Behind Big Bucks in Africa: Lawsuit Sheds Light on Cracks in Israeli Business Venture

French businessman suing Haim Taib and Eytan Stibbe claims Taib cut him out of a partnership engaged in $200 million worth of projects ■ Stibbe backs plaintiff, says former partner may also strip his share

Israeli entrepreneur Eytan Stibbe (L), French businessman Hubert Haddad (R) meet Ivorian President Alassane Ouattara during one of their Africa business trip
Uncredited photo

Hubert Haddad, a French businessman who immigrated to Israel several years ago and is active in African business, is suing two Israeli businessmen, Haim Taib and Eytan Stibbe, at the Tel Aviv District Court. Haddad claims Taib cut him out of a partnership that was engaged in projects worth $200 million in Côte d'Ivoire, despite agreements with Taib and his former partner Stibbe.

In a response submitted to the court, Stibbe backed Haddad's claims, said he regarded the partnership as still functioning and expressed concern that he, too, might be at risk of losing his share of the partnership.

Until the start of this year Taib and Stibbe were partners in a firm called Mitrelli, which was formed five years ago and operates mainly in Angola.

Before that, the two were associated with another firm called LR Group, where Stibbe was a partner and Taib was a senior executive. In addition, Stibbe is a founding partner of Vital Capital, a socially-oriented private equity fund focused on sub-Saharan Africa.

Haddad says the connection between the three began in 2015, when Taib and Stibbe sought to expand out of their principal area of operations in Angola and the Democractic Republic of the Congo to the Ivory Coast.

According to Haddad, a critical event in bringing about the partnership was his role in helping the other two collect what he describes as a “very large debt” from the Congolese government. The suit doesn’t say what the debt was for but apparently it was in connection with a government construction project worth tens of millions of dollars.

As Haddad told the court in his suit: “In June 2015, the plaintiff met with Taib and Stibbe in Congo where he was able to immediately arrange a meeting for them with the president. During that meeting, the president of Congo invited the minister in charge of the ministry with which Taib and Stibbe were working and had the relevant debt. [The president] told [the minister] to solve the issue of payment.”

Haddad says Taib and Stibbe were impressed by his ability to open doors on the continent and proposed a three-way equal partnership to work in the Ivory Coast. “It is important to note that at that time the Ivory Coast had begun recovering from a bitter civil war and was in need of extensive reconstruction and government investment,” Haddad’s suit said.

Cashew nuts, rice farms and serious disputes

By July 2017, the three had reached a partnership agreement dedicated to developing projects for processing cashew nuts and developing rice farms. However, the Ivory Coast government subsequently decided it was not interested in them.

Haddad asserts that while the three were negotiating their partnership agreement and after it was signed, as well, he was also involved in two other projects in the Ivory Coast — one to build 250 small medical clinics around the country and another to build four vocational training schools for several thousand students. Each contract was worth about $100 million, Haddad says.

“Because Taib and Stibbe had no permanent office in the Ivory Coast, they had a minimal presence in the country. The plaintiff was the one with the time to make contacts and look after the interests of the three parties,” the suit says.

Haddad asserted that even though the projects he was working on as a rule required open, competitive bidding, due to his local connections he was able to negotiate and sign memoranda of understanding on a one-on-one basis with the education and health ministries in 2016 and 2018, respectively.

Among other things, Haddad claimed that those connections enabled Eva Peled, a Mitrelli executive who was working with Taib, to meet with the Ivory Coast’s health minister to get a better understanding of what the health clinics’ contract would require.

“The Ivory Coast education minister was replaced several times during that period and with each new minister that was appointed the plaintiff had to create new connections,” the suit said. Finally, with the memorandum of understanding in place on the school project, Israel’s Bank Leumi agreed to provide 92 million euros ($102 million at current exchange rates).

Haddad said that despite his role in winning the contracts, he received a letter from an assistant of Taib’s in June, claiming that at a meeting between Taib and Haddad in May, Haddad had agreed to end the partnership and would claim no rights to the projects.

“No such meeting ever occurred,” asserted Haddad in his suit. “More than that, the plaintiff never spoke at all with Taib about ending the partnership.” Haddad said he rejected an offer to receive a fee of 1.5% of the projects’ revenues when he had been entitled to 33% as a partner. Haddad has asked the court to block any change in the partnership until a final ruling.

“Taib didn’t inform Stibbe of his intention to break up the partnership with Haddad in the Ivory Coast or of the correspondence with Haddad regarding the dissolution of the partnership,” Stibbe’s attorney said in response. “Stibbe’s position is that the partnership agreement should apply to existing projects.”

Taib did not respond to queries by TheMarker.