Clickable Note in French to Dr. Gahiga: Mes Hommages
Transnational Research Associates
A B S T R A C T
"Corporate Diplomacy in the Third World" examines the covert machinations of our nation's most privileged executives who are positioned to influence expenditure of hundreds of millions of dollars, in conjunction with career diplomats and powerful political appointees. The virtually limitless corporate power well within reach of multinational firms in Third World settings is shown to be abusive, deleterious and corrosive in relation to both the interests of the United States and the Less Developed Countries.
Management errors are highlighted and financial crises elucidated. Specific data are furnished, supported and confirmed throughout this article, shedding light on the morally ambiguous roles of major historical figures such as Larry Devlin, former CIA Station Chief, Retired General Thomas Hayes, and Former U.S. Ambassador to Zaire, Sheldon Vance, all of whom interacted with dictatorial, banking and corporate interests, culminating in the ill-advised construction of the One Billion Dollar Inga-Shaba Transmission Line, extending from the mouth of the Congo River to the copper-rich region of Shaba, 1700 kilometers distant.
The Line was initially considered a strategic asset by many, but has been proven to be a serious financial and environmental liability in light of incessant civil unrest, instability and fiscal insolvency in this exotic land of intrigue and mystery, dubbed by Joseph Conrad, The Heart of Darkness.
Part I: Creation of the Consortium
Strengthened by a century of unbridled internal economic growth, industrialization and technical development, the United States, one of two world superpowers endowed, in the aftermath of the Second World War, with unfathomable wealth and influence, was eager to turn its attention to the Less Developed Countries of Asia, Africa and Latin America. The nation's motivations, in so acting, were seldom altruistic, generally quite self-serving, and invariably strategically or militarily focused.
Unlike the collectivist economies of the Soviet Union, the Eastern Bloc, People's China, and many Third World Nations, the U.S. private sector bristled with potential, featuring industrial and logistical capabilities widely thought to be unparalleled in Post-War Europe.
Among the scores of multinational firms representing America's internationally projected industrial might figured Morrison-Knudsen Company, Inc., a monolithic entity, founded in 1912, immersed in a plethora of pursuits, ranging from aircraft and locomotive maintenance to hydroelectric turbines and massive mining operations, headquartered in Boise, Idaho.
Morrison-Knudsen International, a then fledgling subsidiary of Morrison Knudsen Company, having drawn heavily on the Mother Firm's 7000 employees, had been active in the overseas sector prior to the Vietnam War, yet rose to prominence as an integral component of the construction consortium, RMK-BRJ, formed to design and build the elaborate air bases at Tan-San-Hut and Da Nang.
Additional logistical and engineering tasks throughout Vietnam, particularly in the Mekong Delta, ensuring security for the capital, Saigon, were assigned to the MKI management team operating often as Prime Contractor within the Consortium.
This mechanism had characterized the modus operandi of MKI for several decades. During the early 1950s, well before their militarily oriented endeavors in Vietnam, MKI had also formed a Consortium in Morocco, Atlas Constructors, the principal objective of which was to design, develop and build aerodromes, hangars, runways and ancillary facilities in the then strategically vulnerable sector of the Cherifien Kingdom, not far from Agadir.
Astute executives realize that legal shielding of the Mother Firm is achieved through prudent juxtapositioning of a shock-absorbent entity, itself temporary in nature and immune usually by presidential decree, royal prerogative or strife-related privilege. These conditions could never coalesce in the United States or in other industrialized democracies, where harshly imposed legal remedies, professional malpractice suits and nine-digit settlements are common in corporate circles.
While pre-feasibility studies, engineering support, logistical capabilities, revolving credit facilities, and administrative expertise can be drawn from the home-office, the Consortium is a technically insulated operation, pursuing specific objectives in relation to the host country's requirements and specifications. Further, it is responsible only to the host government in terms of acting within local legal, managerial and fiscal parameters.
In nations where laws are lax, subject to corrupt practices, or fundamentally unenforceable, the advantages which accrue to a properly structured Consortium are enormous.
While labor unions in any given Third-World host country are a minor factor, they can be silenced quite readily , as can judicial authorities, through sweeping mandate obtained surreptiously by Management from any compliant Magistrate, Deputy Minister, Parliamentarian or Military Officer. Government imposed wage and benefit scales are pre-set, subject to exceptionally narrow ranges of flexibility, plus or minus 14% usually, in lands where inflation frequently attains, as in Zaire currently, 6000% per annum, issuance of "New Zaires", the latest currency, notwithstanding.
