[A-List] UK state: Mittal scandal

[Keaney Michael]

Mittal company escapes US steel tariff

David Hencke, Westminster correspondent
Wednesday March 13, 2002
The Guardian

The Romanian steel plant owned by Lakshmi Mittal, the wealthy donor to
the Labour party, will be exempt from the new 30% US-imposed duty on
imports while British steelmakers, Corus, will have to pay full duty, it
emerged yesterday.

Both Romania, and Trinidad and Tobago, where Mr Mittal also has a big
interest in steel making, are among developing countries, listed on the
London US embassy's web site, which will not pay the tax when it comes
into force on March 20.

The disclosure that Mr Mittal will be a beneficiary of the exemptions
adds to the embarrassment facing Tony Blair who intervened to ensure the
Indian businessman got the steel plant after a late bid from the French,
who have traditional links with Romania. Mr Mittal gave £125,000 to the
Labour party.

Officials from the International Development department also backed
cheap loans for Mr Mittal, worth £120m, from the World Bank and the
European Bank for Reconstruction and Development.

These loans, under Labour and the Tories, were for developing and
modernising the Romanian and Trinidad plants. Mr Mittal received backing
for a £175m loan to modernise the Kazakstan steel works, which is not
exempt from the new tax.

Clare Short, international development secretary, last night defended
British support for the loans. "There is not a zillionth of evidence to
suggest scandal. The decisions were taken by the international
organisations themselves... ministers in my department were not
involved."

Romania last year exported 187,181 tonnes of steel and already has an
advantages over the UK with plentiful cheap labour and substantially
lower industrial costs, including rent and energy supplies.

Michael Hitchcock, spokesman for Corus, said yesterday that the company
was not pleased that Romania's steel industry - which would now be
thoroughly modernised with the new cheap loans -would get this extra
advantage over Britain.

"However, we could also benefit if Romania is able to export to the
United States without paying the extra duty, because it will stop them
dumping cheap steel on Britain, putting our company further at risk," he
said.

"The extra steel they are likely to export is more likely to affect our
plants in the Netherlands than the ones in Britain."

He added that his main concern was that Sidex, the company owned by Mr
Mittal, would continue in business when there was a big overcapacity in
the supply of steel.

The Conservatives last night jumped on the government's latest
embarrassment.

Tim Collins, shadow Cabinet Office minister, said: "Tony Blair today
attempted to draw a line under sleaze allegations affecting the Labour
party. This new revelation shows it just won't go away. It is yet
another example of those with huge sums of money and connections in high
places gaining important influence.

"Mr Mittal has effectively bought himself exemption, just as it has been
suggested he brought favours from our own government."

Among other countries to benefit from US duty exemptions are Albania,
Belize, Czech Republic, Estonia, Latvia, Moldova, Poland, Slovakia,
India, South Africa, Argentina, Paraguay and Uruguay.

Full article at:
http://politics.guardian.co.uk/labour/story/0,9061,666349,00.html

Michael Keaney
Mercuria Business School
Martinlaaksontie 36
01620 Vantaa
Finland

michael.keaney at mbs.fi