Finance Minister Mustafa Al-Shamali announced his resignation in the National Assembly yesterday after a marathon grilling and after 10 opposition lawmakers filed a no-confidence motion against him.

The moves came following a marathon 11-hour grilling in which the minister was accused of financial and administrative violations besides facilitating the squandering of billions of dinars of public funds.

The motion was filed after the minister and the opposition exchanged harsh words like liars and thieves. There will be no voting on the motion because the minister has resigned.

Al-Shamali is the first minister to quit just over three months after the formation of the cabinet which came after the February 2 elections in which the opposition scored a resounding victory.

Observers expect that Al-Shamali’s resignation will open the way for a limited cabinet reshuffle that may also include Minister of Social Affairs and Labour Ahmad Al-Rujaib.

The grilling debate finally started following two days of serious conflict between the government and the opposition which controls a majority in the National Assembly after opposition MP Obaid Al-Wasmi withdrew one of the two grillings originally submitted.

The grilling was debated by MPs Abdulrahman Al-Anjari, Khaled Al-Tahous and Mussallam Al-Barrak who hurled many accusations against the minister and officials of companies and institutions under his authority.

Al-Anjari charged that the Public Institution for Social Security had lost around $ 1.2 billion in option trading in the United States through one brokerage company which eventually collapsed and its manager was jailed for 16 years for being massively involved in highly risky speculative trading.

He said that the minister, who chairs the institution, took no action against the director general of the institution who squandered the pensioners’ money. Only three days ago, Al-Shamali suspended Director General Fahad Al-Rajaan until an investigation was completed.

Al-Anjari also claimed that the institution cooperated with a local firm to set up a joint company called Petrolink which is suspected of breaking the international sanctions against Iran over its controversial nuclear programme.

He said the institution paid KD 12.5 million in the company’s capital which supplied Iran banned materials for its nuclear and missile programmes and also helped the Lebanese Shiite militia Hezbollah purchase arms.

He provided no details, but added that the issue was raised by two US senators who sent letters to the US Defence Secretary a few months ago. Al-Anjari warned that such activity could lead to imposing international sanctions on Kuwait. He said that the Kuwaiti public prosecution has asked the state security to investigate the allegations.

Al-Anjari also blamed Al-Shamali for the losses of the Kuwait Investment Authority and the Social Security Institution by investing in Global Investment Company which has lost most of its capital following the global financial crisis.

He said that the institution has not only taken part in the capital of the company but KIA and the institution each invested KD 500 million in Global. The Social Security Institution also bought almost half of KD 50 million bonds issued by the company after the global financial crisis. Now most of the money has been lost.

Tahous also raised a number of issues in which he accused Al-Shamali of being responsible. He first highlighted the difference in the price of imported sheep between a private company and a state-owned company, showing that the private company was selling at half the price of the other one which is receiving heavy subsidies from the government.

He said that Al-Shamali, who is responsible for the government company, took no measure. Tahous also accused the minister of failure to check liquor smuggling into the country which passed through the customs department which comes under Al-Shamali’s authority.

The lawmaker said that in early September, police seized a container full of alcohol destined for Benin’s Embassy after it got through customs. He said that the embassy tried to dissociate itself from the scandal by saying that they had only ordered furniture from Italy and not liquor. Authorities are still investigating the case.

Tahous charged that the minister has been favouring the interests of banks and financing companies at the cost of Kuwaiti citizens who had taken more than a half a million dinars worth loans from them. He said that the minister always sided with the banks and not the debtors.

Barrak also detailed a large number of violations in state properties, projects, the Touristic Enterprises Co. and other investment companies. He claimed that Al-Shamali violated the law in awarding the Al-Zour North power and water desalination project by not conducting an open auction between the companies and also by excluding the local companies. He demanded that the awarding process for the project, with costs more than KD 700 million, should be scrapped and a new auction held.

He said that the ministry of finance has been leasing two huge plots to two private companies at just 145 fils per square meter annually for years, whereas the real rent should be at around KD 45 a meter based on the ministry estimates. By doing so, the minister has squandered close to KD 32 million a year which is a huge amount considering the long duration of the contracts. In addition, the ministry is leasing 12 restaurants on the waterfront at a nominal value and in 20 years, the losses for public funds will be KD 1 billion.

The lawmaker charged that Kuwait has squandered around KD 5 billion in the offset programme under which foreign companies signing contracts with Kuwait must reinvest 35 percent of the value of the deals in Kuwait. He said that the officials of the programme, falling under the finance minister, have deliberately squandered the money.

The minister however categorically denied the allegations, claiming that the whole grilling is part of the political score settling and is politically motivated by the MPs. He said he applied the law in the Al-Zour power plant and carried out the open auction which was also published in the Official Gazette.

He defended the positions of Kuwait Investment Company and Kuwait Investment Authority saying they have been working in service of Kuwait. Al-Shamali warned that Kuwait is at a high risk if the lawmakers continue to press the government to increase salaries and benefits without any limit.

He said that at present, the price of Kuwaiti oil is $ 104 a barrel and based on studies, the oil price needed to break even with budget spending at $ 111 a barrel. Some studies have warned it could go up to $ 200. Al-Shamali, who was appointed as finance minister in October 2007, appealed to lawmakers to cooperate to serve Kuwait.