Energy Dep’t selects everal tainted oil traders to market Guyana’s oil

Jun 27, 2020 News

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By Mikaila Prince

The Department of Energy (DoE) has shortlisted 19 oil traders out of 35 applicants to market Guyana’s share of its light sweet crude from the Liza Destiny Floating Production Storage and Offloading (FPSO) vessel, the first oil production ship offshore Guyana.

However, upon examining the list of traders which was publicized by the Energy Department, Kaieteur News found that 15 out of the 19 shortlisted companies have been linked to scandals, foreign bribery and widespread corruption—as previously highlighted in extensive articles published by this newspaper.
These well-documented malpractices, which have resulted in convictions and fines, have ensnared senior executives of these oil companies and traders, 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. This was done in order to win massive contracts, along with acquiring other benefits, and resulted in one of the largest corruption scandals in recent history, the Operation Car Wash affair, the fallout of which was hundreds of indictments, and over a hundred corruption convictions including that of former President of Brazil, Luis Inacio ‘Lula’ Da Silva.
When the Energy Department had advertised a few months ago for Expressions of Interest (EOI) to market Guyana’s crude oil, it had asked all applicants to provide details of any pending litigation or to state if they are under investigation. What remains unclear, however, is if evidence pointing to a corrupt past would be seen as an immediate reason for disqualification, the DoE said in their statement yesterday.
A five-member Evaluation Committee was formed and tasked with producing a shortlist of companies, after a “detailed check” of each firm’s EOI for general and technical data in relation to qualifications and experience pertinent to the assignment at hand, and as was required to be submitted in the request for EOI.

Previously, Kaieteur News had asked Head of the Energy Department, Dr. Mark Bynoe to share details on who the evaluators were since that would be instrumental in selecting the winning company. This was asked to ascertain the competence of the individuals and whether there were possible connections to who would be the eventual winner.
Dr. Bynoe explained during a May 5 press conference that, “…This is not something that the Department of Energy can speak to. What happens normally in a procurement process is that we will make a recommendation to the National Procurement and Tender Administration Board (NPTAB) and they will look at the evaluators and make a decision based on the names proposed. But I don’t know that it is common practice for the names of the individuals to be divulged at this stage… I am not in a position to share those names and I would have to discuss it with NPTAB.”
When Kaieteur News had questioned NTPAB about the identities and qualifications of the evaluators in May, it had declined to provide same.
Meanwhile, Leader of the People’s Progressive Party/ Civic (PPP/C), Bharrat Jagdeo is of the view that now is certainly not the ideal time to be signing on to these international contracts, especially considering the impasse the country has been caught in for the past 117 days in the aftermath of the March 2, General and Regional Elections.

The tainted companies
One of the companies shortlisted 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, 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 centre 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.
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, including the United States.
Finally, there is the company contracted to buy Guyana’s first three lifts of oil.: 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.

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