Kuwaiti politicians and media fumed Wednesday over $2.2 billion paid to US giant Dow Chemical as a penalty for the Gulf emirate scrapping a joint venture, and called for those responsible to be held to account.
State-owned Petrochemical Industries Co (PIC) said on Tuesday it had reached a final settlement with Dow Chemical to pay around $2.2 billion (1.7 billion euros).
The US firm said it has received the payment. Last May, the International Chamber of Commerce, acting as an arbitrator, granted Dow Chemical around $2.2 billion in compensation for Kuwait withdrawing from the $17.4-billion joint petrochemicals project.
In December 2008, the Kuwaiti government scrapped the deal after pressure from opposition MPs, citing the global financial crisis.
In a front-page editorial on Wednesday headlined “A company hunts a state,” the liberal Al-Qabas newspaper demanded firm action against those responsible for the joint venture failing.
“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, it said.
“There are people responsible for this and these must be held to account.”
PIC said in a statement that the amount of $2.2 billion did not include $300 million in interest for delaying the payment awarded a year ago.
Under the original deal, PIC was to pay $7.5 billion to form a petrochemicals firm known as K-Dow.
Yussef al-Zalzalah, head of parliament’s financial committee, said in a statement published in the local media that scrapping the deal was a “major mistake” and insisted that those responsible be punished.
“It is painful to see Kuwait losing this amount because of a deal made wrongly, managed wrongly and which ended wrongly,” Shiite 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 blamed the government.
“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 last 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 inquiry.
Independent MP Saadun Hammad, a critic of the oil establishment, told reporters that the probe panel will recommend that those responsible for the deal or who benefited from it should face court proceedings.
Islamist MP Khaled al-Shulaimi said “those who scrapped the deal or pressed for it to be cancelled should be held responsible”, while independent MP Abdulhameed Dashti said a “gang of thieves” which accepted what he called the “penalty trap” must be punished.
Former opposition MP Waleed al-Tabtabai called for legal action against the previous government headed by former premier Sheikh Nasser Mohammad al-Ahmad al-Sabah, which scrapped the venture.
“The previous cabinet accepted an unfair penalty clause and scrapped the deal while knowing of the penalty provision,” Tabtabai wrote on his Twitter account.