The Offor Quandary: "O what a wicked web they weave/when first they practice to deceive"

The next two weeks are going to be critical for the future of our investment in ERHC Energy, but perhaps not for the reasons most investors think.

There are three separate threads that have braided together in my thoughts and I want to share them with you. Before I do that, however, I would like to call your attention to a minor anniversary: ERHC On The Move started publishing on January 5, 2005, and we have now been blogging day and night for more than a year.

It has been an extremely expensive venture for me because it inhibited my reaction to the price rise we briefly enjoyed in late May and early June of 2005. I felt a certain loyalty to the company and to my readers that kept me from selling my shares when my profit exceeded $54,000, the amount of my original investment.

With my wife in one ear and my brother in the other, both urging me to at least take my profits, I decided to stand pat. The value of my investment - with some cash-out to pay bills - declined all the way to about $26,000. Although I am always inclined to be a philanthropist, I really can't afford it. That is going to guide my thinking in the year ahead. I will probably buy and sell much more often than I did last year.

I have also decided not to post on message boards any more. It doesn't help at all to get caught up in the vicious cross-currents that sweep across Raging Bull and Investor's Hub, where pumpers, dumpers, bashers and mashers spin their psychowares day in and day out in long, tedious cycles that are only apparent after reading them for years. I will stay in touch with anyone who cares to write me at amreporter@aol.com, however, and will always welcome tips, news and advice.

For those who are interested, our statistical data for the blog is that we have about 700 different readers a day who look at about 1,000 pages between them. As I have noted earlier, many of those readers are associated with major law firms, government agencies, the largest oil companies and important banks, as well as the U.S. military and the world's news media. While not all of them are identifiable by the name of their intranet or IP address, most of them are. We get a steady flow of readers from a place called "Unknown country" and "Unknown organization," and I am not sure how to guess who they are.

All right, so much for New Year's house cleaning. What's this about three things that will impact our future, at least according to my take?

The first of the three was an off-handed comment in a newspaper article that was nonetheless taken very seriously by me. The comment was to the effect that Sir Emeka Offor, the chairman of ERHC Energy, had been considered a major player, but now is not.

I took great exception to the comment, and I reacted to it because I felt it was a strategically-placed bomblet that would explode in all the wrong places, in all the wrong ears. It was that - I don't doubt that, one iota. It was a very deliberate, very studied remark made in an -off-the-cuff style that was probably repeated tens of thousands of time throughout the country on the day it appeared. Then the two other things happened.

The second was that what seemed close to a slam-dunk bid by Chrome, Essar and China National Petroleum for the Port Harcourt refinery was suddenly rejected, along with those of the other three major contenders, for reasons that are not very clear at all.

Initially, you'll remember, there were 10 or so bidders, and all but two of these seemed to be disqualified for one reason or the other, such as late submission of bids. Chrome's bid was one of the two solid ones.

The third of my three braided strands was the failure of the Offor-owned Afex Bank to gain a foothold in the new banking regime created by the Nigerian central bank's demand that all licensed banks have a minimum of 25 billion Naira (N132:$1) in assets. Afex bank was a strange animal to begin with; it had almost no presence on the Internet, and it was difficult to learn the first thing about it. All that we really knew was that Offor was the owner and founder.

You have to look very strategically to see where these threads might be resolving into one. You have to put yourself in the minds of Offor's enemies, carefully observing his vulnerabilities and weaknesses, probing for the holes in his defenses that can be exploited to destroy him.

When you do that, you begin to see a likelihood of his being targeted by someone like ExxonMobil - using people who are professionals at doing such things, with no ties that can be traced back to the company - through his projects and his bank. He may be unassailable in the Gulf of Guinea, where his company's rights are guaranteed by a treaty, but he is not unassailable everywhere in his world.

Perhaps you also have to be open to the suggestion that, as Menas Associates said in their flaky Nigeria Focus issue for December, that President Olusegun Obasanjo is making an effort to distance himself from Offor. That is supported by both the refinery and the Afex events.

