First the good news: Ken Silverstein is wrong. The FBI investigation of ERHC Energy has nothing to do with Rep. William Jefferson. But it has to do with the heads of state of Nigeria and Sao Tome, and much, much more.
That's the key conclusion we reached from a partial review of an 83 pages of documents - including a six-page list of items sought by the government, and a 13-page list of items seized compiled by ERHC, and several ERHC affadavits - filed in Federal District court in Houston that describes the FBI's all-day search on March 4, 2006.
Acting on a sealed affidavit from FBI Special Agent Dana Griffin and a search warrant signed by a Texas magistrate, early on Thursday morning, March 4, 2006, 15 or more armed FBI agents led by Special Agent Robert Wolosyzn and "armed with guns and wearing bulletproof vests" entered ERHC's offices at 5444 Westheimer Blvd. in Houston. Receptionist Jane Barker immediately got on the phone to Breward & Pritchard, the company's attorneys, and lawyers Alison Baker and John Clay arrived "at or slightly before 9 a.m." to find ERHC Energy President Walter Brandhuber leaving the conference room in the company of U.S. Attorney Mary Kit Dimke.
The two lawyers were told to sit in a corner of the office after Clay advised Dimke that he was advising his clients not to speak to her or the agents without counsel present. Until after 6 p.m. that night, they watched as agents carted some 118 boxes of evidence away.
The search was conducted pursuant to criminal violations of the Foreign Corrupt Practice Act and various other statutes related to business and wire fraud, the search documents say. ERHC has asked that the government's review of the documents be enjoined and that all be returned, and the government offered to let a "taint team" of prosecutors determine what was attorney-client privileged information, an ofer the company rejected. Now, the government has "broken off negotiations" about the documents, the lawyers say.
Here is ERHC Energy attorney C. Alison Baker's description of the search:
"Over the course of an entire business day, agents conducted a wholesale vacuuming of vitually all original files contained in ERHC's office (over 118 boxes worth of documents), as well as a complete and total electronic "imaging" of all ERHC computer hard drives and computer data including all ERHC email communications."
Included in the documents seized were shareholder lists from 1997-2000 and a Dec. 7, 2004 shareholder list, along with a disc taken from the company's safe filled with seismic data from Blocks 1 - 9, many other discs, and images of all the computer hard drives in the office and on a Sony Vaio laptop.
In a six-page list of everything the FBI and Dept. of Justice hoped to find, there were some interesting names - an in a folder that was seized were even more, including that of Phil Nugent and another entitled "Life Energy & Tech Holding, Inc.," that company that would eventually become Global Environmental Energy Resources (GEECF) and which may figure in campaign contributions totaling $4,500 Silverstein said were made by former ERHC executive Noreen Wilson to Rep. Jefferson.
But neither the government search list nor the ERHC complaint filed in response on June 5 mentioned Wilson or Jefferson, lending a substantial foundation for counterclaims against Ken Silverstein's Harper's articles claiming Jefferson's dealings with ERHC Energy, if any, were implicated in the May 4 search.
But key names on the government's search list are compelling.
The list includes a request for any correspondence Nigerian President Olusegan Obasanjo, Alhaji Atiku Abubakar, Sao Tome and Principe President Fradique de Menezes, former Sao Tome President Miquel Trovoada and his son Patrice, Sao Tome energy officials Joaquim Rafael Branco and Gabriel Arcanjo Ferreira Da Costa, JDA chief Carlos Braganca Gomes, and former Sao Tome foreign minister Mateus "Nando" Meira Rita, and a First Atlantic Bank director who was also a competing bidder for Joint Development Zone blocks, Emmanue Efoby, the head of Foby Engineering.
Notably, Jefferson and Wilson are absent from the government's wish list, and so is GEEC.
Documents related to Frontier Technology Ltd., Texas, "care of Phil Nugent, 5619 Innsbruck, Belair, Texas were sought were sought by the Feds, though.
The search list sought evidence concerning "things of value" given to Nigerian and Sao Tome officials, owners of ERHC stock from 1997 to the present, all records of stock transfers, and documents concerning oil negotiations between ERHC, Chrome Energy, STP Energy Corp., Procura Financial Consultants and both countries, along with expense and travel records, were sought.
The search also sought information concerning ERHC's dealings with a number of "marketing" companies in Miami, Mauritius, Belize and London, including Capital Management Group in Miami, Commodore Marketing Assn., Derby Development Ltd. and Supreme Marketing (all three companies are headquartered on the seventh floor of the Happy World House in Mauritius), and Conquest Consultants and Falcon Commercial Investments in Belize. Lyndhurst Holdings Ltd. in London's St. Johns Wood was also on the FBI's search list.
Also on both lists were requests for and folders of correspondence about due diligence issues with Pioneer Resources, including a letter from ERHC's file drawer No. 4 marked "Personal and Confidential" and refwerencing the JDZ and and a Justice Dept. advisory opinion. The implication arising - since the statutes under which the materials sought include the FCPA from that document is that Pioneer may face an issue concerning as to whether or not it adequately disclosed to the government, as required under the FCPA, information about any suspect payments it may have learned of during its due dilgence process. Pioneer eventually withdrew from its partnership with ERHC. Its shares were up 11 percent, or $4.69, on Friday.
The documents seized included several folders concerning a possible move by the company to the American Stock Exchnage, something many investors have long hoped for.
Among the items seized were one concerning Amerada Hess, which ERHC On The Move believed at one time was a potential partner, and a letter from Anadarko, along with folders for Devon Energy, Noble Energy and Anadarko Petroleum Corp. Two other Sao Tome officials, Hassan Tukur and Hashim Tumsa, were also named on the search list.
The two lawyers went downstairs after talking with Dimke and Brabndhuber and an affadavit by one of them says they "crossed elevators" with the company's newly-appointed accountant and CFO and then rushed back uypstairs to advise him not to speak with the government people. Dimke later wrote the two lawyers saying they had committed "obstruction of justice" in telling both Brandhuber and the CFO not to talk with her.
Th impact of the search, the lawyers stated in the motion, has been great. The government's blanket refusal to allow its lawyers o review the cocuments "has left the company completely in the dark as to the factual basis for an apparent Dept. of Justice investigation that has left the company subject to an uncononsented search and without any of its business records" and "unable to function in a normal manner."
That's certainly consistent with our share price, which is now at $0.42, up $0.019 for the day on volume of 1,077,314 shares.