15 of 34 bidders to market Guyana’s crude linked to corrupt practices – Charges, convictions and fines range from bribery to unfair pricing practices

May 01, 2020 News

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By Mikaila Prince

When the Department of Energy invited expressions of interest for a company to market Guyana’s share of oil from the Stabroek Block, it listed stringent conditions of accountability to which bidders had to adhere to be considered for qualification.
A total of 34 companies applied, but as the following report details, almost half of those applicants – oil companies and commodity traders -come with histories of questionable corporate behaviour.
The fact that the National Procurement and Tender Administration Board (NPTAB), the body which is responsible for selecting the trader, has zero experience with electing one in this regard raises further concern. Against this backdrop Kaieteur News thought it necessary to also conduct a comprehensive investigation on these traders, and found nothing shy of damning results.
It was discovered that of the list of 34 oil companies and commodity traders who submitted bids to secure the title of marketer for Guyana’s light, sweet crude, 15 of them have been caught in scandals, foreign bribery, and widespread corruption.
Resulting convictions and fines have ensnared senior executives of these companies while others are still under investigation.
Public documents show for example that three of the world’s largest commodities trading firms – Vitol SA, Glencore PLC and Mercuria Energy Group have used intermediaries to funnel over US$31 million in bribes to corrupt Petrobras employees so that they may win big contracts, along with acquiring other benefits.
One of the companies is China Offshore Oil International Pte Ltd. In 2015, this state-owned Chinese company had their former Deputy General Manager, Wu Zhenfang, under criminal investigation for accepting an undisclosed amount in bribes although it is unclear what the outcome of the case was. Another Chinese company, Sinochem saw Du Keping, the former Vice President sentenced last December to 11 ½ years in prison for accepting USD $1.8M in bribes.
Russian energy company, Lukoil Oil Company & Litasco, is currently being criminally investigated by Geneva’s top prosecutor on suspicion of corruption of foreign officials and money-laundering.
Gunvor Group, one of the world’s top energy traders was found criminally liable for corruption in the Republic of Congo and the Ivory Coast, after failing to avert its employees and agents from bribing public officials. The trader was subsequently ordered to pay almost USD $94 million to the Swiss Attorney General (AG) in October of last year. According to Reuters, the settlement includes a fine of $4M Swiss francs, out of a maximum of $5M million, as well as gross profit plus interest it gained from oil deals in the two West African countries from 2009 to 2011, worth hundreds of millions of dollars.
Equinor, formerly known as Statoil, a Norwegian company was in 2018 fined ROK $20M for misconduct and extensive corruption in Iran in 2002/2003 attempting to secure lucrative oil contracts for the company in that country. The Director for International Operations, Richard John Hubbard was also ordered to pay NOK 200,000 in fines for his involvement in the case. This was mainly achieved by hiring the services of Horton Investments, an Iranian consultancy firm owned by Mehdi Hashemi Rafsanjani, son of former Iranian President Hashemi Rafsanjani. Horton Investments was paid US$15.2 million by Statoil to influence important political figures in Iran to grant oil contracts to Statoil.
French oil major, Totsa Total Oil Trading SA, was found guilty of corruption in the United Nations’ oil-for-food programme for Iraq during Saddam Hussein’s rule. In 2016 the Parisian Court of Appeal found the company guilty of corrupting foreign officials and was fined USD $820,863.
According to the Commodity Future Trading Commission (CFTC), an independent government agency in the U.S, British Petroleum Products agreed to pay a total of $303M in sanctions to settle charges of manipulation and attempted manipulation in the propane market in 2003 and 2004. Adding to the list of infringements, a BBC World Report exposed how BP agreed to pay billions for Petro-Tim, a West African oil company owned by Romanian businessman, Frank Timis. This West African corporation was found to be in the center of corruption in Senegal. Documents showed that BP knew about the suspicious payments, which totaled to millions to the Senegalese President’s brother, Aliou Sall, and it went ahead with the deal anyway.
In 2015 Jiang Jiemin, the former chairman of PetroChina, International Brazil Trading Limited, was sentenced to 16 years in prison for taking bribes and abuse of power. A report stated that authorities also confiscated about 1 million Yuan ($157,600) from Jiang, after he failed to explain where it came from. Later in 2017, the Chinese court found Liao Yongyuan, the former vice chairman guilty of corruption and sentenced him to 16 years imprisonment. According to Reuters Liao had abused his various positions in the energy industry between 1997 and 2014 for personal gain, and between 2003 and 2015 took 13.4 million Yuan ($1.95 million) in bribes, and was unable to account for the origin of 21 million Yuan in assets.
In 2011, Global Witness (GW) revealed how Shell Western Supplies & Trading Limited (Bahamas) participated in a vast bribery scheme for one of Africa’s most valuable oil blocks, known as OPL 245. GW reported that Shell and Italian Oil Company Eni paid over US$1.1 billion in a murky deal for this lucrative asset located off the coast of Nigeria. Following a lengthy investigation by the NGO it was able to access documents showing that this money did not go to benefit the Nigerian people. Instead, it went to convicted money launderer and former Oil Minister, Dan Etete, who had awarded himself ownership of the block in 1998 via a company he secretly owned, Malabu Oil and Gas. GW stated that the money paid for the block equals more than the African nation’s 2016 health care budget. It is also one and a half times what the United Nations says is now needed to respond to the current famine crisis. The deal which allegedly paved the way for billions to be siphoned off to agents and middlemen in corrupt payments has also sparked law enforcement inquiries in six other countries.
And then there is the case of major Stabroek Block partner, ExxonMobil. Another GW investigation conducted in 2018 uncovered that the US oil giant was complicit in corruption in Liberia, with the US $120 million purchase of Block 13 of the country’s oil lands, a block the company allegedly was aware had been previously awarded through bribery. It also suspected the block was partially owned by former Liberian politicians who may have illegally granted it to themselves while holding office. But despite its concerns, Exxon went ahead with the deal. As has been covered by this paper, Exxon has also been linked to scandals in other countries, from the United States to Equatorial Guinea.
In a subsequent report, we will be looking at the other companies with questionable histories that have applied to market our share of crude.
Sidebar
List of Applicants
1. Gunvor
2. Bonroy Tetchem Co Ltd & Guyana Crude Oil
3. China Offshore Oil Singapore Int’l PTE
4. Enteq Resources
5. MAB Oil Limited
6. Hartree Partners LP
7. Mercuria Energy Trading
8. Shell Western Supply and Trading
9. Sacoil Energy Equity Resources
10. Mercantile and Maritime
11. Unipec America
12. BP Products North America
13. ExxonMobil
14. PPT Energy Trading
15. BB Energy
16. Freepoint Commodities
17. Sinochem
18. Cathay Petroleum Int’l
19. Heritage Petroleum
20. Concord Energy
21. PetroCo Oil
22. Totsa Total Oil Trading
23. Lukoil Oil Trading and Litasco
24. Core Petroleum
25. AISAA Petroleum Shipping
26. Century Tamara Energy Services
27. PetroChina International Brazil
28. Gladius Commodities
29. Equinor
30. Vitol
31. Glencore
32. Petrobras Global Trading BV
33. Interchem PTE
34. Aramco Trading

 

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