Paradis Fiscaux et Judiciaires


dimanche 20 mai 2007

In oil-rich nation, charges of skimming, Congolese officials said to reap profits


By John Donnelly, Globe Staff | November 25, 2005

Second in a series of occasional articles.

DJENO, Republic of Congo — It was one of hundreds of such transactions along the oil-rich Gulf of Guinea this year — a shipment of 950,677 barrels of high-grade crude, loaded at this steamy port on the African equator and bound for the United States.

On June 29, the Nikator, a supertanker registered in Greece, left Djeno for Philadelphia.

The seller was identified as a private company called Africa Oil & Gas Corp. The middleman, Geneva-based Vitol S.A., bought the shipment for nearly $53 million.

Of that amount, the government of Congo received $48.8 million, according to an international auditing firm. Africa Oil & Gas pocketed as much as $4.2 million, according to US private creditors who are trying to collect unpaid debts from the Congo government.

This might have been run-of-the-mill corporate profit taking, except that the person who runs Africa Oil & Gas is no ordinary businessman. He is Denis A. M. Gokana, head of Congo’s national oil company and special adviser to President Denis Sassou-Nguesso, according to court and government documents. And the bill of sale ended up listing the seller as the government’s National Oil Company of Congo, not Africa Oil & Gas.

Gokana declined an interview request made at his oil headquarters in Brazzaville and did not return telephone calls seeking comment on where the $4.2 million went.

From gold to diamonds, copper to uranium, corruption involving Africa’s natural resources has a long, sordid history. African leaders, their cronies, European traders, foreign heads of state, and American middlemen, among others, have reaped billions from the continent’s oil resources over the last four decades.

West Africa supplies the United States with about 15 percent of the oil it consumes, and the US National Intelligence Council estimates that the region could provide 25 percent in a decade.

Such resource riches could help West Africa climb out of poverty by funding better education, healthcare, roads, and other essential services. But financial specialists warn that as the United States, Europe, China, and other energy-seeking nations pour money into the region in a global competition for oil contracts, billions more dollars could simply disappear into the web of skimming and self-dealing.

Ironically, the Republic of Congo — often referred to as Congo-Brazzaville to distinguish it from its larger neighbor, the Democratic Republic of the Congo, formerly Zaire — had seemed to be the first African nation poised to break the cycle of oil corruption that enriches only the ruling class.

The International Monetary Fund last year called Congo-Brazzaville’s efforts at greater public disclosure on oil deals a ’’model" for the rest of the continent. The government has published hundreds of documents on oil transactions over the Internet, hoping that financial openness would persuade the IMF, World Banks, and others to cancel billions of dollars in debt.

Instead, the disclosures seemed to confirm that corrupt practices were still taking place. US creditors and the Publish What You Pay campaign, a coalition of 270 organizations that promote transparency of oil revenue and spending, say their investigations indicate that dozens of recent oil transactions, including the payment for the Nikator oil shipment, have enriched senior Congolese officials.

International creditors had been on the verge of rewarding Congo for its steps toward public disclosure. On Aug. 1, a month after the Nikator deal, the IMF Executive Board in Washington laid the groundwork for possible cancellation of as much as three-quarters of Congo’s public debt, which had been estimated at $8.6 billion in 2003. A final decision is expected in the next few months.

At the August board meeting, Agustin Carstens, IMF deputy managing director, cited Congo’s ’’steps to enhance transparency with regard to oil sector transactions" and declared, ’’There has been a welcome improvement in governance."

IMF officials think granting debt relief will spur further reforms in the Congo as well as encourage nearby countries such as Angola and Equatorial Guinea to start transparency efforts. But private creditors and activists say Congo-Brazzaville has only become more clever in hiding oil revenues and warn that once it secures debt relief it will have little incentive to change its ways.

According to creditors and Publish What You Pay, about $300 million in oil revenues identified by independent auditors last year did not show up in the country’s budgets. That was nearly one-third of Congo’s $974 million in oil money. This year, because of the rise in oil prices, the government is expected to take in about $1.5 billion.

A senior Congolese official reacted angrily to suggestions that government officials were stealing oil money.

’’I don’t know of any country in this world that has done what we have done in publishing our information," said Michel Okoko, an adviser to the finance minister. ’’It is easy to fire on a country like the Congo. We are doing the best we can."

In an interview in Brazzaville, Serge M.A. Ndeko, Congo’s director general of hydrocarbons, said the government has ’’nothing to hide." He added that the public disclosures of oil transactions on the Internet could simply be confusing people.

’’Sometimes people are lost because we have put so much out there," Ndeko said.

