ABU DHABI - The International Petroleum Investment Co.

IPIC was created in 1984 as a 50-50 venture between ADIA and the Abu Dhabi National Oil Co. (ADNOC) to focus on oil-related acquisitions overseas. Shaikh Mansour Bin Zayed Al Nahyan, son of the Abu Dhabi ruler and UAE president from Shaikha Fatima Bint Mubarak, is the chairman of IPIC's nine-member board. He and the other board members were appointed in September 1994 by the SPC Chairman, Abu Dhabi's Crown Prince Shaikh Khalifa Bin Zayed, the ruler's first son who heads the emirate's Executive Council. With Shaikh Mansour at the top, four of the other eight members are from ADIA and the rest are from ADNOC.

Under an emiri decree in January 1999, Shaikh Mansour was retained as chairman of IPIC's board and ADIA executive Juan Bin Salim Al Dhaheri as deputy chairman. The other board members are ADNOC's CEO and SPC Secretary General Yusuf Bin Omeir Bin Yusuf, ADNOC executive Mohammed Dhain Al Hamili, ADNOC executive Nasser Bin Ahmad Khalifa Al Suwaidi, ADNOC executive Khalifa Mohammed Khalifa Al Kindi, ADIA executive Khalifa Bin Nasser Al Huwailil, ADIA executive Walid Al Muhairi, and ADIA executive Mohammed Bin Nasser Al Khaili.

ADIA's Muhairi and ADNOC's Kindi are members of the board of supervisors at the Austrian oil and gas giant OeMV, in which IPIC holds 19.56%. IPIC and OeMV each hold 25% in Borealis, Europe's second biggest polyolefins producer (see DT No. 3).

IPIC's acquisitions are decided on the basis of their financial merits, as judged by ADIA. Their importance to Abu Dhabi's petroleum sector is judged by ADNOC. Each investment proposal by IPIC must be studied and approved by both ADIA and ADNOC, which takes a long time. When ADIA and ADNOC disagree on an acquisition, the SPC has the final say. But intervention by the SPC is difficult to apply, because the council's membership represents three different power groups in the emirate:

There is the Zayed group, which consists of Shaikh Zayed and his younger sons from Shaikha Fatima Bint Mubarak and nephews and his most senior advisors. ADIA is under the influence of this group. Next to this comes the Khalifa group, of the crown prince and his powerful son Shaikh Sultan Bin Khalifa and allies. The third group, the Bani Khalifa, consists of Shaikh Tahnoun Bin Mohammed Al Nahyan, a powerful cousin of Shaikh Zayed - who is the long-serving governor of the eastern province (Al Ain being his capital) - and his allies.

Experts in local affairs have said SPC's appointment in September 1994 of Shaikh Mansour Bin Zayed as chairman of IPIC, along with a reshuffled board of directors, did not mean the company was to become more powerful or bolder. Previously, Shaikh Mansour was in ADNOC's management.

The change was to upgrade IPIC's efficiency, as demanded by both ADIA and ADNOC. It was also said that Shaikh Khalifa wanted to have directors close to him on the board of IPIC in order to lessen the influences of ADIA on the company's management.

Shaikh Khalifa and his son Sultan also wanted to avoid repeating mistakes which preceded the collapse of the Bank of Credit and Commerce International (BCCI) in July 1991. Until the BCCI scandal became public, ADIA had tended to be far more powerful and active in its investments beyond the petroleum sector. Over the years, it had diversified into banking (77% in BCCI for example), real estate, stocks, securities, foreign exchange, etc.