In light of MKI's now highly developed strategic posture, consisting of the "shielded consortium, cost-plus" contractual vehicle, adopted for most of its overseas projects dating back to experiences during the Second World War, when shipbuilding was a major focus of activity largely in the American Trust Territories of the Pacific, the Corporation was assuredly well positioned, decades later, in the 1970s and 1980s, to embark on new projects, utilizing the same time-tested defensive measures and structural mechanisms which had resulted in profitable, efficient and successful operations elsewhere.
In 1973, then Retired General Thomas Hayes, employed as an advisory consultant for MKI's potential projects, bid submission policies and contract-leads, informed the Corporation's Boise Headquarters, and the MKI Liaison Office in Washington, D.C., of a prospective client in Equatorial Africa who would be willing to encourage American involvement in a major undertaking, considered socio-politically controversial, but economically and ideologically vital to U.S. and host-country objectives and interests.
General Hayes had enjoyed a close, mutually adulatory relationship with President Mobutu Sese Seko, whose accession to power had been linked to CIA operations in the mid-1960s, subsequent to the assassination of political arch-rival Patrice Lumumba, and the figurative emasculation, or worse, of Joseph Kasavubu, Pierre Mulele, Moise Tshombe and Antoine Gizenga.
The immense wealth of the former Belgian Congo, known shortly after Independence as the Democratic Republic of the Congo, and ultimately as Zaire, had been coveted by Europeans for generations. However, this concentration of militarily and industrially critical resources had come to the forefront of consciousness in the United States only during World War II, when strategic minerals, including the actual uranium used for Nagasaki and Hiroshima, were exported via N'Djili, the principal airfield in Kinshasa, formerly Leopoldville, which featured Central Africa's most impressive run-way, designed and constructed specifically for transhipment of war-related goods and materials.
Indeed, the United States, in the early 1970s, acting through contacts such as Devlin, Hayes, and Mobutu, initiated the process of involving American industrial power in a potentially rewarding Third World context.
Instrumental, as well, in the initial stages of project planning -- which reportedly by-passed standard bidding procedures to the chagrin of Belgian, French and Italian Firms -- were other influential individuals whose participation in early negotiations was paramount. Their roles were as crucial to lubrication of channels as was the catalytic, and heretofore unacknowledged, interaction of former CIA Station Chief Devlin and Ambassador Hinton, for example, representing the highest echelon of 'dubiously authorized' influence.
Figure I, below, portrays in graphic format primary patterns of communication which were established, at informal gatherings in Binza, in the 1973-1974 time frame, prior to actual finalization of the Inga-Shaba Project's prime contract, financing or mobilization phase.
DEVLIN-------> MOBUTU<--------- HAYES
ZAIRIAN DEFENSE MINISTRY / BISENGEMANA / VANCE / HINTON
STATE DEPT / GAHIGA / MINISTRY OF ENERGY / MKI-BOISE / MKI-WASH.
SNEL / CIS-ZAIRE
(Chart Not Yet Properly Adapted for On-Line Presentation)
If General Hayes and Lawrence Devlin were the principal American liaisons, whether in a sub-rosa, ex-officio advisory capacity, as was the case of Mr. Devlin, or in a visible capacity, as was the case with the General, then President Mobutu, himself, the primary host-nation representative, whose personal decisions became tantamount to binding decrees, served, obviously, as the sole and ultimate authority among Zairians.
Nonetheless, indispensable, behind-the-scenes negotiations which both teams relied upon prior to the "ultimate decision" were handled astutely by trusted members of the Zairian hierarchy, on the one hand, and by American "corporate diplomats", in a manner of speaking, on the other.
President Mobutu's Principal Counsellor, and in the 1970s Prime Minister for a brief interval, prior to the periodic "cabinet reshuffling" well-known in highly centralized governmental models, Citizen Bisengemana was a personage of power, dignity and erudition. His influence swept across several Ministries; his word was virtual Law; his advice and counsel heeded. This man, whose American equivalent might well have been John Sununu, Chief of Staff during the Bush Administration, went unchallenged in the halls of Mount N'Galiema.
Bisengemana was a direct link to The Presidency, and was essential for purposes of relaying information to the Chief of State, filtering up the chain of command from the well-connected Dr. Kari-Ngabo Gahiga, President of a market research organization known as TransAfrika, retained by Constructeurs Inga-Shaba (the then nascent consortium), MKI's surrogate. The Principal Counsellor's hierarchical authority over the Energy Ministry was also instrumental in gaining the unflinching cooperation of this entity in later stages of project planning, namely throughout the pre-feasibility and feasibility phases.
Lastly, SNEL, The National Electrical Utility, actually MKI's client, fell technically under the authority of the Energy Ministry, but enjoyed considerable autonomy, since Nzeza Makunsi, the President-Delegate-General of SNEL, felt secure, as did his successor, Munga Mibindu, in appealing directly to the President of the Republic in instances of crisis or conflict.
