Jan. 29, 2002
Cadiz Looks to Saudi Prince for Bailout
Cadiz Use of Pending Water Deal to Remedy Shaky Financial Footing Is Further Proof Project is a Bad Idea; Cadiz Head Using Ties to Governor to Strong-Arm State Agency
OAKLAND, Calif. ? Cadiz Inc., a California agricultural concern, is seeking a bailout from a foreign prince to maintain its operations. The investor is Prince Alwaleed bin Talal bin Abdul Aziz Alsaud, a member of the Saudi royal family whose $10 million contribution for post-Sept. 11 reconstruction was rejected by former New York Mayor Rudy Giuliani.
The Cadiz project is a massive enterprise to store Colorado River water in an underground aquifer during wet years and use this and native groundwater to supplement supplies during dry years. Cadiz has access to the aquifer, which also underlies federal land. Environmental groups, members of the scientific community and Public Citizen oppose the Cadiz project on grounds that the rates of water extraction that Cadiz has determined necessary for profitability are unsustainable and therefore not in the public?s interest. The project must be approved by the 37-member Metropolitan Water District of Southern California (MWD) board of directors if it is to go forward.
But Cadiz is on shaky financial footing; documents show the company has significantly more debt than assets. Its assets are owned primarily by Sun World International Inc., a wholly owned subsidiary of Cadiz, making Cadiz and Sun World virtually the same enterprise.
According to a Jan. 16 Cadiz press release, Cadiz and the Kingdom Agricultural Development Company (KADCO), a private Egyptian company controlled by Prince Alwaleed, reached an initial agreement on that date under which KADCO would buy 49.75 percent of Sun World. Cadiz and its chairman would retain Sun World?s remaining 50.25 percent.
This slim percentage keeps Cadiz just nominally in control of its most important subsidiary.
“This demonstrates the inadequacy of this company as a reliable or stable partner for the MWD,” said Jane Kelly, director of Public Citizen?s California office. “The investment Cadiz is seeking should alarm the MWD board.”
The deal between KADCO and Cadiz won?t be sealed until April 30, according to the Cadiz press release.
The MWD board vote is subject to strong political pressure. Keith Brackpool, a large contributor to Gov. Gray Davis and currently serving as Davis? water advisor, is the chairman and founder of Cadiz, Inc. Brackpool?s relationship with the governor is solid enough for Brackpool to substitute for Davis at public speaking events. In 1999, Brackpool accompanied Davis during his Middle Eastern tour. Together, they met privately with Egyptian President Hosni Mubarak to discuss the Tushka project, a massive farming project in the South Valley region of Egypt using Nile River water for irrigation. (Local environmental groups perceive the project as a dismal boondoggle.)
Through his attempted contribution to New York City after Sept. 11, Prince Alwaleed has demonstrated that he is interested in purchasing political capital in the United States, Kelly said.
“Brackpool is using the potential contract with the MWD to get a bailout from Prince Alwaleed,” said Kelly. “At the same time, he is flashing the prospect of foreign investment to appear as a stronger business partner to the MWD board, when in reality his company has not seen black ink for a long time. The only reason the MWD would go ahead with such a shifty project is to make a major contributor to Governor Davis happy.”