WikiLeaks cables: Antidote to corruption in Africa?

Published on Pambazuka News, Issue 510, Cameron Duodu, December 16, 2010.

As the fallout from the release of the WikiLeaks cables continues, Cameron Duodu considers the implications for addressing corruption in Africa.

… The cable that follows relates to Uganda, but comes very close to something that may – or may not – have happened in Ghana, which has similarly had its disputes with oil companies about the ownership of oil blocks. Read it and draw your own conclusions:

  • ‘Thursday, 17 December 2009, 11:37 S E C R E T SECTION 01 OF 02 KAMPALA CLASSIFIED BY: Donald Cordell, Economic Officer, State [Department]
  • ‘1. Tullow Oil claims senior Ugandan government officials were ‘compensated’ to support the sale of a partner/rival firm’s exploration and production rights to Italian oil company ENI (ref. A).  
  • ‘Tullow Vice President for Africa Tim O’Hanlon identified XXX and YYY, as Ugandan officials who benefited from the sale of production rights by Heritage Oil and Gas to [Italy’s] ENI. {O’Hanlon] requested U.S. assistance in ensuring the open and transparent sale of oil assets.
  • ‘On 14 December [2009], Tim O’Hanlon, Tullow Oil’s Regional Vice President for Africa met with Ambassador Lanier to discuss recent developments in oil exploration in Uganda . O’Hanlon explained that the $10+ billion required to produce, refine, and export oil from Uganda far exceeds the financial capacity of Tullow and other mid-sized exploration companies currently working in Uganda. Tullow is therefore considering selling a portion of its Uganda holdings to a larger international oil partner, and has unofficially ‘short listed’ three major companies as potential partners – including Exxon Mobil, Total (France), and the Chinese National Offshore Oil Company (CNOOC).
  • ‘After Tullow concludes its process of selecting a partner, likely in January or February 2010, Tullow will present the ‘bids’ to the Uganda government and work with Ugandan officials to gain approval of the much larger oil partner.
  • ‘In contrast, O’Hanlon said, the recent effort by Heritage Oil and Gas to sell its oil exploration and production license to ENI was apparently a corrupt back door deal. O’Hanlon observed that since news of the ENI sale broke, even Ministers unrelated to oil (such as XXXX) have issued public statements supporting ENI. O’Hanlon alleged that XXX received payments from Heritage and/or ENI in exchange for their support.
  • ‘O’Hanlon referred to XXX, who facilitated an August 2009 meeting between ENI and Tullow, as ENI’s ‘patron’ in Uganda, and said ENI created a shell company in London – TKL Holdings – through frontmen XXXXX and XXXXXX – to funnel money to XXX….
  • ‘O’Hanlon said ENI’s Uganda deal is part of a wider effort, facilitated by Heritage, to gain control of all oil fields on both sides of Lake Albert. In addition to its exploration blocks in Uganda, Tullow claims to have exploration rights on the Congolese side of Lake Albert. O’Hanlon said Tullow’s exploration efforts on the DRC side of Lake Albert are hampered by Tullow’s refusal to pay off key Congolese officials, including XXXXXXX. O’Hanlon added that Heritage recently offered to help Tullow ‘take care’ of problems on the Congolese side in order to begin exploration. Tullow refused, according to O’Hanlon.
  • ‘5. (C) O’Hanlon concluded by asking the U.S. to help bring these corruption allegations to light and raise concerns – perhaps in concert with the British High Commissioner or other development partners – over how the Heritage-ENI sale has transpired. O’Hanlon confirmed that Tullow has the contractual right to prevent the Heritage-ENI sale by exercising its contractual ‘right of first refusal’ as a 50% partner in both of Heritage’s exploration blocks and will exercise that right. He said Tullow is confident that one of the potential major oil partners (preferably Exxon Mobil) will be able to assist Tullow in financing the approximately $1.5 billion needed to foil the Government of Uganda-supported ENI deal, by purchasing Heritage’s Ugandan holdings.
  • ‘An Exxon Mobil executive confirmed to [the US] Economics Officer on December 16 that Exxon Mobil has a strong interest in Uganda but is still evaluating available data before making an offer. Because an eventual Tullow-Exxon deal will require Ugandan government approval, the Government of Uganda could still prevent Tullow from raising the funds needed in order to buy out Heritage (so it could then sell those shares to Exxon Mobil) and thereby deny Tullow the means to effectively block ENI’s entrance into the Ugandan oil market.
  • ‘This is a critical moment for the future of Uganda’s oil industry. The Heritage-ENI deal could prevent a multi-billion dollar deal for Exxon Mobil, by drastically diminishing both the size and value of Tullow’s Ugandan holdings. Allegations that XXX, who has already been implicated in other government corruption scandals, solicited and/or accepted payment in exchange for government support will, if true, have serious adverse effects on the economic activity of U.S. businesses in Uganda and U.S. Mission goals regarding accountability, good governance, and economic development. After discussions with Exxon Mobil to confirm Tullow’s story, we intend to approach the British High Commissioner and the Irish Ambassador about drafting a joint letter to President Museveni expressing concern about these very troubling signs of high-level corruption in Uganda’s oil sector’.

(full long text).

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