Four high-ranking Jordanians are imprisoned and awaiting trail in what looks like becoming the kingdom’s biggest-ever corruption case. Bribes of JD12 million ($17 million) are alleged to be involved, in connection with expansion plans for Jordan's only oil refinery.

Those arrested are: 

• Adel Qudah, a former finance minister and former chairman of the Jordan Petroleum Refinery Company (JPRC)

• Ahmad Rifai, former director general of JPRC

• Mohammad Rawashdeh, the prime minister’s economic adviser

• Khaled Shaheen (or Shahin), a billionaire businessman who is head of the Shaheen Business and Investment Group (SBIG).

Last week, just as it appeared that the accused were about to be released on bail, their case was transferred to the State Security Court – which means they will almost certainly be held in prison until trial and won’t have an opportunity to flee the country (as tends to happen in the Middle East when senior figures are accused of crimes). Their assets have also been frozen.

Although state security courts in Arab countries are often misused – dealing with cases that have little or nothing to do with national security – there does seem to be a plausible argument for handling the refinery case in this way because of its strategic importance to Jordan’s economy.

The Jordanian authorities have now decreed that local media must not report or comment on the refinery affair without prior approval. This could be to ensure that the forthcoming trial is not prejudiced by media coverage, though some suspect it's a way of hushing up any further embarassing revelations.

In view of the local clampdown on reporting, and without pre-judging the guilt or innocence of those involved, it's worth summarising what is known about the affair so far.

Noting that corruption cases in Jordan rarely come to light unless there are political factors behind them, Marc Lynch at Foreign Policy considers what the motives for prosecution might be in this instance, and whether it signals the start of a serious clean-up at the top.

But I think he may be reading more into it than necessary. It may simply be that too much information had become public knowledge and the refinery scandal was so important economically that it could not be ignored. Doing nothing about it would also have sent a very bad message to potential investors in Jordan.

The key point is that before the whistle was blown, an obscure company registered in the tax haven of Jersey was on the verge of acquiring control over all of Jordan’s petroleum supplies.

For more than 50 years, the JPRC has had a government-granted monopoly. Besides running Jordan’s only refinery, it is “the sole provider of all petroleum products for the local market”.

The monopoly was due to end in 2008 and, in the light of that, Jordan began exploring various options. Eventually it was decided to upgrade the existing refinery and increase its capacity, and the government invited tenders from would-be partners in the development programme, estimated to cost more than $2 billion. Some 15 companies initially expressed an interest. In the meantime, JPRC’s monopoly was temporarily extended to December 2009.

Last July, the Jersey-registered Infra Mena made a formal bid to become the JPRC's “strategic partner”. Infra Mena – about which very little is known – is variously described as an “investment company” and an “international consortium”. According to some reports, the consortium is headed the arrested billionaire, Khaled Shaheen, whose SBIG company is itself registered in the financially secretive tax haven of Luxembourg. 

Under the proposed deal, Ifra Mena was to inject new share capital into JPRC, giving it control of the company.

This seemed to meet with approval from the Jordanian government and in September the council of ministers agreed to grant JPRC (and Infra Mena) a 15-year extension on the monopoly. This meant that for a relatively modest outlay of around $380 million – and probably borrowed money at that – Infra Mena would gain control of Jordan’s entire petroleum market.

However, objections were raised in parliament and the Jordan Times published an article asking questions about Infra Mena’s suitability for the project. A few days later the paper also published a reply from Ahed Sukhon, who signed himself as “senior vice-president” of Infra Mena. Sukhon has business connections with Khaled Shaheen; in an American court case a few years ago he was described as vice-president of Shaheen’s SBIG company.

Infra Mena’s plans started to unravel in December when the government headed by Nader Dahabi resigned and King Abdullah 
appointed Samir Rifai as prime minister in his place. Rifai, whose father and grandfather were previous prime ministers of Jordan, was working as chief executive of the Jordan Dubai Capitalcompany at the time of his appointment.

At Rifai’s first cabinet meeting on December 15, ministers were briefed on the refinery issue and decided to set up a committee “to study the procedures followed in refinery expansion to ensure their soundness and to meet treasury rights”.

According to the government news agency, “The council of ministers also asked the Jordan Petroleum Refinery to suspend all procedures until the committee submits its recommendations.”

Around the same time, JPRC’s board sacked its chairman and director-general.

Posted by Brian Whitaker, 14 March 2010.