But KPMG, the auditor assigned by the IMF and Congolese government to review financial documents related to oil, has battled Congolese officials for more documents.

After finding that the records of the national oil company — Société Nationale des Pétroles du Congo — were progressively improving from the company’s inception in 1998 until 2001, KPMG said no noticeable improvements have occurred since then.

The auditor has not certified the 2002 and 2003 accounts of the national oil company because of multiple problems, including the company’s refusal to release bank statements and other documents, Alexis Majnoni d’Intignano, a KPMG director who has overseen the Congolese audits, said in an interview in Johannesburg. KPMG found the accounts in 2003 were not auditable for multiple reasons, among them a ’’grave incoherence between the accounting books and the financial statements" as well as ’’major weaknesses in internal controls regarding bank accounts."

These red flags raised by KPMG seem tame compared with findings by two New York-based private creditors — FG Hemisphere Associates and Kensington International — which are trying to collect a combined $300 million in debt from the government.

The creditors say the thousands of pages of documents they have compiled reveal hidden identities, multiple sham traders for every deal, and the son of President Sassou-Nguesso overseeing most of the sales as a private businessman. The transactions were designed to ’’loot the Congolese national economy," according to a lawsuit filed by Kensington in New York this past May.

In a highly unusual approach, Kensington bases its case on the civil Racketeer Influenced and Corrupt Organizations Act, or RICO, which generally is used to fight organized crime in the United States. It essentially charges that Congolese senior officials are running the oil business as a mob would — cornering the market and creating dummy companies to launder profits, for instance.

The case was brought against Congo’s national oil company ; the oil company’s former president, Bruno Jean-Richard Itoua, now Congo’s Minister of Energy and Hydraulics ; and BNP Paribas, a French bank involved in financing some Congo oil deals. Lawyers for the three accused parties have filed motions to dismiss the claim, saying the charges were groundless and that the US court has no jurisdiction.

In the meantime, the national oil company has tried to sidestep the creditors by expanding its deals to a growing number of companies, almost all of which are registered in the British Virgin Islands, which has laws that allow corporations to keep their ownership secret.

Some of the transactions, though, have become public, thanks to the creditors’ investigators.

Gokana, the special adviser to the president, draws much of the creditors’ attention because many of the transactions involve three of his companies — Africa Oil & Gas Corp., Sphynx Bermuda Ltd., and Sphynx UK Ltd.

In a court case in London brought by creditors and heard this month, Gokana acknowledged that he owns and controls all three companies.

The paper trail on Sphynx reveals great profits for Gokana’s companies.

In 2003, Sphynx purchased six cargos of Congolese oil at an average of $2.65 per barrel less than the government’s fixed price, resulting in a $15.3 million loss in revenues to Congo, according to KPMG and Congolese documents published on the Internet.

Sphynx also provided short-term advances to the government, at an annualized borrowing rate of 81 percent, which cost the government an additional $4.9 million that year, according to documents.

Kensington, FG Hemisphere, and Publish What You Pay earlier this year separately wrote to IMF officials about the alleged misappropriation of public money. None has received a response.

’’The IMF effort is inherently flawed — they are not getting any verifiable information to back up their conclusions," Peter J. Grossman, a managing director of FG Hemisphere, said in a telephone interview from New York. ’’If the information is analyzed by anyone genuinely interested in the bottom line, they will see that hundreds of millions of dollars of Congo’s oil revenues are not accounted for. So where is the money ?"

Asked in a telephone interview whether the missing millions in revenue was a result of corruption or sloppiness, Dhaneswar Ghura, the IMF’s mission chief for the Republic of Congo, replied, ’’We really can’t answer this question ; the audit reports didn’t look into this angle."

He said the Congolese government is working to deal with the weaknesses exposed by its new openness. ’’The point here is that the government is taking the bull by the horns and doing its best to correct these problems," Ghura said.

But in Pointe-Noire, Congo’s oil capital on the Atlantic coast, former national treasurer Joseph Mandzoungou has said he had little hope that oil money would ever help most people in his country.

In this port village, nearly 2,000 people live among the overpowering smell of the enormous tanks that hold oil the rest of the world covets.

The people of Djeno get little benefit from the billion-dollar business, Mandzoungou said.

’’Oil has brought poverty among our people," he observed one day recently in his office at a vocational school, which he runs. ’’Oil has brought corruption, hate, arrogance. Oil is at the base of our misery."

Globe correspondent Laura Hambleton contributed to this report.

John Donnelly can be reached at A previous article in this series appeared Oct. 3.

© Copyright 2005 The New York Times Company

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