Wall Street Journal: Probe Found 'No Concrete Evidence'

A Wall Street Journal story out of London today says the paper reviewed the Sao Tome probe report and concludes that investigators "found no concrete evicence" of wrongdoing on ERHC Energy's part.

The closest anyone came to evidence was "repeated suggestions" that came at every step that the company had done something wrong.

Meanwhile ERHE shares bounced back 10 percent from yesterday's frenzied decline, and hit a high of $0.348. At 11:55am EST, the Bid was $0.33 and the Ask $0.335, with some 2,527,572 shares changing hands.
Here is the story, by the Journal's Chip Cummins in London:

ERHC in the Wall Street Journal

By Chip Cummins
Of THE WALL STREET JOURNAL EUROPE


LONDON - The attorney general of the West African island nation of Sao Tome & Principe has asked the U.S. Department of Justice and the Securities and Exchange Commission to investigate Houston-based ERHC Energy Inc., an over-the-counter-listed company that earlier this year clinched a number of oil-exploration awards.

The tiny, former Portuguese enclave, situated in the Gulf of Guinea off the coast of Gabon, has excited the interest of large Western companies eager to explore the potentially oil-rich waters around the islands.

(This story and related background material will be available on The Wall Street Journal Web site, WSJ.com.)

In a report probing Sao Tome's most recent round of oil-exploration auctions, the Sao Tome attorney general's office singled out ERHC for special scrutiny related to a contract the company negotiated with Sao Tome officials over preferential rights to oil exploration in the islands' waters. The report has been forwarded to U.S. authorities, according to people familiar with the situation.

ERHC trades on the OTC Bulletin Board. According to filings with the SEC, its major shareholder as of late 2004 was Chrome Energy LLC, which in turn is controlled by a Nigerian businessman named Sir Emeka Offor. Despite its small size, ERHC has gained a popular following among some OTC stock traders.

Officials at ERHC and Chrome weren't immediately available to comment.

The report, a copy of which was reviewed by The Wall Street Journal, doesn't identify concrete evidence of wrongdoing, but says at "every stage" of the probe, "there is the suggestion that ERHC and its parent Chrome may have made improper payments to government officials or provided benefits to their families in order to secure the assistance of such officials in continuing the contract."

In the report, the office said it would seek the assistance of the two U.S. agencies in probing whether ERHC violated the U.S. Foreign Corrupt Practices Act. Reuters on Monday reported the attorney general's intention to request U.S. assistance.

It is unclear if U.S. officials have acted on the request. A Justice Department spokesperson didn't return a message seeking comment. An SEC spokesman declined to comment.

The office of Sao Tome Attorney General Adelino Pereira, in a statement last week, said his investigation found that procedures used to select winning companies were "seriously flawed," with some companies winning bids without having the technical or financial expertise to contribute to the projects. The contracts were awarded by the Joint Development Administration, an agency formed between Nigeria and Sao Tome that is handling competitive bidding for the rights to explore acreage that straddles the territorial waters of the two West African nations.