In February 2022, the French-Lebanese company CMA CGM was awarded a 10-year contract to manage, operate, and maintain Beirut port’s container terminal in a deal the shipping giant says will see $33 million invested into the port. CMA CGM is the world’s third largest container-shipping firm and also controls the container terminal in Tripoli—Lebanon’s second largest city—and has a presence in Syria’s port city Latakia. While the company’s profile may make it the natural choice to operate the container terminal in the Beirut port, the bidding process’ lack of transparency raises concerns that the Lebanese government and political establishment have failed to learn any lessons from the conditions that led to the August 2020 disaster.
Familiarity with Lebanon’s shipping sector
CMA CGM was already familiar with Lebanon’s shipping sector. Before the August 4, 2020 blast, the company handled 29 percent of the total traffic at Beirut’s port and 83 percent at Tripoli’s. The container port did not sustain as much damage as the rest of the port, meaning it is largely still operable. However, little information has been made public on the bidding process that saw CMA CGM winning the 10-year contract at the Beirut port.
“There was no transparency at all whatsoever,” said Fady Abboud, a former minister of tourism from 2009-14 as part of now President Michel Aoun’s Free Patriotic Movement bloc. Abboud spoke to TIMEP from his office outside Beirut. “They probably would have won [the contract], but it has to be very transparent with open data. Maybe [CMA CGM] is the best choice but not in this way.”
Merit Corporation, CMA CGM’s parent company, is owned by the French-Lebanese Saadé family. According to the Lebanese daily L’Orient-Le Jour, Merit owns 4.38 percent of Bank of Beirut. In early 2021, while many Lebanese were struggling to withdraw their money from banks amid the financial meltdown, the Saadés re-registered the company and moved it from Lebanon to France.
In February 2022, a World Bank sponsored redevelopment plan of $20.55 million was announced to rebuild the area around the Beirut port. The plan was to make it an economic hub and community space—revitalizing the space and providing the Lebanese government with a badly needed source of revenue. But the agreement with CMA CGM came before the Lebanese government implemented the necessary reforms that would have allowed the World Bank’s investment to be fully effective.
A 30 year-long temporary committee
The Beirut port explosion highlighted a litany of problems that had been plaguing the port’s operations throughout the post-civil war era. A lack of transparency, accountability, and a nefarious “temporary committee” that has been operating on behalf of the political establishment are all issues that contributed to the disaster.
In place of any kind of oversight agency is the Temporary Committee for Management and Investment of the Port of Beirut, made up of political appointees who hold draconian power over the port. The committee began running the port in 1993, after former Prime Minister Rafik Hariri’s efforts to have the port privatized failed. The committee’s control over the port was meant as a temporary measure but nearly 30 years later, it is still around.
“The head of this committee can spend the money the way he wants and then simply inform the ministry,” Abboud said. The committee is appointed by Lebanon’s council of ministers and is officially supervised by the minister of public works and transportation, but it allegedly lacks sound supervision from “legally undefined authorities.”
USAID describes the port’s management as “a major source of corrupt questionable practices potential mismanagement, and misuse of port revenues for personal benefits and those of particular politicians and political parties—mainly those who were dominant during the Syrian occupation era.” For years, the port’s revenues were kept in a private bank account away from the eyes of an oversight agency.
Lebanon’s main political parties—including Hezbollah, the Free Patriotic Movement, the Future Movement, the Lebanese Forces, and the Amal Movement, among others—have all benefited from the current framework, according to Human Rights Watch (HRW). These parties install loyalists in the port’s hierarchy, giving them the opportunity to “accrue wealth, siphon off state revenues, smuggle goods, and evade taxes in ways that benefit them or people connected to them,” HRW reported.
Following the August 4 explosion, the committee’s chairman Hassan Koryatem was arrested and put in prison. Koraytem is considered a loyalist to Lebanon’s former prime minister and preeminent Sunni Muslim figure Saad Hariri. The blast should have signaled the end of the temporary committee’s reign. Instead, a new chairman has been appointed, and the committee has issued and is in charge of managing the contract given to CMA CGM.
