Dubai: Djibouti has rescinded Dubai ports operator DP World’s concession at Africa’s largest container terminal and launched arbitration proceedings over alleged corruption.

The government said it had filed for international arbitration on the award to DP World of a concession to operate Doraleh Container Terminal, and hoped to have the annulment confirmed and receive damages for losses incurred from the conduct of the world’s third largest operator.

DP World, controlled by the Dubai government, denies the allegations.

The move comes against the backdrop of a government investigation into the activities of Abdourahman Boreh, Djibouti’s former ports and free zones authority chairman, following claims he channelled funds and contracts to companies he managed.

Djibouti has launched legal proceedings seeking $150 million from Boreh in London, Paris, Dubai and Singapore. A trial is expected to start in London in mid-2015.

Boreh, who has lived in exile since 2008, has submitted a defence in which he denies these allegations, describing the proceedings as a politically motivated attack launched by President Esmail Omar Guelleh, whose family has controlled Djibouti since independence in 1977.

The government said its investigations had recently revealed evidence indicating that DP World “paid bribes and gave other financial incentives to Mr Boreh while he was negotiating the Doraleh Container Terminal Concession Agreement with DP World, as well as afterwards”.

The statement said Boreh was appointed as the government’s representative in negotiations, but that “the resulting agreement unfairly favoured DP World”.

“We reject the allegations made and will vigorously defend our position during the arbitration procedure,” said DP World, a unit of the government-owned Dubai World conglomerate.

DP World will continue to operate the terminal throughout the tribunal proceedings. The company expressed disappointment over the dispute, saying it had invested significantly in Djibouti over the past 14 years.

The loss of the Djibouti operations, if confirmed during arbitration, would be its second loss in the strategic Horn of Africa region, reducing the ambitious company’s regional footprint. In September 2012, DP World ended operations at Aden’s container terminal in southern Yemen after “amicably” divesting its stake in the Indian Ocean port.

The divestment came after Yemeni officials accused DP World of failing to meet its contractual investment obligations at the port.

— Financial Times