Wednesday, July 11, 2007

Once More Unto the Breach of Trust: ERHC is Subpoenaed by the Senate

A Senate subcommittee much like one that studied bribes by ExxonMobil, Chevron, Pioneer Natural Resources and Marathon Oil to West African leaders - and then fell strangely silent - is now turning its gaze towards smaller fry, the four employees of tiny Houston-based, Nigerian-owned oil company ERHC Energy, whose stock rose to $0.31 on the news.

The company won rights to various blocks in the Gulf of Guinea that may be worth countless billions to the Big Oil firms that badly wanted them, but Nigeria's newly-elected President said July 9 that he supports the current rights-holders - including ERHC Energy - and his government and that of Sao Tome have refused to cooperate with the tainted probe that ultimately produced the request.

Until ERHC broke the mold, no Nigerian company had ever been granted substantial rights to Nigerian oil. The country is the world's fourth largest oil producer, capable of more than 3 million barrels per day. But it is miserably poor and many of its citizens have no electricity. The oil revenue flows to Europe and the United States, or is swallowed up in corruption in Nigeria.

The JDZ's Second Licensing Round in 2005 saw a Nigerian-owned firm - ERHC is controlled by Nigerian businessman Sir Emeka Offor and its First Atlantic Bank - shoulder aside the American, French and British oil behemoths competing for six blocks of the Joint Development Zone. That region of the Gulf of Guinea is saidto hold some 14 billion barrels of oil, according to the Houston Chronicle.

ERHC and its partners, Swiss-based Addax Energy and others - have hired a drillship set to begin deepsea oil exploration of the rights in 2008.

The genesis of the Sao Tome probe is compelling.

George Soros, a 6.4% shareholder in Pioneer Natural Resources - a onetime partner of ERHC in the battle for lucrative drilling rights in the Nigeria-Sao Tome and Principe Joint Development Zone - paid tens of thousands of dollars through the Senior Lawyers Project for an investigative report signed by the Sao Tome and Principe Attorney General, but actually written by R. Dobie Langenkamp of the Tulsa U. School of Law, the father of a Nightmare on Elm Street star.

In the report, Langenkamp asked for an SEC and FBI probe of the company and its rights to JDZ blocks 2, 3 and 4, which are estimated to hold some 14 billion barrels of oil. ChevronTexaco and ExxonMobil have already struck oil in their adjoining Block 1, but now say that what the Wall Street Journal said could be a billion-barrel strike is not "financially viable."

Supoenas soon followed, all aimed at ERHC. The aim appears to be to get the company to turn over its rights to the likes of ExxonMobil, ChevronTexaco, Pioneer - the Soros investment which unsuccessfully fought ERHC for the rights - and Anadarko, which tried to get a joint bid with ExxonMobil approved after the deadline for bids had passed. That effort was rejected by the JDZ's Joint Ministerial Council, and buttons started getting pushed in Washington with greater intensity than ever.

The industry's p.r. mavens called in all their chits, apparently, as attacks on ERHC soon began appearing in The Wall Street Journal, Houston Chronicle, Harper's Magazine, the New Yorker and most recently, the New York Times, as the evildoer that cheated Sao Tome out of its oil rights.

But ERHC officials had twice rewritten their deal with Sao Tome, and its oil might never have gcome under scrutiny if ERHC had not paid for a $6 million geological study of potential Gulf of Guinea deposits.

Meanwhile, the bribery investigation of the Big Oil firms by the Senate Commerce Subcommittee on Energy remains unresolved.

According to an L.A. Times article that was never followed up, the senators were examining millions of dollars in bribes to West African leaders by ChevronTexaco, ExxonMobil and other companies, including Pioneer and another former ERHC partner, Noble, when the Commerce and Energy subcommittee investigation of Foreign Corrupt Practices Act violations suddenly disappeared.

Back in the day, one ERHC CEO actually denounced Sao Tome leaders at an airport press conference for demanding a bribe, and then left the country. None of the new stories mention Langenkamp, the Pensabenes or the bribery investigation that suddenly stalled.

Senate Energy Committee Republican chief counsel Judy Pensabene, a student of Langenkamp's - as was her husband, former Energy Dept. official Greg Pensabene, nopw the top government lobbyist for Anadarko - was honored by Langenkamp even as he was preparing to write the report. In 2005, he named Pensabene a "Distinguished Visiting Professor" at his Tulsa U. law school, where he trained dozens of the top lawyers in major oil companies (which, notably, would not include ERHC attorneys). Langenkamp serves with many of them on industry non-profit boards.

Meanwhile, Pensabene's boss - 83-year-old Republican Sen. Ted Stevens, until recently the chairman of the Senate Energy Committee - is now under investigation for the taxpayer-funded expansion of his home in Alaska, which doubled the compound's size. He is a strong supporter of ExxonMobil and ChevronTexaco's Arctic drilling projects and plans, and has been royally rewarded by the industry he oversees.

No newspaper has followed up on the twisted origins of the attack on ERHC. No one expects that they ever will. And now, more than 14 months after its offices were raided by the FBI, there is still no sign of an indictment against the company. An ERHC lawyer has agreed to meet with the SEC and provide them with documents on July 18, however.

Here is the Houston Chronicle piece:

July 11, 2007, 12:10AM
Subpoena delivered to ERHC
Senate panel questions payment for energy deals off west Africa

Copyright 2007 Houston Chronicle

Email Get section feed
Print Subscribe NOW
Comments Recommend
Houston's ERHC Energy has been subpoenaed by a Senate subcommittee looking into possible improper payments related to ERHC's oil and gas holdings around the island nation of São Tomé and Príncipe.

The U.S. Senate Committee on Homeland Security and Governmental Resources Permanent Subcommittee on Investigations sent the subpoena on Thursday asking for documents "in connection with its review of matters relating to the potential abuse of payments made to foreign governments," according to a statement by ERHC Monday.

Senate investigators are particularly interested in information "related to the acquisition of ERHC's interests in the Gulf of Guinea," where ERHC has the right to drill for oil and gas off the coast of São Tomé, the company said.

In the statement, interim CEO Nicolae Luca said ERHC believes development rights it negotiated with São Tomé over the past decade were "legitimately awarded to ERHC."

A spokeswoman for the Senate subcommittee declined comment on the investigation.

In December 2005, São Tomé's then-attorney general called on the U.S. to investigate ERHC's dealings in the region, saying in a report that ERHC and politically connected Nigerian businessman Emeka Offor "may have made improper payments to government officials."

Last year FBI agents raided ERHC's offices in Houston looking for possible "things of value" paid to officials in São Tomé and Nigeria, an FBI affidavit filed in Houston said.

Last month the U.S. Securities and Exchange Commission issued a subpoena to Sugar Land attorney O.J. Chidolue, an employee of a major ERHC shareholder, ordering him to hand over documents and speak with federal investigators.

According to court filings Chidolue and the SEC reached an agreement where he would provide the documents by June 29 and testify on July 18.

It could not be determined Tuesday if those terms have been met. SEC officials declined comment. Chidolue and his attorneys could not be reached.

ERHC has signed partnership deals with Swiss firm Addax Petroleum and China's Sinopec Corp., and said in a statement this week the companies were on target to begin drilling test wells off the west African coast next year.

ERHC Energy stock closed up $0.01 on the news.

No comments: