ERHC Energy Inc (ERHE)

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Aug. 17, 2007, 12:26AM
Chief of scrutinized Houston-based oil company quits
ERHC's actions in west Africa being investigated


By DAVID IVANOVICH
Copyright 2007 Houston Chronicle Washington Bureau

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WASHINGTON — Nigerian businessman Emeka Offor is stepping down as chairman of ERHC Energy, a Houston-based oil company whose business dealings in west Africa have come under government scrutiny.

Offor, through his company, Chrome Energy, owns a controlling stake in ERHC, which holds potentially lucrative oil drilling rights off the tiny west African nation of São Tomé and Príncipe in the crude-rich area of the Gulf of Guinea.

Company spokesman Dan Keeney said Offor is resigning to devote more time to other business interests.

In a letter to the company's board of directors, portions of which were made public, Offor said he remained "committed to ERHC and my investment therein and want to assure you all that I will continue to support the company in any way I can."

Offor could not be reached for comment.

In May 2006, FBI agents raided ERHC's offices on Westheimer and carted off 118 boxes of documents.

According to the FBI affidavit, investigators were looking for possible "things of value" paid to officials in Nigeria and São Tomé.

The company, in filings with the U.S. Securities and Exchange Commission, has said the search warrant alleged violations of the Foreign Corrupt Practices Act, as well as conspiracy and wire fraud.

In July, the company was served with subpoenas from the U.S. Senate Committee on Homeland Security and Governmental Affairs' Permanent Subcommittee on Investigations, which is examining the company's activities regarding its acquisition of drilling rights in the the Gulf of Guinea.

Interim CEO Nicolae Luca said in a statement then that the ERHC believes development rights it negotiated with São Tomé over the past decade were "legitimately awarded to ERHC."

Offor, a wealthy man with powerful political connections in Nigeria, was instrumental in pushing Nigeria and São Tomé to resolve a long-running border dispute and create an offshore development zone, where international oil companies could bid for the rights to drill. As the two countries were creating the joint development zone in early 2001, Offor's Chrome Energy bought its controlling stake in ERHC.

In December 2005, São Tomé's then-attorney general called on U.S. officials to investigate ERHC's dealings in the country, citing in a report a $100,000 payment Offor's company made to a firm controlled by São Tomé's president.

ERHC and its its operating partners, Swiss-based Addax Petroleum and China's Sinopec Corp., are pushing ahead with plans to begin drilling exploratory wells as early as the third quarter of 2008.

As of June 30, the company had cash assets of $35.8 million. Last week, ERHC announced it had posted a net loss of $587,000 during the second quarter, compared with a loss of $621,000 during the same three months a year earlier.

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