How Chad war is financed
One of the things that baffles many people about the long-running civil war in Chad is how the war has been financed for so long by a country with a 'non-existent' economy.
A recent ruling at the International Chamber of Commerce Arbitration in the Hague, has shed some light on the murky deals that have enabled both sides of the conflict to prosecute the war for so long.
The arbitration awarded Chief Francis Arthur Nzeribe, the colourful and controversial Nigerian businessman and a senator in the short-lived second term Second Republic in Nigeria, substantial damages against the Republic of Chad for a breach of contract.
Chad was not represented at the Arbitration (and the Arbitration Panel went to great lengths to protect the country's interests) and most people doubt that the over $20m damages can ever be collected from a country in such dire straits as Chad.
The details of how Chief Nzeribe clinched a deal to provide $25m to enable Chad to buy arms and earn $25m in profit the very next year make very interesting reading.
It all went very wrong however. The deal was made with Goukhouni Weddye, at the time President of Chad, but before Chief Nzeribe could reap his 'windfall' power had shifted in N'Djamena and Hissein Habre had become President.
We publish below excerpts from the proceedings of the ICC in the Hague:- In 1980 Chad was, and has since remained, a sovereign State. The Chad constitution had by then been suspended and the President of Chad, M. Goukouni Weddeye (whom we will call "the President of Chad") was the head of State; he was recognised as such internationally, and for instance his government was recognized by OAU members, and there is evidence that in 1980 the Government of the United Kingdom had dealings with him
In 1979 and 1980 the Government of Chad, presided over by the President of Chad, was in control of the major part of the country including the main airport (though that was shut), but there was a civil war going on between the Government and certain rebel groups. The economy of Chad was very poor indeed being mostly agricultural and with few exports. In this regard we quote one passage from the Chief's oral evidence:
"When the agreements were made in 1980 the Chad constitution was suspended and the President of Chad was the head of State. He was recognised as such internationally. In addition there was a civil war going on between the government and the rebels from the north under the command of Mr Habre. The Chadians themselves described their economy as non-existent. The activity of the Chad people is mostly farming, and little is exported. To the best of my knowledge no foreign powers were involved in the fighting at the material time. The government of Chad was recognised by the whole of the AEU and was heavily backed and recognised by my home country Nigeria.”
As far as any potential borrowings were concerned, Chad's international credit-rating was non-existent without a third party guarantee, and Chad had been unable to raise finance on the international money markets. The Chief's written evidence included this passage:
"The negotiations which preceded the final agreement were concerned in the main with the rate of interest or return upon the advances to be made by Sogal. It was however accepted by all parties that a high return was justified having regard to the parlous economic situation in Chad and its history of political instability. Indeed I understood that the Chad Government had made strenuous efforts to raise the necessary finance on the international money markets but had been unsuccessful. The accord finally reached in this respect reflected what both the Chad Delegation and I recognised to be the high risk element of the transaction."
In 1979 it became known that the Government of Chad was in the market for the services of certain advisers and to acquire certain equipment, principally in order to open the airport, service existing aircraft which they had, and prosecute the civil war. With the airport shut, the only means of entry to Chad was through Nigeria and the Government of Chad maintained good relations with that country. However, the Nigerian Government was not prepared to assist with the services and equipment sought by the Government of Chad.
In 1979 Sogal and Flintgrange began to negotiate through intermediaries with the Government of Chad to see if they could assist in meeting the latter's requirements. Neither Sogal nor Flintgrange were in the business of supplying the required services or equipment, but they got in touch with a specialist company called Armadillo Management Safeguard Limited (hereinafter called "Armadillo") which did. Armadillo is an independent company not owned or controlled by Sogal, Flintgrange or the Chief. In his oral evidence the Chief described Armadillo thus:
"I have no connection with Armadillo, and there is not the least connection between Armadillo and Sogal, Flintgrange or any other company I control. Armadillo is an internationally recognised dealer in war material. I had used them previously to these agreements.
A number of discussion took place between the various parties, including Armadillo, whose representatives also visited Chad to make an appraisal, and by April 1980 broad agreement had been reached and all that remained was to negotiate the detailed terms upon which and the manner in which those requirements were to be fulfilled.
