French oil company operating offshore Guyana has history of corruption, bribery, inflating costs

Apr 22, 2019 News

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By Kiana Wilburg

INTRODUCTION

Much has been said about the attractiveness of the Guyana basin, which holds over five billion oil equivalent resources. The world’s most elite petroleum operators are flocking the now de-risked offshore play. The Government is pleased about the investments heading Guyana’s way.
But what is not being spoken of is the notoriously corrupt backgrounds of some of these companies and what precautions the Government intends to take to safeguard the nation.
Kaieteur News has repeatedly exposed what ExxonMobil has done to countries around the world. Exxon is also the company, which holds the puppet strings of its subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), which is operating in the Stabroek Block. The entire series on how nations have been left worse off after welcoming ExxonMobil into its shores can be seen by following this link: https://www.kaieteurnewsonline.com/category/what-guyana-needs-to-know-about-exxonmobil/.
Today, Kaieteur News turns its attention to the operators of the Orinduik Block. The oil majors include: Tullow, Eco Atlantic and Total Oil which was recently allowed to farm into the Block with the approval of the government. Total, a French super major, has a foothold in three of Guyana’s oil blocks.
Along with the Orinduik Block, Total has a 35% working interest in the Canje Block, located in water depths of 1,700 meters to 3,000 meters, under the terms of the agreement signed with an affiliate of Canadian company JHI Associates, Inc. and Guyana-based company, Mid-Atlantic Oil & Gas, Inc. These two companies will retain a shared 30% interest alongside operator ExxonMobil (35%).
Total also acquired a 25% working interest in the Kanuku Block, located in water depths of 70 meters to 100 meters, under the terms of the agreement signed with operator Repsol (37.5%), and will be a partner alongside Tullow (37.5%).
While Total, has been operating quietly in Guyana’s backyard, moving to grab up as much interests as it can in Guyana’s offshore blocks, its history which screams corruption, bribery, inflating costs underscores the need for a close eye to be kept on every move it makes within these shores.
Below is just a snapshot of this company’s past.

BRIBERY
On May 29, 2013, Total S.A. entered into a three-year Deferred Prosecution Agreement (DPA) with the Department of Justice (DOJ) and a settlement agreement with the U.S. Securities and Exchange Commission (SEC) to resolve past violations of the Foreign Corrupt Practices Act (FCPA)’s anti-bribery, books and records and internal controls provisions.
As part of the agreement, Total was made to pay US$245.2 million in fines to the DOJ and pour out $153 million in profits to the SEC. The combined US$398 million penalty makes this the fourth largest case in the history of FCPA enforcement.
Going into the details of the case, www.anticorruptionblog.com said that based on the DPA and SEC’s administrative cease and desist order, from 1995 until 2004, Total and others paid approximately $60 million to intermediaries in order to unlawfully induce an Iranian government official, the head of the National Iranian Oil Company (NIOC) and later the head of another NIOC subsidiary, to grant Total access to Iran oil and gas fields.
As a result of the bribes, Total reportedly secured the rights to develop the Sirri A and E oil and gas fields and parts of the South Pars, the world’s largest gas field, in order to earn US$150 million in profits.
Per the DPA, Total paid the bribes to the Iranian official through a consulting and services agreement entered into by Total with an intermediary designated by the Iranian official. According to the SEC, Total also violated the books and records and internal controls provisions of the FCPA, by mischaracterizing the bribes as legitimate consulting fees or business development expenses. (See Link for more details: https://www.anticorruptionblog.com/industry-investigations/oil-and-gas-giant-total-s-a-pays-fourth-highest-penalty-in-fcpa-enforcement-history/).
Furthermore, on December 21, 2018, a French court fined oil giant Total 500,000 Euros for corruption after finding it guilty of paying bribes while bidding for a huge gas contract in Iran in 1997.
The French company was accused of paying US$30 million in bribes to middlemen, in return for help in securing the rights to the South Pars natural gas field, the world’s largest. (https://www.thelocal.fr/20181221/french-oil-giant-total-handed-500000-fine-over-corruption-in-iran)
And that’s not all. On December 16, 2008, the Managing Director of the Italian division of Total, Lionel Levha, and 10 other executives were arrested by the public Prosecutor’s office of Potenza, Italy, for a corruption charge of €15 million to undertake the oilfield in Basilicata on contract. Also arrested was the local deputy of Partito Democratico Salvatore Margiotta and an Italian entrepreneur.
In April 2010, Total was accused of bribing Iraqi officials during former president Saddam Hussein’s regime to secure oil supplies. A United Nations report later revealed that Iraqi officials had received bribes from oil companies to secure contracts worth over €10B. On 26 February 2016, the Paris Court of Appeals considered Total guilty and ordered the company to pay a fine of €750,000 for corrupting Iraqi civil servants.
Despite the European Union’s sanction against the military dictatorship Myanmar, Total is able to operate the Yadana natural gas pipeline from Burma to Thailand. Total is currently the subject of a lawsuit in French and Belgian courts for the condoning and use of the country’s civilian slavery to construct the pipeline. The documentary ‘Total Denial’ shows the background of this project. The NGO Burma Campaign UK is currently campaigning against this project.
OVERSTATED COSTS
In 2004, the government of the Republic of Congo contracted independent, external audit firms to audit the costs of its oil permits. Overall, 13 audit reports for 2004 and 2005 were subsequently published, covering nine permits held by the oil and gas companies ENI and Total.
The audits found that the companies had overstated their costs by $127 million. In fact, $15 of every $100 in declared recoverable costs that auditors sought to verify were ineligible or excessive. Assuming a 50 percent split in profit oil, the Congolese government lost $63.5 million. Of the 13 reports, nine pertained to 2005, for which the revenue loss was $55.3 million.
That amount of additional revenue would have been enough to lift one-fifth of Congo’s 1.6 million poor people out of poverty. In addition to this, it was noted that in 2016, the Auditor General of Uganda disallowed $80.5 million worth of petroleum costs for all petroleum agreements (PAs) for the period 2004 to 2011. The costs were disallowed on the basis that they did not comply with the terms of the PAs or were related to licensed areas where discoveries were yet to happen. Industry analysts such as Oxfam America have said that the disallowed costs would have increased government revenue by $24 million. (See link for more details: https://oxfamilibrary.openrepository.com/bitstream/handle/10546/620595/bp-examining-the-crude-details-131118-en.pdf)
To be continued…

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