“The process for securing the container terminal concession is not as clear as other port management agreements; but perhaps because CMA CGM is based in France, is the third largest shipping company and on the top 10 list of container terminal-management companies, it lends itself to more scrutiny,” Laleh Khalili, a SOAS professor who studies the political economy of war and militaries as it intersects with infrastructure, logistics and transport in the Middle East, told TIMEP via email. “Or as much scrutiny as a family-owned firm, which most major Europe-based shipping companies are, can bear.”
An endemic lack of transparency
Transparency in Lebanon’s governance remains a problem. Globally, the country ranks 154 out of 180 countries in Transparency International’s annual Corruption Perceptions Index. Even beyond Lebanon, the shipping industry in particular is one of the world’s most secretive sectors. While around 90 percent of the world’s traded goods are shipped by sea and the industry is plagued by a lack of transparency.
Only two firms competed for the Beirut port contract. CMA CGM beat out the Emirati based Gulftainer for the rights to operate the terminal container. Initial interest was also shown by companies from China, Germany, and others. “Certainly, there were not enough companies interested [in bidding for the terminal operations] because multinational companies hate countries like Lebanon unless they have a very strong local politician who’s making their life easier,” Abboud said.
CMA CGM has never shied away from working with controversial political figures. From 2014, the firm worked as part of a consortium that managed the container terminal in Latakia alongside the Syrian Arab Army’s Fourth Division. The Fourth Division unloaded containers that were distributed to the Assad regime. Part of the appeal for CMA CGM in working in Beirut’s port in particular is the eventual reconstruction of post-war Syria. The World Bank has estimated that the Syrian civil war has inflicted more than $200 billion of destruction, meaning any contracts to rebuild could be lucrative.
Between 1997 and 2006, regional managers of CMA CGM allegedly paid bribes in Cairo that saved the company $5 million. And in 2021, CMA CGM made record profits of $18 billion due to a COVID-related increase in the global demand for shipping. This caused the chairs of two US congressional oversight panels in the United States to send a letter asking if CMA CGM had “engaged in predatory practices during the pandemic, making scores of essential goods needlessly expensive for consumers and small businesses.”
But the company has also sought to help Lebanon during its financial crisis, in close collaboration with the French state. It was involved in transporting 50 buses donated by France in May 2022, transported more than 4,000 tons of humanitarian aid to Beirut, and promised to pay school tuition for 1,000 school students in Lebanon. And then there is their planned investment in the port. CMA CGM chairman Rodolphe Saadé traveled with French President Emmanuel Macron to Beirut after the port explosion and tweeted that his company could be relied on to help with reconstruction.
According to CMA CGM, the $33 million dollar investment will be used to upgrade infrastructure, build a new maintenance facility, and improve the port’s environmental performance. The project was set to start in March 2022 and $19 million is set to be spent in the first two years. The group claims to employ almost 1,000 people in Lebanon and will create 400 more roles in the next year. Data provided by CMA CGM also says that they shipped 55 percent of the traffic at the container terminal prior to winning the bid.
Reigning in the political establishment
Based on their global track record, few in Lebanon or beyond would find issue with CMA CGM managing Beirut Port’s container terminal. But the issues around CMA CGM gaining this contract represent the larger issues at the port. A lack of transparency over the port’s operations and finances means profits that could serve the Lebanese people and state are instead likely filling the pockets of various members of the political establishment.
The port’s explosion on August 4 cannot be disconnected from the lack of transparency and accountability. Instead of forming a permanent oversight agency, the temporary committee has continued to operate as a means for the political establishment to enrich themselves. This committee should be abolished and replaced by a genuine oversight agency that works with full transparency. “You need a government watchdog that can scrutinize deals,” Khalili said.
Furthermore, Lebanon’s main priority related to the port should be an implementation of a transparency law that requires the publishing of publicly accessible data and financials from the Beirut port. “I cannot see any reform in Lebanon taking place if we do not have a bulletproof transparency law,” Abboud said. “I don’t know of any country anywhere in the world where reform was taken seriously and it worked where transparency was not behind the reforms.”
Until this happens, the Beirut port will continue to be an appendage used to enrich the Lebanese political establishment at best. At its worst, it will be a conduit to other hazardous incidents like what happened on August 4.
Justin Salhani is a Paris-based writer, journalist, and producer interested in identity, migration, Lebanese society and politics, cosmopolitanism, and the anthropology of soccer.