JAMAICA: A TRAFIGURA SCANDAL PRIMER

Identifier: 
06KINGSTON2021

C O N F I D E N T I A L KINGSTON 002021

SIPDIS

SIPDIS

STATE FOR WHA/CAR (BUDDEN, NICHOLS)

E.O. 12958: DECL: 10/11/2016
TAGS: ECON, EFIN, EINV, PGOV, PINR, PREL, SOCI, KCOR, JM,
XL, XK
SUBJECT: JAMAICA: A TRAFIGURA SCANDAL PRIMER

REF: A. KINGSTON 1592
B. KINGSTON 1903
C. KINGSTON 402
D. KINGSTON 1342

Classified By: Ambassador Brenda L. Johnson, reasons 1.4 (b) and (d)

--------
Summary
--------

1. (SBU) The six-month old administration of People's
National Party (PNP) Prime Minister Portia Simpson Miller
faces embarrassing and intense scrutiny over its acceptance
of JMD 31 million (approximately USD 475,000) from a
Dutch-based oil trading firm. The firm, Trafigura Beheer BV,
holds the contract to lift, market, and trade oil that
Jamaica receives from Nigeria under a concessionary financing
arrangement. The powerful Minister for Information and
Development, Colin Campbell, already has resigned, and
opposition leader Bruce Golding has called for the entire
government to follow suit and allow general elections to be
held as soon as possible. Simpson Miller has admitted
meeting recently with Trafigura executives in New York, but
claims to have known nothing of any transfer of funds. If
the Prime Minister herself becomes more deeply implicated,
there could in fact be a dissolution of Parliament and snap
elections; if not, the scandal seems more likely to push back
the timetable for elections until later next year -
ironically, something the Opposition Jamaica Labor Party
(JLP) admits privately it can ill afford. End summary.

----------
Background
----------

2. (SBU) The Government of Jamaica (GOJ) has had
concessionary oil deals with Nigeria since the 1970s. The
quotas have varied as the agreements are renegotiated, but
have always been in the range of 20-30,000 bpd. The GOJ
claimed, however, that the PetroJam refinery in Kingston
(ref. A) cannot process the type of crude that is sourced
from Nigeria. Over the ensuing years, the GOJ has contracted
with various oil traders to lift, market, and trade the oil.
In October, 2000, the GOJ signed an agreement a Dutch oil
trading company named Trafigura Beheer BV (headquartered in
Switzerland) for this purpose.

3. (SBU) The proceeds from the sale of the Nigerian oil were
intended to be used to purchase finished petroleum products
that would be received to and distributed from the PetroJam
refinery. Therefore, the profits were routed to the
Petroleum Corporation of Jamaica (PCJ). In April, 2005,
however, Finance Minister Omar Davies directed that the funds
be deposited directly into the National Treasury, under the
GOJ's "Consolidated Fund." It is unclear how this money was
then spent.

------------------------
The JLP on the offensive
------------------------

4. (SBU) On October 4, Opposition Jamaica Labor Party (JLP)
leader Bruce Golding announced in Parliament that his party
had uncovered "shady dealings" between the ruling People's
National Party (PNP) and Trafigura Beheer BV. Golding
alleged that Trafigura had paid the PNP JMD 31 million
(approximately USD 475,000) through accounts belonging to
Minister of Information and Development ) and PNP General
Secretary - Colin Campbell. These monies, he continued, were

SIPDIS
used to fund the lavish PNP National Convention (ref. B) held
September 21-24.

5. (SBU) Golding called for the resignation of prominent PNP
officials, and for immediate elections. Private sector
organizations also have criticized the PNP's acceptance of
the money. On October 5, PNP Minister of Housing, Transport,
Water and Works (and PNP Party Chairman) Robert Pickersgill
stated that the money was a campaign "donation," and as such
there was no impropriety (Note: It was Pickersgill, in his
capacity as Minister of Mining and Energy, who renegotiated
the deal in 1999-2000. End note). On October 6, however,
Trafigura stated that it was not a campaign contribution at
all, and that the company's dealings in Jamaica are "strictly
commercial."

6. (C) The campaign by Golding has been partially successful
thus far. On October 9, Colin Campbell resigned his
positions as Minister of Information and Development and as
General Secretary of the Party, although he retains his
Senate seat, to the irritation of some (Senators are
appointed, and thus some feel that he should resign from that
position, as well). Other prominent JLP targets are the
Minister of Industry, Technology, Energy and Commerce
(MITEC), Phillip Paulwell, Attorney General A.J. Nicholson,
and Minister Pickersgill.

--------------------
A Political Mistake?
--------------------

7. (C) As post will report septel, PolEconCouns, PolOff and
EconOff met with JLP MP James Robertson on October 10.
Robertson indicated that he thought the JLP leadership had
made a mistake in bringing the issue into the public domain
too soon. He argued that the revelations have only served to
ensure that the ruling PNP will not call elections this year,
as many (particularly the JLP) had hoped. He opined that the
JLP's party machinery "does not have a sixth gear," and
worried that they would sputter due to lack of funds if the
PNP waited that long.

-----------------------
Who Leaked and Why Now?
-----------------------

8. (SBU) At issue is also the question of how the Opposition
came to uncover the scandal. Rumor and speculation abound,
but it is clear that the official of First Caribbean Bank,
Sonia Christie, who discovered the unusual money transfers is
the wife of JLP Deputy Mayor of Falmouth, Fitz Christie.
While JLP contacts maintain that, by virtue of her position
at the bank, she was duty-bound to report the suspicious
transfers of amounts over USD 10,000, PNP supporters clearly
see this as a partisan attack and a crime against privacy
laws, for which Christie should be prosecuted. First
Caribbean has put Christie on leave while it investigates the
matter.

9. (C) Others, reflecting the Jamaican penchant for
conspiracy theories, perceive the hand of Minister of
National Security Peter Phillips at work. Phillips was
defeated in a close and sometimes rancorous internal party
election for the leadership by Simpson Miller (ref. D), and
it is an open secret that the two are not working well
together, despite public appearances suggesting PNP internal
unity. There have been rumors that Phillips and his
supporters in the PNP are willing to "throw" this election in
order to oust Simpson Miller, and the current scandal only
abets this claim.

-------
Comment
-------

10. (C) If Simpson Miller can weather this storm without too
many more disastrous leaks, she will likely wait some time
before calling general elections, as Robertson predicts.
However, the possibility cannot be ruled out that she herself
will become deeply implicated, perhaps thus forcing her
resignation. In such a scenario, her likely successor,
Phillips, also would prefer to wait to call elections, but
the clamor of public opinion might well be too great to
ignore.
JOHNSON