This is a potentially favorable arrangement to use the state powers as a means to secure private business opportunities that will remain in private hands even after the government tenure.
It is widely known that Nigeria’s Cross River State Governor Ayade has many grand ambitions and projects. With numerous projects ranging from a toothpick factory, rice mill, a piles and pylon outfit, instant noodles factory, and poultry farm. Indigenous people in Cross River State admire his ideas, but their main concern has been implementation. Of all the numerous projects over several years, few have led to tangible outcomes and unemployment numbers continue to rise.
In August 2019, a widely circulated video surfaced showed Governor Ayade promoting a “ultra-modern 21st-century” chocolate factory in Ikom, Cross River. He claimed it “was the first cocoa processing factory that goes from cocoa bean to chocolate bar in Africa.” and that “the company is already ready for commissioning”.
This looked and sounded like a great opportunity for jobs and local manufacturing of chocolate.
Unfortunately, nearly a year later, the plant is still not in operation.
Interestingly, very recently, on June 10, 2020, reports show The Cross River signed for $15M deal with an Israeli company to allocate “5,000-10,000 hectares of land for an out-growers scheme” and constructing an Agro-Industrial Centre. This includes “a processing plant, seedlings nursery, and training facility as well as pulp powder and dry cocoa beans for export.”
They are partnering with an Israeli company to construct “a processing plant to enable pulp powder and dry cocoa beans for export” was strange for a government that already claims to have constructed a cocoa to chocolate factory in Ikom. Even if the initiative is meant to complement what was already built, the implementing partner has an even more questionable background.
The implementing Israeli company Bean & Co is owned by Israeli agribusiness firm, LR Group. “LR Group manages large scale sustainable cocoa plantations worldwide in South America, Africa, Oceania & Asia and produces a wide range of cocoa products for distribution.”
Having a large global cocoa plantation manager sounds normal for a government looking to enter cocoa processing, however, the weapons trade history of LR Group is what ventures into abnormal.
Excerpts from an article from one Israel's most respected and longest-running newspaper Haaretz details their background:
“LR Group was founded by three Israeli former fighter pilots (Eitan Stiva, Ami Lustig and Roee Ben-Yami), who monetized on business opportunities that arose out of Angola's 27-year-long civil war, which ended in 2002.
“Similarly to other resource-rich African nations that have oil, gold, diamonds or particularly fertile soil, Angola is a paradox of a country full of natural wealth that actually makes its citizens poorer largely due to the involvement of foreigners in its local conflicts and corrupt government.
LR got involved in defense exports in Angola in the mid-80s and spent years massively arming the government there and training its troops.
In the 2000s, after the war ended, the ex-pilots sought to break into civilian fields. They entered into infrastructure, technology and agriculture projects; first in Angola and then in other countries. They led ambitious projects to set up dozens of agricultural communities in Angola and Congo, modeling them after the Israeli moshav. Later they set up farms, barns, water purification plans and other agricultural projects in countries such as Ghana, Nigeria, and most recently, Chad.
This trio seem to be among the richest people in Israel, but because their business is private, people don't know them,” a source familiar with them said."
A company formally fully involved in weapons trade and arming of African governments, may have changed gears and adopted agricultural projects. However, even within agriculture, citizens Papua New Guinea encountered some strange oddities in further probing into LR Group during its collaborations with their government. As Papua New Guinea’s premier anti-corruption blog PNGBlogs writes:
“Inside Israel, the only service that LR Group advertises as their specialty is the repair, service, and testing of elevator drives & MRL (machine room-less) motors.
But outside Israel, LR Group seems to have the expertise to build and manage anything and everything. For example, outside PNG they state that they not only engage in rural development and construction, and telecommunication infrastructure businesses, but also can build villages and renovate existing structures, construct farm buildings and community facilities, storage silos, produce processing plants, cow sheds, chicken houses, pig pens, schools, clinics, churches and roads. They offer crop management, dairy farm development and management, and poultry farming related services. They say they can do cellular and satellite infrastructure; radio transmission equipment and infrastructure, with IT integrated solutions, including IT applications design other areas of expertise. On one web site, LR Group says that they have interests in real estate, aviation and healthcare worldwide.” Through its “subsidiary” Karat Israel Ltd, LR Group “specializes in international trade management, offering credit lines arranging pre-finance activities, and guaranteeing purchase and export of the client's goods and services. LR Group is additionally involved in civil engineering, supply, train, infrastructure, and cellular operations, as well as civil and military projects.”
Looks like this company can do ANYTHING! But only outside Israel. In its home country, LR Group isn’t even listed in any on-line Israeli phone books. Its stated physical address in Israel is 11 Shenkar Arie Herzliya, yet on Shenkar Arie street, there are no physical addresses for numbers 10-15. Maybe their office is at 16 Shenkar, but if so, they only have an office in a much larger office building containing lots of businesses. There is another LR Group office listed at 45 Natanya in Sokolov, Israel. Unlike the Herzliya street address, this one is valid – but it’s an ugly plain concrete building that looks like warehouse and home to other businesses. You can see it all on Google Street View.
