By Joanna Hartley
The collapsed deal with PIC is being investigated by the Kuwaiti parliament.
Dow Chemical has rejected accusations by members of the Kuwaiti parliament that it paid bribes to secure a $17.4 billion joint venture with a state-owned company, it was reported Saturday.
The deal between the US chemicals giant and Petrochemical Industries Co (PIC) to form K-Dow Petrochemicals, which was agreed in December 2007, collapsed just days before it was to close at the end of last year when the Kuwaiti company pulled out.
Kuwait's parliament voted overwhelmingly this week to investigate "suspicions of profiteering and accepting all forms of commissions by oil executives" involved in several deals, including the plastics joint venture with Dow, according to the Kuwait daily the Kuwait Times.
In response Dow Chemical released a statement saying it was highly offended about any suggestion of improper action.
"The contract between Dow Chemical and Petrochemical Industries Co (PIC) was entirely appropriate, as was Dow's conduct," it said.
Dow said earlier this month it was planning to pursue legal action against the PIC to recoup a breakup fee of about $2.5 billion.
“Any investigation should be focused on PIC's failure to close the transaction," the company said.
”PIC needs to be responsible for its failure to close the transaction and we intend to hold those that interfered with this obligation accountable," it added.
The failure of the joint venture left Dow without the $7 billion it expected from the deal on the eve of closing its acquisition of Rohm & Haas for $15.4 billion.
Dow has seven Middle Eastern operations, five of which are joint ventures.
In 2007 the company posted sales of more than $430 million from the region.
The company is in the planning stages for a massive chemicals and plastics production complex in Ras Tanura, Saudi Arabia, which is expected to be among the world's largest petrochemical facilities. (AP)
If anyone thinks you can do a deal this big in the Gulf without some brown envelopes or Swiss bank transfers, they are dreamng or simply incompetent. That is how it is, and Dow should either walk away or admit their own innocence about Gulf business practise.
I agree with Adel's comments. DOW may have not patronized the "right" people and the MPs feel left out.