Turning to primary members of the U.S. team of diplo-corporate players, we find, in addition to Larry Devlin and General Hayes, other figures of note.
Dean Roesch Hinton, former Ambassador to Guatemala and Chile, implicated in the overthrow of the left-leaning Guatemalan regime and, later, of the Allende Government in Chile, was appointed Ambassador to Zaire in the 1974 time frame.
While he was relatively tranquil in the initial stages of his mandated term in Kinshasa, and participated in many of the duties normally expected of a plenipotentiary diplomat, commendably representing his country at such functions as the ceremony marking assembly of the First Tower of the 1700 Kilometer Inga-Shaba Transmission Line, held in sweltering heat at Gombe-Matadi in Bas-Zaire during November of 1974, he took advantage of such occasions to persistently wedge himself into the relationship between the MKI Consortium (CIS) and the Zairian Government.
This hardline political stance, foisting American ideology on an African Government preparing literally to adopt the teachings of Kim-Il-Sung, combined with the fast-moving, arguably Soviet-inspired events of June 1975, got Ambassador Hinton, a decorated American career diplomat, quite dramatically thrown out of Zaire, on the heels of an "abortive coup", responsibility for which was summarily assigned to him by the Mobutu Regime. Declared "persona non grata" and given 48 hours to depart, Ambassador Hinton created a near-crisis situation in relations between the U.S. and Zaire, daring to call into question the "integrity" of President Mobutu, who, admittedly, had been responsible for the deaths of tens of thousands of Zairians and the impoverishment of tens of millions more.
Americans, during this period were warned by the official daily newspaper, ELIMA, that, "If so much as a hair on the head of our Guide is harmed, not a single American will leave Zaire alive."
In the period during which MKI was negotiating implementation of the Prime Contract, however, Hinton interacted with former American Ambassador to Zaire, Sheldon Vance, retained by MKI as a consultant, with General Hayes and with high-ranking MKI functionaries, playing a significant role in the laying of a foundation for finalization of arrangements financially, logistically and administratively.
Ambassador Hinton's interests, it has been asserted, were primarily the shoring up of an American corporate presence in Zaire, a strategic nation, which could under no circumstances fall into the hands of the Soviet Union, hovering in the wings across the river in Congo-Brazzaville. In the USSR's quiver of arrows were to be found not only the Socialist Regime of Denis Nguesso, but also Castro and the Angolan MPLA, all a threat to stability in Zaire.
Sheldon Vance, former Ambassador to Zaire, had many useful and powerful contacts in Kinshasa's Ministries. He was well acquainted with the "nomenklatura", the pool of loyal talent from which Mobutu periodically drew his Ministers, Vice-Ministers and Commissioners.
Indeed, Mr. Vance, in the final stages of his mandate as Ambassador, had also reportedly interacted officially with General Hayes and U.S. Corporate officials, holding out hope for increased industrial and construction activity for American firms in this exotic land of intrigue and mystery.
A cursory glance at the Zairian Defense Ministry is in order. This crucial arm of Mobutu's government, providing enforcement for severe domestic policies somewhat more effectively against his internal civilian population, than against his militarily prepared external foes, occupied an ambivalent role in Pre-Consortium Days. Mobutu personally assumed the Defense Portfolio, serving as Head of State and Defense Minister. His most trusted Generals were members of his own tribe, the Mongo ethnic grouping from the M'bandaka area.
However, one well-positioned officer, in particular, Colonel Umba, interacted frequently in the planning stages, and thereafter, with CIS. Curiously, within 18 months of his cooperation with the Consortium, he was accused of lese-majeste, high treason. Colonel Umba, a European-educated career officer, erudite, cosmopolitan and intellectual, had been implicated in the June 1975 coup attempt, blamed on the United States, along with 10 other high-ranking FAZ officers, and was summarily shot.
Primary stage props having been duly positioned by key-players in the formulation of final arrangements for the structuring of Constructeurs Inga-Shaba, events moved swiftly.
Early in contractual negotiations, the pre-feasibility stage and preliminary financing efforts, MKI's Washington Office, interfacing with Boise, provided professional input and expertise for the vital connections required in New York, Chicago, Boston, and European financial circles. As plans were drawn up from a technical perspective, administrative efforts progressed as well. The multi-pronged approach which MKI had perfected on prior contracts was put to best use, and all elements of the Inga-Shaba Project fell, virtually without obstacle in the early days, into place. The first Americans arrived on site in late 1973.
The original cost estimate for this 1200 mile-long Extra High Voltage Transmission Line, linking the Inga Dam Complex at the mouth of the Congo River to the copper-rich region of Shaba, was on the order of $275 million dollars. Featured in this Gargantuan scheme were two converter stations, state-of-the-art thyristor conversion technology (provided by the Swedish), more than 8,000 pylons, a line-carrier telecommunications system, four switching stations, access roads, administrative quarters and ancillary facilities. Enormous quantities of power, rated at 550KV in the first phase and 1100KV in the second, were envisaged.