To interpret them this way, though, is to see things as Exxon may wish us to see them. The NNPC, conducting the refinery sale, said the bidders will be permitted to rebid shortly, and Chrome may win the refinery after all (you may recall that in what was just my second post, back in 2004, I urged Offor to sell a substantial share of his JDZ stake and purchase a refinery, when none were for sale). And Alliance Bank - the conglomerate that is absorbing Afex and seven other banks - is scrambling with great dexterity to find a way around the Dec. 31 deadline for assets that it failed to document. It may well succeed.

But, you see, it was the President of Nigeria that told the Central Bank of Nigeria, in a statement made public by the central bank, that it would support the consolidation program, including the part about recovering deposits and jailing executives at banks that could not produce their presumed assets - some of which typically gets loaned to insiders who don't repay their loans.

This is what I am trying to tell you, then: If the President is indeed distancing himself from Offor at Exxon's behest, and then telling the NNPC to queer his refinery deal or at least hold it for ransom, he may also be using the bank issue as a key piece of leverage to get Exxon into Block 4.

The fact is that as founder and owner of Afex Bank, under the rules Obasanjo has just endorsed, Offor could be arrested and jailed if he doesn't produce the assets the bank is supposed to have. If he goes along with Exxon and accepts the loss of Block 4 of the Nigeria-Sao Tome Joint Development Zone, they may let him back out of the corner he's in; if not, they could close the door on his dreams and ours.

In fact, although I don't like to think about it, there is even a back-up disaster waiting if Offor gets out of the present trap. If you would go to The American Reporter and find (use Control + F in Windows) the article I wrote about ERHC Energy after the 2003 coup, you may notice that I was slightly less than positive that the affair in Anambra State in which the then-Governor, a man named Mbadinuju ("bad juju" for short), allegedly had the president of the Nigerian Bar Assn. murdered, would not rub off on Offor, who was never in any way connected to the plot in the press.

Nonetheless, he was Gov. Mbadinuju's "godfather," a very meaningful term in Nigeria; he was the Karl Rove, perhaps, or the Dick Cheney - the guy with the smarts and the money - that put Mbadinuju in office, and then ousted him when Mbadinuju turned his back on Offor. The fabulists at Elendrureports and Nigerian Village Square are going to whip up a lot of poisoned candy out that, if someone tells them to.

Now the government has Mbadinuju in jail without bail, and I for one have absolutely no doubt that Exxon's man in Anambra can extort whatever statements he wants out of Mbadinuju to implicate Offor in anything he wishes.

It's a lot like the USC defense in the Rose Bowl, where they faced Vince Young. They could either defend against the pass at the goal line, or they could defend against the run, but they couldn't defend against both. Vince faked and walked into the end zone untouched. Vince is ExxonMobil and Anadarko; USC is us.

Here we are at the limits of power and corruption. So many of our investors believe that as a "billionaire," Offor could buy himself out of any trouble he is in. But the emperor has very few clothes. His newspaper is non-existent; his bank is shuttered; his airline is shut down; his insurance company is nowhere to be found.
All he really has is a trillion dollars worth of oil under treaty.

The I-Hub board has gotten a lot smarter of late. They are beginning to realize how much politics and even culture can impact our unique situation, and one by one, the sane posters are beginning to examine the larger context. For instance, today they noted that the Ovidio Pequeno story has moved into the foreground, and with that, the probe report is tip-toeing to the rear.

In reality, the probe died when the outspoken prime minister said she had no comment, and when the President deferred comment; in Portuguese culture, that's the polite way of saying "No comment, next topic, please." We defeated that problem; now we have some others to face.

All is not lost, by any means, but in the game of chess we are playing, we need to be looking for a move. This is the kind of time when a buy-in or a farm-out or an outright sale becomes tempting to the home team. The purchase by China's CNOOC of a Nigerian oil block for $2.3 billionm, just announced this morning, has obvious implications for ERHC Energy.