For this purpose the Chad Government sent a strong delegation to London in May 1980 headed by M. Jibrin, who was the Chad Minister responsible for finance and ideology, and it included General Goko, the Commanding Officer of Chad, and also a high ranking civil servant from the Public Treasury of Chad.
The Chad delegation refused to commence the detailed negotiations on the documents until their lawyer, a Mr Nart, arrived. For Sogal and Flintgrange the Chief was assisted by Mr Alan Lengleben, and English Solicitor. In due course the Chad delegation left taking with them drafts of the Loan and Commission Agreements (which were in the same form as those finally executed).
Before the Chad delegation left, Flintgrange, according to the Chief's evidence, advanced £100,000 sterling to them on behalf of the Government of Chad to meet expenses and to purchase urgently required materials, and also placed at their disposal for the use of the Government of Chad a 9-seater private executive jet aircraft, which the delegation proposed to repaint in the Chadian national colours, and 2 pilots.
The £100,000 advance and the cost of running, manning and maintaining the aircraft were to be the subject of orders to be made under the Agreements so as to enable Sogal to reimburse Flintgrange. All the agreements about the £100,000 advance and use of the aircraft are recorded in a letter of agreement dated 18th May 1980, which was produced at our request. The evidence was that the expense associated with the use of the aircraft in fact came to more than £50,000 sterling.
However all 7 experts returned within 2 weeks and the Managing Director of Armadillo reported to the Chief that the Government of Chad had changed its mind and did not wish to proceed.
When the Chadian delegation left, Sogal, Flintgrange and Armadillo all confidently expected the Agreements to be finalised, and Armadillo made a second fact-finding visit to Chad in July 1980; before Armadillo left it obtained a £20,000 sterling advance from Flintgrange to cover its expenses. But the signed Agreements did not materialise, and the Chief arranged to meet the President of Chad in Northern Nigeria at about the end of July or the beginning of August 1980 to try and resolve matters.
The meeting was amicable and successful, and the Loan Agreement and the Commission Agreement were sent to London by Chad a few days thereafter in their final form executed on behalf of Chad, and to be signed on behalf of Sogal and Flintgrange, which was done in London. The Chief gave evidence; this oral evidence about the delay in the signing of the Agreements:
"As to the delay in signing the two agreements, I knew that there was plenty of rivalry between the Chadian Ministers about who did what. I believed the President of Chad wanted to see me face to face. We had a few confidential words between us at our meeting in July 1980. That accounts for the delay in signing. As soon as I saw the President, within a few weeks the agreements were signed 100 wings; they had not come in and the capital was still in complete control."
Following the signing of the Agreements, Armadillo in cooperation with Chad, sent 7 of their experts to Chad in September 1980 to finalise what would be ordered, 5 of whom were intended to remain there for quite some time in order to supervise. In his oral evidence the Chief said this:
"With regard to the delay after the agreements were signed, when they came back with the contracts signed I did not waste any time in sending Armadillo back to Chad in September 1980. I believe that in the interim period the President of Chad had reached some conclusions with the Libyans, who had been active. The President of Chad had been trying both sides and was playing for time. The agreement he reached with the Libyans was to supply equipment free of charge. In September 1980 Armadillo went out to Chad with full confidence of having orders signed and of leaving 5 men behind for a long stay in Chad."
However all 7 experts returned within 2 weeks and the Managing Director of Armadillo reported to the Chief that the Government of Chad had changed its mind and did not wish to proceed. The intermediary between the President of Chad and the Chief produced to the Chief a letter from the President of Chad dated 15th October 1980 and reported that Chad had been able to obtain equipment from elsewhere.
The letter of 15th October 1980 proposed a fundamental change in the Agreements, but the Chief on behalf of Sogal and Flintgrange rejected his request in his reply of 20th October 1980 and insisted that the Agreements were not performed by Chad in any way, despite Sogal's and Flintgrange's subsequent attempts at mediation through the offices of the Government of Nigeria. The Chief gave this oral evidence:
"When it became evident that Chad was not going to go ahead with this contract, I approached the Nigerian Government to act as my intermediary to try and settle the dispute. This was after October 1980. The President of Nigeria asked for the original of Loan Agreement in order to enable him to speak to his counterpart the President of Chad, and the original Loan Agreement was accordingly sent to him. The President's attempt