It is obvious that MKI alone, diversified as this monolithic entity was, would not have been capable of providing all services called for under such an enormous prime contract. Logistical assistance and technical expertise would have to be pooled from a variety of sources. Therefore, the concept of a consortium was, not only to shield the Mother Firm from possible legal recourse under International Law, but to maximize participation of sub-contractors at less than American wage scales. As a result, profits, net of payments to foreign sub-contractors at modest rates, could be handsomely enhanced for the Home Office.
In light of these considerations, the Consortium, Constructeurs Inga-Shaba, physically housed in a walled-in compound, featuring a high-rise apartment building, shops, a company commissary, helipad, auxiliary offices, warehousing space and independent generator and emergency water systems, all located in an industrial suburb of Kinshasa, known as Kingabwa, ensconced among Belgian, Greek, and French owned Breweries, Tobacco Processors, Coffee Roasters and a variety of Mechanical Shops and Garages, began its complex assignment in early 1974, an assignment, originally scheduled to be completed in three or four years, that would stretch into the eight or nine year range.
The composition of the Consortium, which remained constant until virtual completion of construction activity, can be summarized essentially as follows:
Thus, technical and financial groundwork having been prepared in the U.S., with tangential input from the Zairian Government, actual Mobilization and Construction commenced in early 1974.
Part II: Project Financing, Mobilization and Construction
If the concept of constructing an infrastructural asset as significant as the Inga-Shaba Line was politically controversial, logistically challenging and economically dubious, the actual financing of the Project was equally so.
Ostensibly, MKI contacts in major banking sectors led to initial interest on the part of American Bankers. When it was learned that, as is the case with most overseas U.S.-sponsored project activity, EXIMBANK would secure, as guarantor of last resort, the entirety of the Loan Package, in concert with Swedish and Italian Government backing to a significantly lesser degree, the private sector leapt enthusiastically aboard.
For its part, MKI was aware from the outset that the standard 20% incremental contingency, cost-overrun provision , as well as cost-escalation formulae, were to be included in the original estimate submitted to the client, SNEL, and foresaw, consequently a figure on the order of 5 to 7% in profits. Given the initial bid of 250 Million Dollars, plus 20% as explained, the approach adopted represented a minimal theoretical profit, for a three or four year project, of between 15 and 21 Million Dollars, an attractive prospect for the Boise-based firm, whose stockholders applauded from the sidelines. Inasmuch as MKI had, at any given time, up to 80 massive projects around the world, the enormity of revenues generated, after costs, can be readily appreciated.
A simplified overview of basic financing sources, channels and relationships is represented schematically in Figure II, below:
Swedish Gov't / U.S. Treasury /Italian Gov't
U.S. Guarantor / EXPORT IMPORT BANK / ASEA-Ludviga /Eurodollar A & B Funds
BUREC / IMF /Sadelmi-Milano
Copper Revenue / PRIVATE BANKING CONSORTIUM
BOZ / Fed-NYC
Manu-Hanover / Chicago Continental / FNCB / FNB
Sadelmi Revolving Credit
[Debt Service] / [$1M/mo.+ Local]
MKI-KIN / CIS / Revolving Credit MKI-Boise
CIS Management / Credit Facility / Procurement
ASEA-Kin / Sadelmi / GE /IECO
(Not Yet Properly Adapted for On-Line Presentation)
When the Government of Zaire placed its signature on the Order to Proceed, a complex mechanism was triggered, allowing IECO to finalize its engineering studies, ASEA and GE to begin technical arrangements, in accordance with the master construction schedule, and CIS to commence the mobilization phase. Funds flowed directly to MKI-Boise for procurement purposes, with Manufacturers Hanover generally disbursing draw-downs when scheduled or required. Equipment, personnel and logistical costs were initially handled by the Boise Office, with increasing weight, for obvious reasons, being shifted to CIS as start-up proceeded.
Figure II indicates, in phantom, the major guarantors positioned to provide assistance should defaults on debt and debt service become too onerous for the Banking Consortium to absorb or renegotiate. These institutions provided the perhaps false sense of confidence required to prompt the private and semi-private sectors to finalize the master loan agreement.
As costs escalated, over the nine-year life of the project, U.S.Government agencies such as the Bureau of Reclamation confirmed (1) the quality of work performed in Zaire, and (2) the amounts required to continue project activity as a myriad of factors impacted progress. The Bureau of Reclamation, a government watchdog, in effect, maintained its autonomy rather effectively, with the exception of one employee, a Zairian, which is unusual, who was offered employment in Boise's Computer Department, a clear violation of conflict-of-interest and ethical standards.
