World Bank-backed committee urges Somalia to cancel fishing deal

A World Bank-backed committee criticized a deal in which a company partly owned by Saladin Security Ltd. was granted the rights to manage all aspects of Somalia’s fishing industry and said it should either be scrapped or renegotiated with reduced scope.

Giving Mauritius-registered Somalia-Fishguard Ltd. responsibility to sell fisheries licenses and conserve the Horn of Africa’s fisheries resources is “a potential conflict of interest,” the Financial Governance Committee said in a report to donors. The report was given to Bloomberg by an official who has knowledge of the discussions and was confirmed by a member of the committee. Both asked not to be identified because the document isn’t public yet.

Somalia’s coastline is rich in fish species including yellowfin tuna, Spanish mackerel and lobsters that offer the country an opportunity to rebuild its war-shattered economy. Development of the industry is being hindered by illegal foreign fishing worth an estimated $306 million a year, according to a report published by the Colorado-based One Earth Future Foundation last month. Piracy that caused havoc to international shipping off Somalia over the past decade may return unless the illicit trade is curtailed, it said.

Somalia-Fishguard, run by former British army soldiers David Walker and Simon Falkner, hasn’t issued any fishing permits since it signed the deal with the government in July 2013. In that period, the government has granted an unspecified number of tuna-fishing licenses, mostly to Chinese companies, without involving Fishguard, according to the committee.

“Although the Fishguard contract is effectively sidelined, uncertainty over Fishguard’s role and divided views on the contract within the government are interfering with the orderly development of Somalia’s fisheries sector,” the committee said. “The confidential assessment recommended either cancellation, or renegotiation of a contract with a much more limited scope.”

Simon Falkner, the chief executive officer of Fishguard, confirmed the company has been “sidelined” by the Fisheries and Marine Resources Ministry and, as a result, hadn’t been able to issue any licenses since the contract was signed. He said amendments have been made to address previous criticism of the contract.

‘Diverting Administration’

“Whenever a fishing company registered on the website as an applicant for licenses, generally as a result of our introduction, the ministry, who also have administrator access to the website, contacted the applicant directly, diverting the administration of the application, and taking the fees for itself,” he said in an interview in Nairobi, Kenya’s capital, on Oct. 30.

Falkner said his company “consistently tried” to work with the international community to prevent any conflict of interest and has offered to reduce its contract terms from 15 years to 10.

Somalia has been embroiled in civil war since the ousting of dictator Mohamed Siad Barre in 1991 and its institutions have largely collapsed. The country’s president, Hassan Sheikh Mohamoud, is seeking to attract investors as its army, supported by African Union peacekeepers, pushes back al-Qaeda-linked militants from the country’s main urban areas.

‘Fueling Corruption’

The United Nations Monitoring Group on Somalia and Eritrea report published in October said the Fisheries and Marine Resources Ministry sold 11 licenses since March 2015, mostly to China-flagged longliners fishing for tuna and tuna-like species, generating more than $180,000 in revenue.

“The Monitoring Group is concerned that the sale of licenses, especially without a federal-regional resource-sharing agreement in place, has the potential to fuel corruption and even conflict,” it states.

An official in the Somali president’s office and Deputy Prime Minister Mohamed Omar Arte didn’t respond to Bloomberg’s e-mailed questions regarding the status of Fishguard’s contract. Deputy Fisheries Minister Said Jama Mohamed said the Fishguard contract will be discussed this week with the Ministry of Finance.

“The Monitoring Group’s report is not correct,” he said by phone from Mogadishu, without offering further explanation.

Bloomberg