BLOOD PETROLEUM



Investigation urged into west African oil deals

David Leigh and David Pallister
Tuesday December 20, 2005
The Guardian

BP, Britain's biggest oil firm, has been buying oil from west Africa which may have been corruptly sold, a high court judgment has found. Last night campaigners called for an inquiry into the deals, in which more than £265m of oil was secretly shipped from the heavily indebted state of Congo-Brazzaville.

In March, the supertanker Nordic Hawk twice put into Marseilles with Congolese crude worth £22.1m. The cargo was bought by BP in a deal struck with oil traders Glencore, but the court action exposed a chain of deception by the original sellers in Congo-Brazzaville.

Behind a screen of middlemen, the court found a trail leading to the bank account of Denis Gokana, the head of Congo-Brazzaville's state oil company, which originally owned the oil. Mr Gokana had arranged for it to be sold to firms he secretly owned, and resold to BP at a profit.

Last month's judgment found that Mr Gokana's under-the-counter oil trading system had been set up primarily to cheat creditors who were trying to seize the country's oil assets. The creditors alleged money had also been siphoned off privately. Mr Justice Cooke ruled that the "cosmetic" transactions "may have provided some scope for personal enrichment", and that Mr Gokana had lied in his evidence.

Glencore UK, which sold the oil to BP, has an office in Mayfair, central London. The firm is Swiss-based and was founded by US businessman Marc Rich. Glencore in turn bought the cargo from a company called Sphynx, in nearby Bruton Street. Sphynx was administered by an Englishman, Simon Chaffey, but was under secret foreign control. Sphynx in turn ostensibly bought the oil from the Africa Oil & Gas Corporation, based in Congo-Brazzaville.

The court found that both Sphynx and Africa Oil & Gas were secretly owned by Mr Gokana. He had bought the oil from his own state oil company, in a deal authorised by the son of the Congolese president, Denis Christel Sassou-Nguesso.

Commenting on the judgment, the campaign group Global Witness said yesterday: "Despite earning almost $1bn (£566m) from oil in 2004, Congo remains one of the poorest and most indebted countries in the world. The heart of the problem lies in opaque management of the oil revenues."

Global Witness said they estimated that Mr Gokana made $30m-$40m (£17m-£22m) profit from a series of such shipments, and urged the Congolese government and the international community to hold an inquiry.

The exposure of the deals is a serious blow to Congo-Brazzaville, which had been hoping for the International Monetary Fund to cancel some of its £4.87bn debt in return for offering more transparent public finances.

The case was brought by one of the so-called "vulture funds", which buy up developing country debt. New York-based Elliott Associates has now seized the £22.1m about to be paid over by Glencore.

BP yesterday said that its deal was found by the court to be "a typical arm's length commercial transaction between entities involved in the conventional trading of oil".

Mr Gokana did not respond to efforts to contact him in Brazzaville yesterday.

· Read the full judgment here (pdf)