Generally, BUREC's American employees, competent engineers, seemed objective and forthright in their evaluation of the quality of CIS work in Zaire. It cannot be forgotten, however, that massive sums of money were available from a variety of "contingency accounts", in either Zairian Currency or U.S. Dollars, and could easily have been routed unethically to any individual whose surface integrity would otherwise appear intact, unless he or she chose to depart precipitously. The Tax-Exempt Commissary at the CIS Compound in Kingabwa was also reportedly the focus of occasional probes and, frequently, the appearance of impropriety surfaced.
In spite of the foregoing peccadillos, major project funding flowed from the U.S. Banking Consortium to MKI and CIS, with the latter disbursing payments for sub-contractors.
Figure II portrays the normal flow of funding, as indicated by simple arrows; nonetheless, it must be recalled that, in light of Bank of Zaire defaults, which often triggered cross-defaults involving other banking groups and institutions, the flow of capital was sometimes altered dramatically, curtailed totally, or reliant on MKI's credit facility, serving as a temporary buffer.
It would be valid to observe that uninterrupted flow of funding for the Inga-Shaba Project was sensitive to fluctuations in socio-political events, as well as to perception abroad of the degree to which Mobutu's Government was willing to conform to international law and relevant banking regulations. In light of the mercurial decisions and arbitrary pronouncements of Citizen Namwisi, Finance Minister, whose influence is not portrayed on Figure II, although it would be interposed between the source of copper revenue and the Bank of Zaire, there were frequent crises in financing and availability of capital for project advancement.
These impasses were generally negotiated, in their preliminary stages by intervention at the level of Citizen Djamboleka, Secretary of Finance, and later with the Minister himself, who usually deferred to the nation's highest ruling body, The Executive Council, chaired by the Prime Minister.
Failing payment or arrangement of new lines of credit in any of the currencies used by the Project, CIS Management consulted the U.S. Embassy and diplomatic leverage was exerted. This may not seem unusual; however, bargaining was intense and the stakes involved were considerable. Zairo-American trade relations, IMF and World Bank Grants, infrastructural capital assistance, foreign aid, cultural and educational packages were all held in abeyance, at various times, until monies flowed from Zairian coffers to either Banking Consortium or CIS accounts. Frequently, the Zairian Government retaliated in kind, by sequestering funds in the Bank for International Settlements until their demands were met. As tension rose, the Deputy Chief of Mission at the U.S. Embassy, with whom CIS dealt in intermediate stages of most "crises", would consult the Ambassador, in the early days, Hinton, later Oakley, and in the final stages of the project, Constable, who would petition the Zairian Chief of State after consulting Washington for instructions. MKI's Stateside operations, of course, had already laid the groundwork there, thus ensuring that a rather rough ballgame was to be played at the highest levels. Slowly, cash would begin to flow once again, as Memoranda jogged Bank of Zaire functionaries into action.
During the nine year life of the Project, a wide variety of events influenced decisions, progress and policies. In the early stages of mobilization, which were frenetic and high-pressured, there were massive deficiencies in the hiring process. Incompetency among newly hired employees was frequent. Plush appointments were given career MKI employees within the context of the Inga-Shaba Project, even though their skills were outmoded or irrelevant. Figure III incorporates a random sampling of employees hired, indicating insufficiencies, and estimated time on the job:
REPRESENTATIVE SELECTION OF TEN MISHIRED U.S. CITIZENS, 1974-1984
Point of Hire / Assigned Position / Duration / Reason for Termination
1. San Francisco, Ca. / Translator / 3 weeks / Sex-related Incident
2. Washington, D.C. / Jr. Engineer / 2 weeks / Drug Offenses
3. Guadalahara, Mexico/ Admin. Asst. / 11 months / Sexual Misconduct
4. Portland, Oregon / Exec. Secretary / 6 months / Incompetence, Attitude
5. Memphis, Tenn. / Warehouse / 24 hours / "One Look at Zaire"
6. Boise, Idaho / Secretary / 2 months / Tumor Misdiagnosed
7. Brussels, Belgium / Chief Engineer / 2 years /Professional Rivalry
8. Rochester, N.Y. / Technical Consultant / 2 months / Communication Barrier
9. Boise, Idaho / Project Manager / 9 months / Zairian Death-Threat (against wife)
10. Wheeling, W. Va. / Linemen (2) / 2 weeks / Sex-related Homicide
(Partially Adapted for On-Line Presentation)
Although the preceding Figure does not purport to represent a statistically significant sampling of mishired employees over the period indicated, it is nonetheless clearly reflective of the types of deficiencies and incidents which typified employee terminations throughout the mobilization and construction phases.
