Kuwait Admits: "We’re a Laughing Stock Now"

• Posted by ToddSullivan
• on January 8th, 2009

Like I said repeatedly, I don’t think Kuwait thought their decision to cancel the Dow Chemical (DOW) deal all the way through and are only now beginning to recognize the damage they have done to themselves.

From the Arab Times

MP Jamaan Al-Harbash on Tuesday asked his colleagues to conduct a thorough investigation on the Dow Chemical project, especially after the company announced its plan to take legal action against the state-owned Kuwaiti company which, sources say, might be asked to pay a fine of $2.5 billion for pulling out of the deal. Al-Harbash also urged the MPs to look into allegations that some people have earned commissions amounting to $750 million from the deal, conflict of interests, and unfair penalty clause. He also stressed the importance of determining the actual reason behind the decision of the Supreme Petroleum Council (SPC) to sign the deal only to withdraw from it later.

Proposing the formation of an investigative committee to look into the alleged violations, Al-Harbash stated “we have to find the truth to take the right decision on the issue. We must identify the people behind the violations and hold them liable for their acts as Kuwait has now become the laughing stock of the whole world due to this deal.”

No kidding…..

As for proof Kuwait still does not get it, Reuter reported yesterday,

“The state of Kuwait has undertaken all necessary measures to counter the case Dow Chemical is pursuing against KPC for not concluding a deal by Petrochemicals Industries Co with Dow,” al-Watan quoted Commerce & Industry Minister Ahmad Baqer as saying.

Baqer did not elaborate.

Several Kuwaiti officials have told Reuters that under the agreement Dow would need a court ruling proving that Kuwait had violated the deal to qualify for a break fee.

Dow is not suing for a “breakup fee” but for damages due to breach of contract as CEO Andrew Liveris stated several times over the last two days. The two are very different things. Dow only needs to prove monetary damages due to the Kuwait action (will be easy enough) to be awarded a settlement. Although I think the real reason for the suit is to force the deal.

Disclosure (“none” means no position):Long DOW
Visit the ValuePlays Bookstore for Great Investing Books

To see more posts on any of the companies mentioned in this article, enter their stock ticker symbol in the search box.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.