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Senegal Govt. was aware of obvious corruption red flags but chose to ignore them – Expert says
How Senegal lost US$ billions on gas fields…
Kaieteur News – In 2012, BBC News revealed by way of a Panorama documentary, how the Senegalese government signed away two offshore gas blocks that cost its people billions of US dollars. The sweetheart deals were struck with a company called PetroTim which was registered in the Cayman Islands on January 17, 2012. PetroTim, however, was then and still is an industry unknown.
Expert on Oil Sector Corruption, Alexandra Gillies
President of Senegal, Macky Sall
Called: Romanian-Australian businessman, Frank Timis
So unknown was the company that it did not exist at the time the deals were struck with company owner, Frank Timis. Two years after creating the first shell company, the Romanian-Australian businessman – who has a well known history of fraud, corruption, and misleading investors, created another firm which he called Timis Corp. It was registered in the British Virgin Islands. Timis transferred the 90 percent stake he had in the two offshore concessions, Saint Louis and Cayar, to this new company.
Following this, Timis hired the brother of Senegal’s President Macky Sall, to run Timis Corp and paid him US$25,000 per month. The BBC also reported a secretive payment from Timis Corp to an offshore company owned by the president’s brother, though the company and the brother deny the payment ever existed.Less than two months after registering the new company and hiring the President’s brother to run the show, Timis Corp, sold 60 percent of the shares to American oil company Kosmos in 2014. That same year, Kosmos found major natural gas reserves. The United Kingdom (UK) oil giant British Petroleum (BP) subsequently joined the partnership which saw Timis getting more than US$200M. In 2017, BP bought out Timis Corporation and agreed to pay Timis billions of US dollars in royalties over 40 years.Following the release of the damning BBC documentary, many industry analysts have sought to examine the red flags which were ignored and led to Senegal
losing hundreds of millions of dollars in rights to the blocks which are estimated to contain as much as 50 trillion cubic feet of natural gas and a billion barrels of oil.One such international watchdog that has taken a closer look at this case is the Natural Resource Governance Institute (NRGI).
Aliou Sall, the brother of Senegal’s President
According to its Expert Advisor on Oil Sector Corruption, Alexandra Gillies, the controversial sale of the Senegalese blocks holds critical lessons that all oil producing nations and civil society activists must pay keen attention to. Gillies noted that the Senegalese case sounds several alarm bells, the first one being that PetroTim, was an unqualified company. She said that it had no exploration experience or track record in the industry and was only incorporated after the contract was signed for the oil blocks.In light of this, Gillies said it is important to ask: Why did the Senegalese government choose PetroTim, an unqualified company to begin with? Why did it then let Timis Corporation, a shell company registered in a tax haven, acquire the rights? And, why did two major oil companies, Kosmos and BP, choose to partner with the Timis Corporation?
Gillies said that these questions expose that the challenge is not one of inadequate due diligence by the Senegalese authorities, but rather, low standards which ultimately led to billions of dollars in gas wealth being lost through corrupt means.
Map showing the two controversial gas blocks off the coast of Senegal
She said, “Most of the red flags were observable well before the BBC’s investigation. Savvy and experienced companies such as Kosmos and BP surely saw them, and the government of Senegal likely did too. The government award process failed to weed out PetroTim as a suboptimal candidate.”
The expert added, “The later decisions by Kosmos and BP to move ahead with the deals suggest that they found their legal risks to be acceptably low, such as with respect to the U.S. Foreign Corrupt Practices Act or the U.K. Anti-Bribery Act. So, it’s not that the parties’ due diligence systems failed to uncover the red flags; it’s more likely that they noted, assessed the risks and decided they were worth taking.”
Gillies noted that unless governments and companies adopt stronger standards, the natural resource wealth of developing countries will continue filling up the pockets of the “Timises of the world”, instead of transforming the lives of the true owners of the nation’s patrimony.
(More details on this massive giveaway will be published in subsequent days…)
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