Two former PMs and a prominent Algerian business family alleged in court that Algeria gave $267 million in opaque tax breaks to tip the scale in its “economic war” against Morocco.
Rabat – A prominent court case in Algeria has brought to light claims of attempts to undermine Morocco’s car manufacturing sector. The high profile case over alleged corruption featured the Tahkout family and two former prime ministers. They tried to justify their corruption charges by claiming involvement in a scheme to use tax breaks to give Algeria an edge in its competition with Morocco in the car manufacturing sector.
Both the Tahkout family and the former PMs are seen as close associates of former President Abdelaziz Bouteflika. The Tahkout family owns several car manufacturing plants in Algeria and claims that the funds they received, and profited from, were provided to give Algeria an edge over Morocco’s car industry.
The alleged scheme to grant giant tax breaks in favor of Algeria’s car manufacturing sector failed, and has led to several prominent businessmen and former prime ministers spending over a year in prison with no end in sight. The court case has revealed details of alleged unsuccessful Algerian efforts to damage Morocco in an effort to justify the tax breaks.
High-level court case
The case revolves around roughly $267 million in missing public funds through tax breaks gained illegitimately. The two former prime ministers involved are Ahmed Ouyahia, who served under Bouteflika in four separate terms between 1995 and 2019, and 72-year-old former Prime Minister Abdelmalek Sellal, who held the post from 2012-2014.
The defendants in the court case, which also include Ouyahia, have been in detention since their arrest in June of 2019. Their arrest followed the ouster of the authoritarian Bouteflika in an effort to address widespread corruption that was one of the Algerian Hirak (movement) protests’ main grievances.
The case covers the use of public funds that benefitted the Tahkout family, with the suspicion being that Algeria granted the tax breaks because of the Takhouts’ close ties to Bouteflika’s regime. The Takhouts own assembly plants for Algeria’s car industry, which aims to compete with that of Morocco. In what appears to be a desperate attempt to hide their corruption, the defendants brought up a plot against Morocco to justify their dealings.
Morocco plot as defense
Former Prime Minister Abdelmalek Sellal claimed that an Algerigan plot to harm Morocco’s car manufacturing sector was part of his reasoning for the controversial tax breaks. Sellal alleged that the government granted the Tahkout family hundreds of millions of dollars in tax breaks in a plot to give Algeria’s car manufacturing sector an edge over Morocco’s.
“We would have destroyed a neighboring country by manufacturing cars,” Sellal said in defense of the dealings between officials and the Tahkout family. According to court reporting by Algerian outlet Echorouk, Sellal defended his actions as part of an effort to allow Algeria to compete with Morocco in the car manufacturing sector.
Importing cars had become a drain on Algeria’s economy, according to Sellal, requiring “urgent” and “necessary” drastic action. He claims Morocco attempted to tarnish his reputation in an effort to halt such plans. “It is an attempt to destabilize Algeria, history will witness,” he stated.
Former PM Sellal told Judge Abdul Aziz Ayad that his actions were merited because “Algeria was going through a very difficult phase.”
The plan to give Algeria’s car sector a boost over Morocco’s failed because Sellal’s reputation came into question through Moroccan misinformation on YouTube, he claimed. He accused Morocco of trying to “topple” him for his efforts, saying “at that moment I knew the economic war had begun.”
With all the defendants denying their charges, the court case will likely continue to reveal new allegations and their details. Observers have often described Algeria’s policies directed at attracting car assembly plants as “disguised imports” that do little to improve local technical capabilities.
Volkswagen in December 2019 closed a plant in Algeria citing corruption and Renault has shifted large parts of its production to Morocco. Despite Algeria manufacturing cars, the high cost of imported car parts means prices continue to exceed those in Europe.
As Algeria’s car industry struggled, Morocco continued to grow its sector. In January of 2019 Renault was producing 400,000 cars in Casablanca and Tangier. In October of 2020, Renault announced it would expand this number by producing its Dacia Sandero model exclusively in Morocco.