It will be noted that Mean Duration In-Country can be represented as M = 5.6 months, when the required employee contract stipulated 18 months minimum. A "defection" rate can be validly estimated at approximately 30% of the 2000 odd U.S. employees hired throughout the nine-year duration of the Project, or extremely conservatively 600 employees terminated prior to fulfillment of contractual obligations. Footnoted below is a reconstructed break-down of costs incurred per incompetent, disgruntled or criminally-involved employee, a figure amounting to approximately $26,000, multiplied times 600 such employees, resulting in 15.6 Million U.S. Dollars simply in unnecessary employee turn-over, charged to the client, SNEL, understandably loathe to pay, and ultimately absorbed by EXIMBANK and the U.S. Treasury.
Coupled with (1) the onerous costs of two Shaba Invasions, (2) the massive theft of Local Currency (referred to in Section Three of this paper, which was labeled an "inside job" by CIS reinsurer Lloyd's of London), (3) hidden graft, and (4) the egregious "fire-sale", loss or theft of the construction material, heavy equipment and supplies, captioned below:
this minor 15.6 Million Dollar personnel "item", assignable to the intrinsic ineptitude, socio-cultural bias and narrow-mindedness of MKI headquarters employees, steeped in nepotism and old-boy recruitment practices, added insult to injury, reflecting, at very least, on the alleged professionalism of the entire MKI-led operation, and its adaptability to Francophone Third-World settings.
It is not surprising, under these circumstances, that overall Project cost soared to more than 1.1 Billion Dollars by the time the internationally televised Tower Completion Ceremony was held in Kolwezi in 1982.
It is only just to recognize the professionalism of many CIS employees, some of whom sacrificed their health, families and lives for this Project.
It is, however, reprehensible that, while MKI Executive Vice- President Neal Spencer was shooting moose in the Northwest Territories, drawing down a solid Fortune 500 salary, his subordinates were mired in corruption, lethal rivalry, unethical transactions and carnal intrigue which would have made this good man blanche with Conradian horror.
As will be observed, the socio-ethical implications of the Inga-Shaba Transmission Line Project are as far-reaching as the financial defaults, cross-defaults and rescheduling efforts which, by fits and by starts, bailed out on-going project operations from the enthusiastic Order to Proceed to the whimper of Demobilization. Indeed, while hard-working family men and conscientious CIS employees were being demobilized, laid off, terminated and flown to their respective "U.S. Points of Hire", in keeping with the Reduction in Force underway, such was the cozy relationship between then Project Manager Jim Miller and Reagan Appointee Ambassador Bob Oakley that the latter's son, Tom, was actually hired preferentially to work for CIS on-site, ostensibly in exchange for an "undetermined favor" extended to the Project by the U.S. Embassy in Kinshasa, where unemployment soared beyond 70% and human misery was rife. As if to cement this relationship even further, he and his wife, Phyllis Oakley, dutifully attended the CIS Manager of Logistics' Commemorative Service held in 1982 on one of the Project's 70-meter barges, christened the "M/V Jack Langland." She later became a highly visible State Department Spokeswoman in Washington.
PART III: Crisis Management, Sociological Impact and Implications for Future American Project Activity in the Republic of Zaire or Under Successive Regimes
In Zaire, where conditions were volatile on all fronts, it would be fair to assert that daily crisis-management became an art form. Not only was the magnitude of this project conducive to a constant barrage of mini-crises, such as helicopter crashes, accounting discrepancies, medical emergencies, or even homicides, but crises with broader implications also plagued the very survival of the Project.
It would seem appropriate to review three significant crises, rather than to concentrate on the sensational aspects of day-to-day management, in the hope of exploring primary mechanisms and modalities which lead to resolution of such dilemmas. This approach may also best assist students of management who, doubtless, will be required to resolve similar issues, if assigned to future Third World projects.
Areas of primordial concern, for our purposes, are: labor-management relations, project financing, and logistical challenges.
The UNTZA (Union Nationale des Travailleurs du Zaire) was sub-divided into industrial sectors for purposes of representing the nation's labor force. The Electrical Sector, also embraced the Petroleum Industry, since both were Energy Related. A General Secretary was assigned to each such sub-division and visited work-sites throughout the capital (and nation) on a regular basis. Annually, negotiations were scheduled as a function of the Secretary's availability. The Belgians had instilled in Zaire's labor force the essential notions of dignity, decorum and wages commensurate with productivity and skill. However, twenty years after Independence, many of the finer points of Belgian Labor Law had been reformed, amended or modified by the Presidency.
