Seems as though enough is not enough, please!
REUTERS Sao Tome to ask U.S. to probe ERHC oil contracts
By Zoe Eisenstein
SAO TOME, Dec 12 (Reuters) - Sao Tome will ask U.S.
authorities to investigate contracts awarded to Houston-based
ERHC Energy <ERHE.OB> following a probe into alleged
irregularities in an oil exploration licensing round.
A report by Sao Tome's Attorney General's office said there
were repeated suggestions that Nigerian-controlled ERHC made
improper payments to officials and their families during the
award of oil blocks in a joint development area shared with
Nigeria.
"Key officials in the past have been reported to have
solicited bribes, and ERHC has provided known benefits to the
families of key decision makers," said the report, a copy of
which was obtained by Reuters.
"Such payments would be a violation of Sao Tomean law and
make the contracts voidable," the report said.
"The office intends to refer this matter to the U.S.
Department of Justice and the Securities and Exchange Commission
and to seek their assistance in investigating whether violations
of U.S. law have occurred."
U.S.-listed ERHC, which Sao Tome says is controlled by
Nigerian company Chrome, was the biggest winner from the
licensing round for five blocks, gaining the joint control of
two blocks and stakes in the three others.
Asked about the report, ERHC President and CEO Ali Memon
said his company had acted at all times in consortia with U.S.
companies.
"Whatever we have done from the time of the submission of
the bids, we have acted in consortium with other major U.S.
companies," Memon told Reuters. "ERHC has had no contact with
any Sao Tomean officials whatsoever through the bid process."
The round, which concluded in May, was the second held in
the Joint Development Zone (JDZ) shared by the two neighbours in
the Gulf of Guinea.
The Nigerian attorney general's office had not cooperated in
the probe and no Nigerian officials had testified, the report
said.
The preferential rights granted to ERHC would, if executed,
result in a loss of $58.6 million in revenues for Sao Tome, the
investigation concluded.
Separately, the attorney general's report noted the
conditions of ERHC's agreement were so favourable they might
violate Sao Tomean law by "alienating" -- signing away control
over -- its natural resources.
"Apart from fraud, Sao Tome and Principe should again
reexamine whether there are grounds for terminating the
contract," the report said.
Expressing concerns over the financial and technical
qualifications of some of the companies awarded blocks by the
Joint Development Authority (JDA), the inquiry suggested some of
their partners might simply withdraw.
"One immediate challenge to the JDA may be the partial
collapse of the second round itself," the report said, noting
none of the groups awarded blocks had finalised production
sharing agreements with the JDA.
The report said top U.S. independent oil producer Devon
Energy Corp. <DVN.N> and Noble Energy Inc. <NBL.N> had already
withdrawn from two groups where ERHC was a partner.
The investigation recommended the JDA should simplify the
bidding process, making it more transparent and reducing the
number of variables open to bidding.
International observers should be invited to observe the
process and members of the JDA should be made to disclose any
interests, the report concluded.
