• SECRET US CABLE SHINES LIGHT ON ENI CORRUPTION IN UGANDA
• HERITAGE OFFERED TO PAY BRIBES IN CONGO

‘’If Tullow’s allegations are true – and we believe they are …”
US Embassy, Kampala, 17 December 2009

A secret United States diplomatic cable (below and here[1]) published by Wikileaks last week has exposed the real politics of oil in Uganda, confirming that the Americans believed that corruption was endemic at the highest level of decision-making. The December 2009 report sent by the US embassy in Kampala confirms that:

– The Americans believed the allegations that Italian oil major Eni was trying to bribe its way into Uganda’s oil fields in late 2009 by making payments through the security minister (and ruling party secretary-general) Amama Mbabazi , using a holding company, TKL Holdings
– Tullow believe Tony Buckingham’s Heritage Oil – the very company it was partnered with -had also ‘compensated’ Ugandan politicians in order to facilitate a deal with Eni and assist Heritage’s exit from the country
– Heritage also offered to ‘take care’ of Congolese officials on behalf of its partner Tullow to get exploration moving on the other side of the lake

The cable, which largely reports a conversation between Tullow Vice President Tim O’Hanlon and the US Ambassador Jerry Lanier, was written at a crucial time: Heritage was seeking to sell its Lake Albert oil licenses to Eni; its then partner Tullow wanted them too. The three-way tussle resulted in weeks of secret negotiations in Kampala in which senior politicians lobbied on behalf of different corporate interests and money was widely rumoured to be changing hands.

Platform was handed a Ugandan intelligence document in January 2010, two months after the US cable was sent, outlining the ENI bribes – naming Mbabazi, the use of TKL Holdings, the role of frontmen Mark Christian and Moses Seruje, and the presence of Eni ‘broker’ Oded Mayer in Kampala.

No concrete evidence ever emerged. Heritage ultimately sold to Tullow, not Eni, and skipped the country without paying $400m in capital gains tax on the $1.3bn it received in the deal. Mbabazi remains one of the most influential of the National Resistance Movement old guard, close enough to President Museveni that few think he would have coordinated bribes without his boss’ sanctioning. It was reported at the time that Eni were furious that their payments had yielded no result.

Key questions remain:
– On what basis did the US embassy believe the allegations to be true? Had they conducted their own investigation and why were their concerns not shared?
– Why was evidence not shared with the US Securities and Exchange Commission, which was then investigating ENI for violating the Foreign Corrupt Practices Act for bribery in Nigeria?
– Do the United States or other embassies have evidence of other payments made by oil companies in Uganda? Has Tullow sanctioned bribes or has it turned a blind eye to payments facilitated by its new partners, Total and CNOOC?
– Why have repeated Freedom of Information requests made by PLATFORM to the United Kingdom Foreign and Commonwealth Office produced no answers when these matters are almost certain to have been under discussion? Especially given that the US cable documents O’Hanlon specifically asking the US Ambassador to work “in concert with the British High Commissioner” to raise concerns over the Heritage-ENI sale.

The leaking of the cable has caused a storm in Uganda, with just weeks to go before the Presidential election and with Tullow still fighting for government approval for production to start alongside Total and the China National Offshore Oil Company. The decisions taken in 2009/2010 – and the process by which Tullow ultimately won the battle of the companies – are still cloaked in secrecy.

ENI have issued a spluttering denial. ”ENI denies the serious allegations which are completely without foundation and has instructed its lawyers to initiate legal proceedings to compensate for any damage caused to the company’s reputation,” a spokesman said.

Meanwhile, Tullow’s O’Hanlon wrote to President Museveni two days ago, denying the conversation with the American Ambassador and desperately trying to smooth out the situation. Tullow are already unpopular with Ugandan politicians – these revelations so close to the election will sour relations further.

He wrote: “No doubt you have been made aware of the illegal theft of confidential communications from various US Embassies around the world including that in Kampala and the publication of selected and often doctored elements of these on the internet.

In one such release, I have been mentioned as accusing your Honourable Ministers ONEK and MBABAZI of involvement in corruption during a meeting I had with the US ambassador last year. This is absolutely false.

Of course, I never made such a claim to the US ambassador but merely discussed with him at our meeting in December 2009 the detailed stories published in the previous week’s local press and the associated rumors circulating in Kampala at that time. I have no evidence to present implicating the Honourable Ministers in corruption and have no reason to believe that the rumors sweeping Kampala at the time were actually true.

I can assure Your Excellency that we will continue to monitor these matters closely and will work in any way we can with the two Ministers involved to help clear their names. I remain available in Kampala and welcome any advice you may have to offer in this regard and sincerely regret this entire unhappy episode.

Respectfully Yours

Tim O’HANLON 
Vice-President, African Business

HERITAGE OFFER TO PAY BRIBES IN DRC

The cable also quotes O’Hanlon bemoaning the company’s lack of progress with its license on the other side of Lake Albert, in the Democratic Republic of Congo.

‘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 President Laurent Kabila. 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.’

Platform was handed a letter in Kinshasa in May 2010 confirming that Heritage had handed over legal “rights of negotiation” to its partner Tullow two years before. The two companies had signed a disputed Production Sharing Agreement in 2006 (leaked to PLATFORM and available here[2]) and had been lobbying for exploration to start since then. The cable now reveals that Heritage did in fact still have a presence in Kinshasa which it was willing to exert on behalf of its partner – but behind the scenes. In the cable, O’Hanlon says Tullow refused this help. But Congolese are still asking:

– Why were Heritage and Tullow granted their original PSA in 2006? What payments were made then?
– If Tullow was officially handling negotiations with Kinshasa in 2009, why were Heritage still in a position to ‘take care’ of problems?
– Does Tullow now admit that it believed its DRC partner was prepared to offer bribes?
– Did the British Embassy in Kinshasa know about Heritage’s proposal to pay bribes? If so, why have the FCO, UK Trade & Industry and BIS not restricted their diplomatic support for the company, including its operations in Iraq?
– If the British Embassy was not informed by Tullow about Heritage’s offer, will it now – in light of these revelations – re-evaluate its close relationship with Tullow?
– Given the allegations about Heritage’s willingness to pay bribes, has the British Embassy in Kinshasa now passed all relevant information to the Serious Fraud Office in London?

The leaked cable only provides a first, partial picture of how companies and governments are colluding at Lake Albert to enrich themselves and the lengths oil executives will go to in order to secure contracts. Many other examples of corruption are well known to local journalists and communities at Lake Albert but cannot be proved without tracing the money or catching intermediaries red-handed. In many cases, evidence will only emerge much later, or when particular politicians and companies fall out of favour. But we are already getting glimpses of the dirty deals and dishonest politics that lie behind the promises and public relations. Heritage have left Uganda and DRC with $1bn in their pocket. But the nature of their relationships in both countries must still be the subject of urgent investigation.

This blog piece was written by Taimour Lay, Former PLATFORM researcher, Uganda and DRC

For more information on the history of Tullow and Heritage in Uganda and DRC, see PLATFORM’s reports athttp://www.carbonweb.org/uganda and http://www.carbonweb.org/drc



Endnotes:
  1. here: http://cablesearch.org/cable/view.php?id=09KAMPALA1401&hl=tullow
  2. available here: http://www.carbonweb.org/showitem.asp?article=379&parent=39