Under the prevailing rigid military regime, of course, workers had no real bargaining power. Strikes and protests were routinely suppressed by brute force in Zaire. This state of affairs played nicely into the hands of CIS management which immediately recognized that power lay squarely in the hands of pro-regime elements, such as ANEZA (The National Association of Zairian Businesses, chaired by a Mobutu crony, Mbemba, owner of SCIBE-ZAIRE, a charter air-freight firm), the antithesis of the UNTZA.
Wage scales mirrored vaguely the Franco-Belgian model inherited from colonial days, featuring a SMIG, a Thirteenth Month Bonus and other typical European vestiges which provided for certain social benefits (prescription medicine, burial costs and school uniforms, for example).
Figure IV indicates the three major employee categories and prevailing wage ranges for each in the 1980-1983 time frame:
LABOR CATEGORIES AND WAGE SCALES IN THE REPUBLIC OF ZAIRE 1980 TO 1983
Labor Category / U.S. Monthly Salary Equivalent
Laborers (Unskilled to Skilled)................$11.00 to $45.00
Supervisors (Low to High Echelon)...............$30.00 to $65.00
Administrative (Non-Degreed to Degreed.........$40.00 to $150.00
Throughout the early 1980s, inflation levels had attained approximately 440% per annum. The bulk of the CIS workforce, as was the case throughout the Republic, was, of course, comprised of Laborers, many with seven or eight children. Naturally, wages of fifteen or twenty dollars per month were woefully inadequate to cope with the local cost of living, rising exponentially virtually weekly.
Discontent and unrest were frequent under such circumstances; theft was common; crime and bribery were encouraged under this scenario. Kitchen employees were thrown into the street by the U.S. Camps & Commissary Director for stealing so much as a quarter-pound of butter. This was the case of Abdull'ah, for example, who was terminated for cause (the 1/4 pound of butter); he was fortunate, however, since his family was in a position to support him for several months while he attempted to clear his reputation.
Annual Labor Negotiations focused on wages, benefits and promotion criteria. However, account had to be taken of the socio-political realities of Mobutu's Zaire, controlled surprisingly not so much by Mobutu who, at times, seemed to demonstrate some sympathy for his people (offering ambulances to the local hospital, named after his mother, Mama Yemo, and authorizing the occasional public-sector building, such as the Chinese-constructed People's Palace in Lingwala), but by such International Financial Institutions as the IMF, headed alternately, during pre-Project and Project years, by Blumenthal and Jubinville. Both the Government and the IMF imposed stringent limits on the amounts and percentages by which salaries could be increased.
Because of the narrow range of increases permitted Union negotiators, amounting to a maximum of 14% per annum applied to base salary figures, there was very little latitude for UNTZA union delegates. In fact, they could request enhancement of fringe benefits, press for the maximum raise, and convince their Members that a "victory" had been achieved. CIS Management was ecstatic, of course, since local currency was virtually available for the "mere printing" in Zaire (see Appendix B), although some accounting of local expenditures had to be enforced and tracked to comply with local regulations.
Essentially, labor, for purposes of this analysis, was at the mercy of management in Kinshasa.
The UNTZA Secretary General, assigned to the principal CIS worksite in Kinshasa, but with binding effect for line-camps and Project Sites all across Zaire, led elaborate negotiations, excelled at rhetoric, all of which was rendered bilingually by CIS Translators, and gestured theatrically. When the dust had settled, however, and the handshakes of fellowship and crafty winks had been exchanged, more than 2000 workers, with perhaps as many as 20,000 dependents, had been given a raise and benefit package that would be eroded completely by inflation in mere weeks. In spite of this obvious phenomenon, CIS Management, calling the shots surreptitiously on both sides of the table, found it necessary to "provide a small token" of their gratitude to the UNTZA National Secretary. In 1982, it consisted of a $180 electronic harmonica from Brookstone, a gadget which caught the fancy of UNTZA Secretary Issilonga who had literally bartered the futures, health and lives of 22,000 men, women and children, his own countrymen, to satisfy his materialistic and momentary urge to play the Pipes of Pan.
We turn to the second arena of concern which, left unattended, might have threatened the Project's overall welfare and integrity: the realm of finance. High finance has been touched upon in some depth. It was a treacherous world of threat and counter-threat, bluff and blush, thrust and parry. Yet, there was a less highly visible realm of sordid finance, as well, on a smaller scale where six digit sums, a mere bagatelle, were at stake.
The Accounting Department awoke one morning to find that five hundred thousand dollars in local currency had disappeared from the solid concrete vault during the night. A three foot hole had been bored in the vault from an adjoining compound. Guard dogs had been poisoned in the neighboring Compound (a Greek-Owned Garage), and all signs pointed to a major plot with inside knowledge of the timing, amount and whereabouts of the funds. Ultimately, Lloyd's of London refused to reimburse CIS, convinced of intracorporate complicity, and the Security Department compiled a compendious, but inconclusive report white-washing everyone. Ultimately, individuals plausibly connected to this incident began to disappear, through simple attrition, or through elimination. Appendix A speaks eloquently of the numbers of individuals associated with this case and other debacles, too frequent and detailed to enumerate, who paid eventually with their lives. High finance, therefore, was not the only stadium in which this sport was practiced.
