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Kuwaitis fume at $2.2b payment to Dow Chemical

Amount was compensation for pulling out of the venture

Gulf News

Kuwait City: Kuwaiti media and politicians Wednesday fumed at the payment of $2.2 billion to US giant Dow Chemical as a penalty for scrapping a joint venture and called for holding those responsible to account.

State-owned Petrochemical Industries Co (PIC) said on Tuesday it has reached a final settlement with Dow Chemical to pay around $2.2 billion and the US firm said it has received the amount.

In a brief front-page edit titled “a company hunts a state,” the liberal Al Qabas newspaper demanded a strong action against those responsible for the failure of the joint venture.

“Kuwait has lost a suspicious deal and is now paying the price ... A mistake in procedures, in the deal and in the cancellation has cost the state billions” of dollars, said the paper.

“There are people responsible for this and these must be held to account,” the daily said.

PIC said in a statement that the amount did not include $300 million of interest for delaying the payment awarded a year ago.

Last May, the International Chamber of Commerce acting as an arbitrator granted Dow Chemical around $2.2 billion in compensation for Kuwait pulling out of the $17.4 billion venture.

In December 2008, the Kuwaiti government scrapped the deal between PIC and Dow to create a petrochemicals joint venture due to pressure from opposition MPs citing the global financial crisis.

Under the deal, PIC was to pay $7.5 billion to form a petrochemicals firm known as K-Dow.

Head of parliament’s financial committee MP Yussef Al Zalzalah said in a statement published in the local media the scrapping of the deal was a “major mistake” and insisted that those responsible for the loss must be punished.

“It is painful to see Kuwait losing this amount because of a deal made wrongly, managed wrongly and which ended wrongly,” MP Adnan Al Mutawa told Al Watan newspaper. “Still, all those connected to the deal remain in their posts.”

Former opposition MP Riad Al Adasani held the government responsible for the whole issue.

“The Dow penalty is a crime against Kuwait and a squandering of public funds ... The government is responsible for the consequences of scrapping the deal,” Adasani wrote on Twitter.

The parliament elected in December has asked its public funds protection panel to investigate the implications of signing and then cancelling the deal with Dow. The panel has not yet completed its probe.