Seems like LR Group has a very light, almost imaginary footprint in its home country, but is master of everything overseas, a middleman operation that relies on everyone else to implement their projects.
LR Group looks like little more than a networking company whose greatest asset is exaggerated self promotion and the ability to find expensive long-term consultants.
One of LR Group’s secrets now out in the open is the company’s involvement in land grabs. through the sneaky land grab technique called “land leases”. Land leases allow the lessee, not the lessor, to make the big money, since there is almost never a profit-sharing clause for the landowner in a land lease. Even when there is, the lessor takes care to manipulate the accounts so that there’s always little to no profit shown coming from the business activities on that land, hence little to no profit sharing with the landowner. The corruption of land leases via the SABL process is what allowed foreigners to steal and export, tax- and royalty-free, hundreds of millions of kina worth of hardwood timber logs, the benefits of which are now lost forever to the true landowners.
LR Group likes African land. In 2012 it grabbed a 2,000 hectare Rivers Farm Village venture in collusion with a Nigerian state government. It also grabbed the Etche Agro Industrial Farm, in which LR Group coerced the local state government to put up 60% of the money. Another recent LR Group prize was the contract to revive the agro-industrial area of N'sele (DAIPN) in the Congo.
Examining LR Group’s recent agricultural deals, they seem to like the tired old strategy of taking land rights away from former landowners, then offering them low paying jobs in return, to slave away on their own land. If the landowners turn up their noses in anger, the company brings in labour from other parts of the country to take the jobs.
LR Group likes operating in the world’s most corrupt countries. They operate in Nigeria, with a TI corruption index rating of 25 (just like PNG), but majority activities are in Angola, which has a corruption rating of 23. The Congo where LR Group also rates is rated a lowly 22. All these countries are oil/gas/resource rich so there’s lots of money around just waiting to be stolen.
The company was involved in a series of arms deals in Angola. It sold the country artillery systems made by Elbit, and also partnered with IMI to sell mortar bombs and artillery shells that the government used in its war against Angolan rebels. A much larger deal was LR’s sale to Angola of eight U.S.-made Bell 212 helicopters that the IDF had taken out of service. Aside from selling Israeli equipment, the company also sold Angola two Sukhoi Su-27 fighter planes and radar systems from Ukraine. But after two to three years of intensive activity, the three founders decided to get out of the arms business and focus on civilian projects like setting up agricultural villages in Angola and elsewhere in Africa.”
At best, there are clear implications of a foreign agricultural contractor and colluding with African governments to acquire indigenous plantation land to facilitate the export of raw commodities as was written in the agreement between LR Group and the Cross River State government. At worst, there are deceptive precedents of former weapons trade companies using shell agricultural projects to facilitate weapons trade. As Haaretz writes:
Last year, the U.S. Treasury Department put Maj. Gen. (res.) Israel Zivon on its blacklist of people suspected of terror financing and money laundering, due to allegations that he illegally sold $150 million worth of arms to South Sudan during its civil war. The Americans say Ziv was arming both the government and the rebels while disguising his arms sales as agricultural projects. The farming project was instead used to cover up the sale of approximately US$150 million in weapons, including rifles, grenade launchers, and shoulder-fired rockets.
It should also be reminded that the Cross River State Government has a track record of participating in diversion and misappropriation of earmarked funds. And furthermore, behavior to obfuscate inquiry by citizens into these matters. As the NGO Global Voices writes:
“On July 17, 2019, Cross River journalist Agba Jalingo wrote a critical story about an alleged diversion of 500 million naira (about $1.4 million United States dollars) meant for the establishment of Cross River state Micro-Finance Bank. Jalingo stated that “eight months after the opening of the bank,” Ayade had failed to release the money meant for the start-up of the state-owned bank:
On August 14, the Cross River State Command of the Nigerian Police invited Jalingo for questioning on the allegation of “conspiracy to cause unrest and conduct likely to cause a breach of peace”: However, Jalingo was arrested in Lagos on August 22, four days before the scheduled date to honour the police invitation.”
After citing evidence of government mismanagement of public funds, Agba was charged with treason, terrorism, cultism, and public disturbance for protesting bad governance. He was accused of "undemocratically" attempting to "force the government of Ayade to end through violent means.”
Ayade’s government has shown a penchant for building several factories with state funds, coupled with private investors. As seen in the alleged chocolate factory implementing company, AA Universal Agro Industries Ltd, consists of 90% private ownership and 10% to the state. This is a potentially favorable arrangement to use the state powers as a means to secure private business opportunities that will remain in private hands even after the government tenure.
So while journalist Agba Jalingo was charged for treason by Cross River Government for calling attention to these inconsistencies, The Cross River Government struck a deal with a former Israeli weapons dealing company for the purchase of local indigenous land.
It may sound laudable to create local jobs with foreign partners on the surface. But instead of an ultra-modern chocolate factory that was promised for all, we see that the agreement is actually to sell a 5,000-10,000 plantation land to former weapons supplier, in the process, taking land rights from local populations in return for low wages and export of raw materials. This is the classic example of what was experienced under colonialism in Africa. And one has to inquire, who really benefits from this deal in the end?