VZCZCXYZ0000
RR RUEHWEB

DE RUEHPL #0316 2611012
ZNR UUUUU ZZH
R 171012Z SEP 08
FM AMEMBASSY PORT LOUIS
TO RUEHC/SECSTATE WASHDC 4171
INFO RUCPDOC/USDOC WASHDC 1233
RUEHNR/AMEMBASSY NAIROBI 2998

UNCLAS PORT LOUIS 000316 
 
SIPDIS 
 
AF/E FOR MARIA BEYZEROV 
 
E.O. 12958: NA 
TAGS: ECON ETRD EFIS ELAB PGOV SE
SUBJECT: WHERE'S THE TUNA?  LEHMAN BROTHERS' BANKRUPTCY AND PIRATES 
AFFECTS SEYCHELLES 
 
¶1. SUMMARY: Concerns over the state of the Seychelles tuna industry 
rose in the wake of news of more piracy in the Indian Ocean and the 
bankruptcy announcement of Lehman Brothers, a shareholder in one of 
Seychelles' largest seafood operations.  While recent pirate attacks 
have everyone's attention, not all parties are worried that the 
Lehman Brothers news will have a significant impact.  END SUMMARY. 
 
--------------------------- 
LEHMAN BROTHERS BANKRUPTCY 
--------------------------- 
 
¶2. In early 2006, Lehman Brothers created and led an investment 
consortium called Marine World Brands (MWBrands) in the purchase of 
Heinz's seafood business, which included commanding shares in four 
leading European seafood brands, and related canning and processing 
factories in Ghana, Portugal, France, and Seychelles.  The 
Seychelles facility, Indian Ocean Tuna Company (IOT), is currently 
60 percent owned by MWBrands and 40 percent government owned.  As 
the head of the MWBrands investment consortium with a controlling 
share of 18 percent (the remaining 82 percent is said to be held by 
undisclosed institutions located mainly in the U.S.), Lehman 
Brothers has a large stake in the largest nongovernment employer in 
the Seychelles. 
 
¶3.  According to contacts within IOT, the September 15 announcement 
of Lehman Brothers' bankruptcy caused widespread concern among lower 
level and middle management employees.  A subsequent conversation 
with Joe Madnach, Chief Financial Officer of IOT, confirmed this, 
but Madnach reassured ECONOFF that upper-level IOT management is not 
particularly concerned about Lehman Brothers events affecting 
operations.  In addition to IOT's current profitability and 
performance, Madnach said the structure of ownership, which limits 
Lehman Brothers' financial impact on the company, assuages any 
concern IOT has about Lehman's bankruptcy. 
 
¶4.  Madnach further noted that MWBrands' overall performance is too 
good for it to be dissolved and offered that, although no official 
communiqu has been released, the most likely option he envisions is 
a reallocation of Lehman's 18 percent share (in MWBrands) and 
appointment of a new firm to head the consortium.  Madnach thinks 
this will have minimal effect on operations. 
 
¶5. Opposition leader Wavel Ramkalawan and his Seychelles' National 
Party, however, are concerned over the fall of Lehman Brothers. 
Lehman Brothers is not only tied to the Seychelles economy through 
IOT, but also issued and backed 200 million USG worth of bonds in 
2006 to service Seychelles' external debt and another 30 million USG 
to fund interest on that initial loan.  Seychelles' recent credit 
downgrade by two of the three leading credit agencies (Standard & 
Poors and Moodys) also contributed to opposition concern.  In a 
September 15 meeting with the DCM, Ramkalawan said the issue would 
be raised in Parliament because the public needs to know.  On 
September 16, Finance Minister Danny Faure answered the opposition's 
parliamentary question by downplaying the effects of Lehman 
Brothers' bankruptcy on the Seychelles economy. 
 
--------- 
PIRATES! 
--------- 
 
¶6.  While both IOT and the Government of Seychelles are downplaying 
the effect of Lehman Brothers' bankruptcy, both parties, as well as 
the Seychelles public-at-large, seem to be worried about the 
problems of recent piracy.  Many ships registered in Seychelles 
returned to Port Victoria this week after attempted attacks on the 
Drennec, a French tuna vessel, and other ships by Somali pirates. 
These ships are refusing to leave port until their safety concerns 
can be met. 
 
¶7.  In a September 15 conversation with Ambassador Cabrera, Indian 
Ocean Tuna Commission (IOTC) Executive Director Antonio Anganuzzi 
confirmed that many boats have halted operations temporarily due to 
attacks.  Post contacts estimate that there are thirty private boats 
docked in Port Victoria.  IOT Finance Director Madnach told ECONOFF 
that while these private boats are not linked to IOT, their refusal 
to leave Port can affect operations since the ships want to offload 
and IOT has a limited 7000 tons storage capacity for offloading. 
 
¶8. On September 16, Minister of Environment Joel Morgan presided 
over a meeting of stakeholders affected by pirate attacks to discuss 
next steps.  At that meeting, Port Victoria was offered as a "safe 
haven" to ships and port facilities were offered to regional armed 
forces to assist in concerted efforts to fight the pirates.  In a 
meeting with the DCM earlier that day, Foreign Minister Patrick 
Pillay said he felt the U.S. military would be a major stakeholder 
in the effort to ensure ship safety in their waters. 
 
CABRERA