The political roots of Algeria's corruption scandals

The political roots of Algeria's corruption scandals
Analysis: Rather than indicating corruption is being fought, Algeria's never-ending scandals are a symptom of a high-level struggle for power, says George Joffe.
4 min read
18 May, 2015
Hanoune is close to Bouteflika, who was recently sworn in for a fourth term [Getty]
Algeria seems to be slowly sinking under a sea of corruption scandals.

Last week Louisa Hanoune, the leader of the Workers' party in Algeria, rounded on the minister for culture, Nadia Labidi, making accusations about the management of her department and her ownership of a television company. The minister sued for libel in response.

Labidi was not the only target of Hanoune's disapproval. In recent days she has made similar attacks on the minister for mines, Abdesslam Bouchareb, and the minister for health, Abdesslam Boudiaf.

Hanoune is well-known for her robust views and for her support for the Bouteflika presidency. This probably protects her from arrest as the president is an admirer of her political style.

In the recent past, she levelled similar accusations against Algeria's leading "economic baron", Ali Haddad, the main financial backer for Bouteflika's most recent re-election campaign and a man with considerable influence in the Mouradiyya, the presidential palace in Algiers.

He was accused last year of demanding - and getting - the head of Abdukhamid Zerguine, the secretary-general of state oil firm Sonatrach, because of the latter's opposition to a contract Haddad's company wanted.

The scandals and the courts
The former head of Sonatrach was one of 19 defendants accused of involvement in a corruption scandal involving a German company and the state oil giant.
Sonatrach has had its day in court elsewhere. A trial has just started in Milan of employees of Saipem, the Italian oil services company, who are accused of being instrumental in payment of a $207m bribe to obtain contracts in Algeria worth $8.4bn.

In Algiers in March, the former head of Sonatrach, Mohammed Meziane, featured among 19 defendants accused of involvement in a corruption scandal involving a German company and the state oil giant. He, of course, vigorously denies any responsibility.

Behind the accused stands Chekib Khalil, the former oil minister, who fled Algeria in 2013 after being forced from his job despite his closeness to the president.

He has been curiously untouchable, despite an international arrest warrant, ever since - no doubt because of his closeness to Bouteflika.

Another trial involving Sonatrach and Saipem is due to start in Algiers at the start of June, the result of a security service investigation in 2010 which was an indirect attack on the president and his favourite, the oil minister.

Then there is the scandal of the East-West motorway, a construction project, now just completed, for a major highway across Algeria from its border with Tunisia in the east to the still-closed border with Morocco in the west.

The road is said to be the most expensive in the world, mile for mile, and its construction has been mired in endless accusations of corruption.

Its cost has ballooned from a projected $6bn to an expected $11bn according to official sources. Commentators in Algeria, however, expect it to ultimately cost $13bn to $17bn. During a recent associated court case, a defendant accused Amar Ghoul, the minister of transport, of taking up to a quarter of $5m of bribes paid out during the motorway's construction.

Ghoul has denied the claim.

Finally there is the Khalifa scandal, now being retried in Blida.

This involved Algeria's first private sector conglomerate, which collapsed in the early years of the last decade. The group had been built around a small pharmaceutical business that dramatically expanded into a bank and an airline, named after their founder, Rafiq Abdelmoumen Khalifa, the son of a former senior figure in Algeria's war for independence.

Khalifa managed to fall foul of Bouteflika after he had funded two satellite television stations that gave airtime to challengers for the presidency in the 2004 presidential elections. By then, his industrial group had already found itself threatened by Algeria's financial regulators and was eventually forced into liquidation, with Khalifa himself accused of fraud.

Corruption scandals like these are the visible signs of the constant battle between the presidency, army and security services.

He was eventually arrested on an international warrant in the UK and spent years on remand fighting an extradition request, while 123 persons went on trial in Blida in 2007.

Khalifa himself was sentenced to life imprisonment in absentia. Three years ago, the sentences of 78 of the accused were overturned by Algeria's supreme court.

Last year Khalifa himself was returned to Algeria. He now faces a new trial and, in the meantime, is a leading witness in the retrial of his former employees.

The causes of corruption

If there is a common theme that links these stories together, it is the occult political system that actually runs Algeria.

Power in the country is the subject of the "lutte des clans", a constant tussle between the presidency, the army and the security services. Scandals like these are the visible sign of that constant battle.

A year ago last September, the army and the presidency seemed to be in the ascendant, as the security services were shorn of most of their investigative functions that they had used with telling effect in their investigations of Sonatrach three years before.

Now, however, they seem to be back as their support was needed last year to secure the president's re-election for a fourth time.

Until this power struggle ends and Algeria becomes a state properly governed by a constitution, it will continue and we can expect many more scandals to come.