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Doug Saunders

The business of doing business in Gadhafi's oil kingdom Add to ...

When the big men come crashing down, all manner of mysteries spill out on the sand. Here in this dusty and somewhat disreputable slice of the Sahara near the Libyan border, people fleeing Moammar Gadhafi's fast-collapsing dictatorship gather at hotel bars and make furtive deals in the night.

Most of the exhausted, frightened figures making their way through the smuggler hideout of Ben Gardane are Egyptians, Turks and even a few Japanese who had come to Libya for the fat paycheques of this bizarre oil kingdom, enjoying a living standard and wage level far higher than their own. Libya was a magnet to everyone in Africa, a place where you could make some money if you played along.

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But there's a more elevated clientele, such as the Austrian diplomats who sat up drinking beer and making desperate phone calls to destroy their Tripoli embassy's records. On the other side of the country, you can encounter hundreds of Canadians boarding flights to get out as quickly as possible, some leaving their own embarrassments behind.

Among these is the revelation that SNC-Lavalin Group Inc., the giant Montreal-based engineering firm, has been quietly building a prison, on a contract worth an estimated $275-million (U.S.), in Tripoli, the capital of the Libyan police state.

Surprised by the exposure of this heretofore unpublicized job (although SNC-Lavalin officials say the prison project is mentioned in the company's coming annual report), a company spokeswoman said the jail would be the first Libyan one to conform to international human-rights standards - a claim made mute by headlines coming out of Benghazi that revealed acts of torture and deprivation in actual Libyan prisons. Libya, as I knew it in its heyday, was always a peaceful place free from petty crime, such a powerful deterrent were the very words "Libyan prison."

It's possible that SNC-Lavalin took this job as a quid pro quo for its far larger projects, such as the Great Man Made River (whose name, in case it isn't clear, means an underground river made by the Great Man). To do business with an autocrat, one often has to agree to side deals. But it's possible the fee was simply too good.

Business deals with the Gadhafis were always very personal, and usually involved fixers and middlemen of colourful background and the exchange of huge sums of money.

When Petro-Canada (now Suncor Energy) got involved in Libya after U.S. sanctions ended in 2004, for example, it hired as its local agent Jack Richards, an Englishman whose Virgin Islands-based consulting company, operated on the fact that he was personal friends with Colonel Gadhafi and his son and heir apparent, Saif.

Mr. Richards had met the Libyan in 1967 while selling him a military communications system and, after the 1969 coup, became a trusted confidant of the Gadhafis. If you were an oil company and you wanted to get a slice of Libya's newly privatized oil field, then you paid Mr. Richards a truly enormous fee.

Mr. Richards, according to leaked Petro-Canada memos, would cement such hard-to-get oil-exploration deals by taking Saif Gadhafi on shooting trips on Princess Anne's estate, which adjoined his own farm in Gloucestershire, and make the pitch over lead shot and flying feathers. He approached the Libyan autocrat with the Canadian petroleum firm's offers for blocks of undersea oil-drilling rights in the 2000s.

This sort of arrangement bore fruit for the boys from Calgary, turning Libya into one of Petro-Canada's most important non-Canadian bases of operation. But to get it, they had to pay the Libyan government - and thus, rather directly, the Gadhafi family - a startling sum.

According to U.S. State Department reports obtained from the so-called Cablegate leaks, Petro-Canada paid the Libyan autocrats a $1-billion "signing bonus" straight off the bat, then invested $3.5-billion in the redevelopment of many of Libya's existing oil fields. In exchange, the Canadians got a 12-per-cent share of oil revenues produced from their slice of the field, for 30 years. As the U.S. ambassador to Tripoli wrote in a 2008 cable, Petro-Canada "swallowed hard and signed up."

Follow on Twitter: @dougsaunders

 

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