The Red Sea Corporation, the ruling party�s financial arm, is headed by Hagos �Kisha�, who reports directly to President Isaias Afwerki.  Hagos, who has no government portfolio, is authorized to move millions of dollars with a single phone call.  Like all of the "Presidents Men", he has a habit of not signing documents, thereby ensuring that there is no paper trail to all of the questionable activities.  None of his transactions, or that of the Red Sea Corporation, are audited by anyone.

Helping Hagos Kisha in moving funds in the Gulf States�particularly Kuwait and United Arab Emirates--is a Kuwaiti businessman.  Known as �N. Al-O,� the Kuwaiti businessman is the Front's Arab front, tasked with facilitating the purchase of construction materials as well as food staples from Gulf States on behalf of the Red Sea Corporation.  He has opened an office in Asmara and is reported to have opened several bank accounts in foreign countries using the names of Eritrea�s senior government officials. 

�Got Dollars?�

Two weeks ago, the Nackfa was trading at 23.8 to a dollar, the lowest exchange since its launch, when it was trading at 7 to 1. The shortage of hard currency has forced the Red Sea Corporation to send an army of accountants and financial officers to the streets of the cities to buy hard currency from Diaspora Eritreans visiting the country. The scarcity of the dollar is attributed to the Red Sea Corporation that has been buying all the hard currency it could lay its hands on. It chief, Hagos Kisha, was on a globetrotting mission to buy cargo ships. The plan is to increase the fleet that the Red Sea Corporation owns and to use them to transport the corporation�s cargo including food and construction materials.

The PFDJ Projects

When awarding contracts, the PFDJ uses a familiar pattern: instead of conducting competitive bids, it selects companies which are considered �friends of the front� or companies which can easily be replaced by or absorbed into the Front.  Kickbacks and cutting corners are the norm, resulting in huge cost overruns and flawed designs. Construction experts indicate serious engineering faults in almost all projects executed to date. There are reports of crumbling bridges, cracked walls and a multitude of architectural faults.

Typical of these projects is the Intercontinental Hotel, which reportedly cost $85 million dollars, making it, on a per-room basis, the most expensive hotel to build in Africa.  Within a year after its construction, a side of the building had collapsed.

The Massawa Airport Scandal

Using its corrupt selection system, the PFDJ chose the following to build the Massawa Airport:

• Gedec, an engineering consulting firm owned by Engineer Weldetsion Misghina, an Eritrean-American, (a San-Francisco Bay Area transplant) with a reputation for being a �friend of the front�;
• Gedem, a wholly-owned subsidiary of the Red Sea Corporation, the ruling party�s financial arm, hired to do the �earthworks� at the airport;
• Keannam, a Korean construction company, a �partner� of the PFDJ, which had received exclusive rights to build many residential and commercial complexes in Eritrea.  The company was hired to do the surfacing of the runway;

The Massawa Airport was opened with great fanfare a few months ago.  What hasn�t been revealed until now is that the 4 kilometer runway was found to be riddled with many design flaws and is now rendered useless for the purpose designed.   Apparently, the runway was constructed without proper study of wind direction, resulting in its conversion to a taxiway and prompting the design of yet another new runway.

How Honesty Is Rewarded By PFDJ

Compounding matters, Gedem, the Red Sea Corporation subsidiary that was contracted to do the "earthworks" at the airport, billed the government for 30 million Nakfas.  Citing gross negligence by the company in the execution of the contract, a Ministry of Construction official refused to authorize the payment.  An unhappy Gedem complained to the boss of its parent company, Hagos Kisha.  The government official refused to release the funds even with Kisha�s �orders.�  The case was referred to President Isaias Afwerki, who ordered the release of the funds and �transferred� the government official who defied Hagos Kisha to be the Ambassador to South Africa.    The government official, whose wife is an American citizen, quietly flew to the United States, where he has been residing now for nearly 11 months.    The Eritrean Embassy in South Africa is still without an ambassador.

Fearing damaging disclosure by the Ministry of Construction official, the PFDJ has been engaged in a familiar allegation: circulating innuendos about alleged links between him and unnamed �external forces� whose plots were supposedly communicated through his American wife.

Keannam, the Korean concern, lost its favorite partner status and has packed out of Eritrea.  It was recently replaced by a Chinese company, China Tianjan International Economic & Technical Cooperation Corporation (CTIETCC), a subsidiary of China's ruling party, making it the Chinese equivalent of the Red Sea Corporation.  In addition to the Massawa Airport project, Keannam had also been awarded the contract in the planned renovation and expansion of the Massawa Port.  After its departure, a European company, which was awarded Keannam's Massawa Port contract, declined the offer citing many flaws with the way the project was executed.

More Secrecy, More Corruption

The Red Sea Corporation has recently vowed not to involve consultants �who complicate construction activities.�   According to reliable sources, Mr. Hagos Kisha has pledged that the Red Sea Corporation will �now manage all projects on our own�.  Gedec, the Eritrean-American owned consulting firm, is now, for all purposes, a PFDJ firm.  All phases of future projects--consulting, contracting, building material trading, financing and subcontracting--are to be performed by the PFDJ.  Consequently, the already-rampant conflict of interest is expected to be even worse with project supervisors acting as sub-contractors.  Inevitably, say knowledgeable sources, this will result in more corruption, more cost over-runs, more secrecy and projects of even shabbier quality than the already poorly designed PFDJ projects of the past.