sold to the Chinese firm Sinopec for US $7.2 billion “in cash” and his take was about US$ 1.4 billion.[ix] But when it came to financing the sugarcane operations and ethanol factory, Addax Bioenergy went in search of public money and “development partners”; more than half of the debt financing for the total investment of about US$ 346 million [Euro 267 million] came from mostly publicly funded European and African development banks and Funds.[x]
Addax Bioenergy expects an annual return of 15 percent,[xi] on the investment. But the 30,000 people living and farming the original lease area are not guaranteed such a return. [xii] Local people maintain [pdf] they were convinced to give up their land with promises of free education, health facilities and other forms of local development that have not been fulfilled, that the much-touted employment opportunities are very limited, jobs are insecure and often short-term and wages not nearly enough to compensate them for what they have lost in the way of farming produce and local resources no longer available.[xiii]
Addax Bioenergy counters such criticism with denials and praises its ”sustainable investment model”.[xiv] In 2013 it secured certification from the Roundtable on Sustainable Biofuels,[xv] a Swiss-based organization weighted down by corporate members. Sierra Leonean civil society has sharply criticized the certification, [xvi] which it deems “shocking”, “unfortunate” and “a shame”.[xvii]
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[i] Based on field and desk research undertaken by the author, Green Scenery and the Oakland Institute between 2010 and 2013.
[ii] Christopher Helman. ‘Swiss oil billionaire sells African assets to finance Iraq adventure,’ Forbes. 21 February 2012. http://www.forbes.com/sites/christopherhelman/2012/02/21/swiss-oil-billionaire-sells-african-assets-to-finance-iraq-adventure/ [accessed 18 March 2013]
[vii] Tax Justice Network, Mapping Financial Secrecy: Report on Switzerland. http://www.secrecyjurisdictions.com/PDF/Switzerland.pdf [accessed 24 March 2013]
[viii] The Press Secretariant, State House, ‘President Koroma hails Addax Group’s multi-million-dollar biofuel investment in Sierra Leone,’ 11 February 2010. http://www.statehouse.gov.sl/index.php/component/content/article/34-news-articles/142-president-koroma-hails-addax-groups-multi-million-dollar-biofuel-investment-in-sierra-leone- [accessed 24 March 2013]
[ix] Christopher Helman, ‘Cashing in on Iraqi oil,’ 24 June 2009. Forbes.com. http://www.forbes.com/2009/06/24/iraq-oil-addax-petroleum-business-energy-oil.html [accessed 18 March 2013]
[x] Addax Bioenergy, Development Partners. http://www.addaxbioenergy.com/en/the-makeni-project/development-partners.php [accessed 18 March 2013]
[xi] Sierra Leone Network on the Right to Food (SiLNoRF) and Bread For All. ‘Concerns of civil society organisations and affected land users on Addax Bioenergy,’ September 2012. p 7. http://www.breadforall.ch/fileadmin/deutsch/2_Entwicklungpolitik_allgemein/C_Wirtschaft%20und%20MR/Landgrab/CSO_Concerns_Addax_120925.pdf [accessed 18 March 2013]
[xii] See: Oakland Institute. ‘Understanding land investment deals in Africa: Country report Sierra Leone,’ Oakland, USA. 2011, http://www.oaklandinstitute.org/land-deals-africa-sierra-leone [accessed 25 March 2013]; SiLNoRF 2012, Op. cit.; Mika Anna and Cosmos Yao Aliwu, ‘Independent study report of the Addax Bioenergy sugarcane-to-ethanol project in the Makeni region of Sierra Leone,’ Sierra Leone: SilNoRF; Switzerland: Bread For All; Germany: Evangelical Entwicklungsdienst, June 2011; WaterLex, ‘Addax Bioenergy – Sugarcane-to-Ethanol Project compliance with the Human Right to Water,’ Geneva, 2011. Available at: http://www.waterlex.org/resources/documents/2011-HRIA_AddaxBioenergy.pdf [accessed 28 November 2012]
[xiii] Who is benefitting? The social and economic impact of three large-scale land investments in Sierra Leone: accost-benefit analysis. July 2013. Freetown: Christian Aid and Action for Large-scale Land Acquisition Transparency (ALLAT)
[xiv] Addax Bioenergy, Sustainable investment model. http://www.addaxbioenergy.com/en/the-makeni-project/sustainable-investment-model.php [accessed 18 March 2013]
[xv] RSB Services Foundation. Press release: ‘Addax Bioenergy earns first African certification by Roundtable on Sustainable Biofuels (RSB),’ 4 February 2012.
[xvi] SiLNoRF and Bread For All. ‘The RSB certification fails to assess the real impacts of biofuels: analysis of the RSB certification of Addax Bioenergy,’ 2013. http://www.breadforall.ch/fileadmin/deutsch/2_Entwicklungpolitik_allgemein/C_Wirtschaft%20und%20MR/Landgrab/2013/201303_Analysis_of_RSB_Certification.pdf [accessed 18 March 2013]
[xvii] SiLNoRF, ‘Press Release,’ 22 March 2013