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Sudan: International investing land grab

NewsNotes, March-April 2009

The January 9 issue of the Financial Times (FT) reported that a U.S. businessman, Philippe Heilberg, a former Wall Street banker and chairman of New York-based Jarch Capital, has secured a vast tract of “extremely fertile” land in southern Sudan from Gabriel Matip, eldest son of Gen. Paulino Matip Nhial, Deputy Commander-in-Chief of the Sudan People’s Liberation Army (SPLA). The political stakes and moral ramifications of this acquisition are high.

According to a Jan. 12 Reuters article, Heilberg expects high returns from the approximately 400,000 hectares of land in Mayom county and anticipated Jarch being involved with the land for “decades.” Jarch said in a statement that agriculture in southern Sudan is exempt from U.S. sanctions provided that the Khartoum government does not have any interest and no imports or exports pass through nonexempt areas. Jarch said it will only deal in southern Sudan.

FT reported that Heilberg’s company “counts on its board former U.S. State Department and intelligence officials, including Joseph Wilson, a former ambassador and expert on Africa, who acts as vice-chairman; and Gwyneth Todd, who was an adviser ... at the Pentagon and at the White House.”

Under the deal, Jarch has agreed to lease the prime farm land and buy a 70 percent interest in South Sudanese company LEAC for Agriculture and Investment Co., Ltd. LEAC has the right to grow cereals, oil seeds, vegetables, fruits and flowers and can process these products for both local and export use. (Reuters)

Prior to starting his own companies, Heilberg worked for American International Group (AIG) during the 1990s. He was a partner in the commodity division of AIG called AIG Trading Group (AIGTG). The commodity division focused on foreign exchange, metals (both precious and base), and energy trading.

FT continues, “The deal is a striking example of how the recent spike in global commodity food prices has encouraged foreign investors and governments to scramble for control of arable land in Africa, even in its remotest parts.

“Laws on land ownership in South Sudan remain vague, and have yet to be clarified in a planned land act. For this reason, some foreign experts on Sudan as well as officials in the regional government, speaking on condition of anonymity, doubted Mr Heilberg could assert legal rights over such a vast tract of land. The deal is second only in size to the recent lease of 1.3m hectares by South Korea’s Daewoo from the government of Madagascar.

“Mr Heilberg is unconcerned. He believes that several African states, Sudan included, but possibly also Nigeria, Ethiopia and Somalia, are likely to break apart in the next few years, and that the political and legal risks he is taking will be amply rewarded.

“‘If you bet right on the shifting of sovereignty then you are on the ground floor. I am constantly looking at the map and looking if there is any value,’ he said, adding that he was also in contact with rebels in Sudan’s western region of Darfur, dissidents in Ethiopia and the government of the breakaway state of Somaliland, among others.

“The company was embroiled in a dispute with the South Sudan government over its claims to exploration rights for oil.

“Mr Heilberg said Jarch had no expertise in agricultural development but would be seeking joint venture partners to cultivate the land, which is in one of the remotest parts of Sudan, in a region bordering the Nile River but with no tarred roads.”  

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