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Cowboy Capitalists

This is chapter 14 of Robert Young Pelton and Tim Freccia's sprawling 35,000-plus-word epic exploration of the crisis in South Sudan. You can skip ahead and read the full text here or <a href...

by Robert Young Pelton
Jun 3 2014, 10:45am

Philippe Heilberg, the white guy, with soldiers loyal to the warlord General Paulino Matip Nhial. Photo by Jenn Warren

Entrepreneurs tried to invest in Sudan but quickly handed over their pipe dreams to companies owned by governments. Parastatals, they are called—deep-pocked corporations seemingly immune to the international criticism about the human rights violations involved in extracting the oil out of southern and central Sudan. But in the early 2000s, like Roland “Tiny” Rowland pulling up a chair to the high-stakes poker game of African investment, a new round of capitalists began to bet on the coming peace talks. Insiders who knew that stability might be on the horizon started arriving in Juba. While the house always had the odds in this winner-take-all, loser-lose-all game, some were determined to beat these odds and bet on southern Sudan’s vast potential for agriculture and oil.

Among these newcomers was Philippe Heilberg, a libertarian former commodity broker who basks in the glow of cowboy capitalism, proactive frontier development, and doing business with warlords.

In 2003, two years before the peace agreement that laid the path to South Sudan’s independence, Heilberg’s investment company, Jarch Capital, signed an agreement with the SPLM to snag the exploratory and commodity rights to 46,000 square miles of the Block B oil concession. The contract also required the SPLM, the political party that would eventually run South Sudan, to notify Jarch Capital prior to arranging any additional commodity deals in the region. The government of South Sudan now claims the contract is invalid, and Heilberg has accused certain parties involved in the negotiations of operating “outside international law.” He alleged that, just a year and a half after he signed the exclusive oil deal in Block B, the SPLM signed a conflicting contract with a British company called White Nile Ltd. Following this violation, Heilberg named high-level officials he said were directly involved in or “were made aware of this deal prior to an agreement with White Nile.” The list included John Garang, his wife, Rebecca, Riek Machar, and a host of government officials.

Other questionable deals abounded. Besides buying the rights to Block B, Heilberg had also leased a million acres of land in Mayom Country from General Paulino Matip Nhial—a famous commander who didn’t actually own the land. In 2008 a Texas-based group with the quaint name of Nile Trading and Development claimed to have leased the entirety of Lainya County from local chief Scopas Lodua—a deal securing them 1.5 million acres. Oddly, the actual size of Lainya County is only half that. When Loduo was contacted by the BBC in July 2012, he said, “I signed, but I didn’t know what it said.”

In the buildup to South Sudanese sovereignty, McKenzie Funk profiled Heilberg in a 2010 article on cowboy capitalism for Rolling Stone. The entrepreneur’s company and philosophy were presented as a high-risk, gun-crazy, warlord-loving, roll-the-dice, make-it-or-break-it attempt to exploit the lack of sophistication in emerging markets. But these cowboy capitalists soon learned the hard way and reined in their ambitions.

While speaking to a room full of Duke University MBA students in April 2013, Heilberg took a very different tone. He warned the students of risky investments, saying the capital costs could be 100 percent—i.e., you could lose all of your money.

“There is no governance; it’s a complete, utter disaster,” he said to them of his dealings in South Sudan. “Until ministers found to be corrupt are hanged or severely punished, it won’t be stopped.”

Who would have thought? Carpetbagging, double-dealing, backstabbing, and blatant corruption in South Sudan? Africans outsmarted outsiders again and again, as Chevron, Rowland, Arakis, White Nile, Nile Trading and Development, and Jarch Capital all busted and then pushed away from the South Sudan high-stakes table.

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