Logistical challenges on this mega-project constitute still another massive sector of activity, fertile ground for lengthy discussion. Suffice it to say that, here too, boondoggles abounded.
Although many insightful and well-reasoned decisions were, of necessity, made during planning and execution of the construction phase of this mammoth undertaking, the Equatorial Rain Forest, Savannas and Rifts of Zaire proved to be worthy opponents.
Voluminous studies were made on methods of transporting heavy equipment, over-sized loads and massive quantities of supplies across Zaire, Angola, Mozambique and Zimbabwe, all plausible routes:
1. Sixty pages, and tens of thousands of dollars, for a study on the "lift capacity" of the Angolan Port of Lobito;
2. Frivolous Junkets to Beira in Mozambique to study routing patterns, political factors and shipping costs;
3. Unnecessary Meetings in Harare, Luanda, Lubumbashi and Dilolo.
Indeed, the deliberations of engineers, logisticians and transit specialists culminated in occasionally effective, but oft disastrous, decisions, costing hundreds of thousands of dollars.
ONATRA, the Zairian Office of Transportation, ultimately, and predictably, provided most of the valid answers. Citizen Kanyama, Director, was most obliging, as he replaced a distinguished, but aging Belgian Official with an impressive bleach-white handlebar moustache.
TEN RANDOMLY SELECTED PROJECT-RELATED DEATHS, 1974-1984
Position / Cause / Apparent Motivation/ Citizenship
1. Security Director / Heart Attack-Poisoning / Implicated in $500,000 theft / U.S.
2. Logistics Manager/ Induced Stroke / Heir Apparent to U.S. Project Manager / U.S.
3. Aircraft Pilot/ Unexplained Disease, Rapid Onset/ Only Competent Zairian Pilot / Zairian
4. Surveyor / Driving - Alleged Drunk / Possibly Involved in Pornography / U.S.
5. Shipper-Receiver / Run Over 3 Times by Volkswagon/ Covert Arms / U.S.
6. Peterbilt Driver / Loss of Control; Minimal Training/ "Accidental" / Zairian
7. Tower Assembler/ Safety Violation - Poor Training / "Accidental" / Zairian
8. Security Employee in Kolwezi / Civil Revolt Possibly Targeted / U.S.
9. Business Manager / Heart Attack / Possible Stateside Poisoning - Vendetta / U.S.
10. Prostitute / Scalded in Shower & Run Over by Pickup Truck / Sex-related Homicide / Zairian
BANK OF ZAIRE MONTHLY FOREIGN CURRENCY DISBURSALS
Nota Bene: These amounts were subject to privately negotiated adjustments, as Sozacom revenue fluctuated and other variables affected availability of foreign currency in Zaire's account at the Federal Reserve Bank of New York and elsewhere.
FOR THE PERIOD AUGUST 1982 THROUGH JUNE 1983, IN U.S. DOLLARS
1. Sabena Airlines ..............................................800,000
2. German Engraving Firm (National Currency) ....................200,000
3. MKI / ASEA (see Figure II) .................................l,000,000
4. Pharmaceutical Products: Ciba/Geigy, et al ...................650,000
5. Israeli & North Korean Arms Merchants ......................2,300,000
6. IBM (Equip. for SONAS, Treasury, Finance) ....................250,000
TOTAL MONTHLY REVENUE OF THE REPUBLIC: $5,200,000
About the Author
Clickable Interview Link Below
Executive Interview with Author
Art Madsen, M. Ed., served in Kinshasa as Chief Translator/Interpreter for the Inga-Shaba EHVDC Intertie Project for a period of five years, in 1974-75 and 1980-83. He interacted personally with the Zairian and American dignitaries mentioned in this article, and has acquired an in-depth, on-site understanding of covert American corporate involvement in Algeria and Congo-Brazzaville, in addition to Zaire.
His specialties have been Administration, French, Psychology and Investigative Research. He translated and published The Zairian Labor Code, The Congolese Five-Year Plan, plus Contractual Documents for the El Outaya Salt Refinery in Algeria, for industrial use, and has taught, lectured and appeared at news conferences and on television broadcasts in Zaire and Congo-Brazzaville.
He is currently conducting human rights research in El Paso / Juarez where he resides, monitoring conditions along the U.S./Mexican Border, in his capacity as Acting President of a small research firm based in the area.