ERHC in the Wall Street Journal
By Chip Cummins
Of THE WALL STREET JOURNAL EUROPE
LONDON - The attorney general of the West African island nation of Sao Tome &
Principe has asked the U.S. Department of Justice and the Securities and
Exchange Commission to investigate Houston-based ERHC Energy Inc., an
over-the-counter-listed company that earlier this year clinched a number of
oil-exploration awards.
The tiny, former Portuguese enclave, situated in the Gulf of Guinea off the
coast of Gabon, has excited the interest of large Western companies eager to
explore the potentially oil-rich waters around the islands.
(This story and related background material will be available on The Wall
Street Journal Web site, WSJ.com.)
In a report probing Sao Tome's most recent round of oil-exploration auctions,
the Sao Tome attorney general's office singled out ERHC for special scrutiny
related to a contract the company negotiated with Sao Tome officials over
preferential rights to oil exploration in the islands' waters. The report has
been forwarded to U.S. authorities, according to people familiar with the
situation.
ERHC trades on the OTC Bulletin Board. According to filings with the SEC, its
major shareholder as of late 2004 was Chrome Energy LLC, which in turn is
controlled by a Nigerian businessman named Sir Emeka Offor. Despite its small
size, ERHC has gained a popular following among some OTC stock traders.
Officials at ERHC and Chrome weren't immediately available to comment.
The report, a copy of which was reviewed by The Wall Street Journal, doesn't
identify concrete evidence of wrongdoing, but says at "every stage" of the
probe, "there is the suggestion that ERHC and its parent Chrome may have made
improper payments to government officials or provided benefits to their
families in order to secure the assistance of such officials in continuing the
contract."
In the report, the office said it would seek the assistance of the two U.S.
agencies in probing whether ERHC violated the U.S. Foreign Corrupt Practices
Act. Reuters on Monday reported the attorney general's intention to request
U.S. assistance.
It is unclear if U.S. officials have acted on the request. A Justice
Department spokesperson didn't return a message seeking comment. An SEC
spokesman declined to comment.
The office of Sao Tome Attorney General Adelino Pereira, in a statement last
week, said his investigation found that procedures used to select winning
companies were "seriously flawed," with some companies winning bids without
having the technical or financial expertise to contribute to the projects. The
contracts were awarded by the Joint Development Administration, an agency
formed between Nigeria and Sao Tome that is handling competitive bidding for
the rights to explore acreage that straddles the territorial waters of the two
West African nations.
(END) Dow Jones Newswires
12-13-05 0654ET
Copyright (c) 2005 Dow Jones & Company, Inc.
06:54 121305
AI
