Mobile companies owned by despots and their progeny (and other relatives)

Posted on April 29, 2011 / 1 Comments

Something we rarely talk about in discussions of the great public policy success of our time, the mobile explosion, is how various kleptocrats rode the mobile boom. Libya’s Qaddafi’s present problems serve to bring this skeleton out of the closet:

But never underestimate the human capacity for delusion. Here’s a despot who’s managed at various times to pocket America and Europe with après-moi-le-déluge talk of the need for his rule, bought off several smaller African states, cocooned himself for more than four decades with fawning acolytes, murdered with impunity, sired with abandon, enriched himself beyond measure and — like any self-respecting modern tyrant — doled out the cell phone companies to his kids. Through all this he’s survived.

Our politicians just tax mobile operators in multiple ways. The truly despotic take the whole company. But then, does it create incentives to reduce rent extraction?

We wrote about the Revolutionary Guard owning mobile operators in Iran. I asked people in the Iranian regulatory authority about the challenges this posed to even handed regulation. They seemed for the most part unaware of the ownership of the operators. Some things, you’d rather not know.

We’d welcome comments on mobile operators owned by despots and their children.

1 Comment

Rohan Samarajiva
May 1, 2011, 6:36 pm
The New York Times expands on the corrupt Syrian license owned by the Brother-in-Law of President Assad.

The American government, which imposed sanctions on him in 2008, accused Mr. Makhlouf of manipulating the judicial system and using Syrian intelligence to intimidate his rivals.

“Everybody knows that you can’t do anything without him,” said Amr Al Azm, a Syria expert and professor at Shawnee State University in Ohio. “He has his fingers in so many pies. Anything you want to do you partner with him, or you give him a share.”

In a country where criticism of Mr. Assad himself was long taboo, Syriatel became an early proxy for protest under his rule, much of which centered on the government’s failure to profit from the sale of its license.

Riad Seif, an opposition member of Parliament, criticized what he called irregularities in the phone licenses and was soon arrested and imprisoned. So was Aref Dalila, another dissident. Rami Nakhle, an activist who fled Syria for Lebanon in January, began an Internet campaign to boycott Syriatel in 2008 over its high fees. They urged people to switch off their phones for four hours on the first day of the month. An online petition that he and other young activists circulated received 5,000 signatures.

Mr Makhlouf did not do the sector too much good while enriching himself. The country had mobile SIMs/100 of 45.57 end 2009 and a 2004-09 CAGR of 33.36, both lower than Sri Lanka (69.65 and 44.8 respectively), despite Syria’s higher GDP.