Saturday, June 17, 2006

Justice At Last! SEC Probes Exxon, CVX Payments To Equatorial Guinea

In a serious case of bribery allegations again major oil companies including ExxonMobil and Chevron, the Securities Exchange Commission is finally looking* [see Editor's Note below] at possible charges two years after evidence of bribes paid to officials of the West African dictatorship surfaced in the Senate Commerce Committee chaired by oil company surrograte Republican Sen. Ted Stevens of Alaska. The hearings came to an abrupt halt.

Action against the oil giants has been topic of discussion here at ERHC On The Move ever since a three-paragraph news brief ran in the Los Angeles Times Business section several years ago.

There has been virtually no follow-up outside of this column until Washington correspondent Ken Silverstein mentioned the charges in a column last week for

Here is the article published today* by the Associated Press:

*Editor's Note: We have learned, via Ken Silverstein, that the article below is in fact three years old. We regret not pursuing its origins further.
We are not aware - and neither is Ken Silverstein, he said - of any further action on the investigation that was announced in the article below. The investigation of the majors came about only after he revealed questionable payments by them in the Los Angeles Times, prompting the Senate Commerce Committee hearings (and the SEC probe) that followed.

SEC eyes oil payments to Equatorial Guinea

WASHINGTON (AP) — The Securities and Exchange Commission is examining payments by four big U.S. oil companies to officials of Equatorial Guinea and businesses they controlled, as government inquiries related to the Riggs Bank affair proliferate.
Spokesmen for the companies — Amerada Hess (AHC), ChevronTexaco (CVX), ExxonMobil (XOM) and Marathon (MRO)— confirmed Friday that they had recently received letters from the SEC requesting information in a preliminary investigation. They said the companies were cooperating in the inquiry, which is being conducted by the SEC's office in Fort Worth.

SEC spokesman Matt Well in Washington declined to comment.

At issue is whether U.S. anti-bribery laws were violated in the companies' activities in Equatorial Guinea, a poor West African country cited by the State Department for human rights abuses, corruption and diversion of oil revenue to government officials.

In the course of an overall investigation of account transactions at Riggs, Senate investigators discovered large payments made by the oil companies to officials of Equatorial Guinea and their relatives. That raised concerns about possible corruption, voiced by senators at a hearing last month.

Executives defended the companies' actions in Equatorial Guinea, testifying that they have strictly complied with the Foreign Corrupt Practices Act and have entered only into legitimate business ventures there.

Spokesmen for Amerada Hess, ChevronTexaco and Houston-based Marathon reiterated that position Friday.

"Our policy is for all ChevronTexaco employees to fully comply with the law at all times," spokesman Stan Luckoski said from the company's headquarters in San Ramon, Calif.

Exxon spokeswoman Susan Reeves would say only that company received the request from the SEC on Thursday and planned "to cooperate fully."

The SEC and the Justice Department have pursued a number of cases recently under the law, which bars U.S. companies and individuals from bribing foreign officials.

The SEC has been formally investigating, for example, allegations that a Halliburton (HAL) subsidiary was involved in paying $180 million in bribes to get a natural gas project contract in Nigeria. The SEC and the Justice Department have asked Halliburton to cooperate and provide information.

The SEC inquiry concerning the four oil companies and Equatorial Guinea is preliminary and not formal and the companies' furnishing of information is voluntary.

News of the inquiry, first reported Thursday by The Washington Post, comes about a week after the disclosure that the Justice Department is investigating the federal regulator who oversaw Riggs during a period of deficient money-laundering controls and later became a senior executive at the bank.

The ethics investigation of R. Ashley Lee was triggered by a referral of the matter on July 20 by the Office of the Comptroller of the Currency — where Lee was the lead examiner for Riggs — to the Justice Department. Inquiries into activities of current or former federal employees by Justice's Office of Professional Responsibility can sometimes develop into criminal investigations.

A report issued last month by the Senate investigators revealed that senior Riggs managers helped former Chilean dictator Augusto Pinochet conceal millions of dollars in assets from international prosecutors and U.S. regulators. The report said that when he was overseeing Riggs as an examiner, Lee instructed agency staff who had looked into the Pinochet accounts not to put their examination memos or supporting paperwork into the electronic files of the comptroller's office.

He denied having done so at the hearing, saying "I made no (such) instructions to anybody."

Also, a former Riggs senior vice president who was in charge of the Equatorial Guinea accounts, Simon Kareri, is the subject of a federal grand jury investigation. He invoked his Fifth Amendment privilege against self-incrimination at the hearing and declined to answer questions on the bank's handling of the accounts, which have since been closed.

With $700 million in accounts and certificates of deposit for the Equatorial Guinea government, its officials and their relatives, the country easily became Riggs' biggest single customer. Using wire transfers, about $35 million was drained from an account that held oil revenue for the country's people and into offshore companies, according to the report by Senate investigators.

Riggs, an old-line Washington institution with deep roots in the diplomatic community, was fined a record $25 million in May by the comptroller's office for allegedly failing to report suspicious transactions in the Equatorial Guinea accounts and those controlled by Saudi diplomats in Washington. Riggs' parent agreed last month to be acquired by PNC Financial Services Group of Pittsburgh in a $779 million deal that will shutter the embassy and international businesses that were Riggs' hallmark.

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