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General News of Tuesday, 23 March 2010

Source: The Enquirer

Kosmos On Begging Knees


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…As Officials Sneak Apologies to Gov't for their Conduct
After many months of muscle-flexing, US Oil firm, Kosmos Energy, finally checked itself, and like a prodigal son, sneaked to the Castle to render an apology to President John Evans Atta Mills and the people of Ghana for their conduct over the years. Impeccable sources say the oil giant met with the President behind closed doors but spent a significant part of the meeting pleading for forgiveness. As usual, President Mills was said to have been very forthright with the group, regarding justice for Ghanaians and the need to play by the rules.

The apology comes in the wake of intensified investigations both here in Ghana and in the US, resulting in two Ghanaians and scores of Kosmos Energy officials being hauled before the US Department of Justice regarding their operations in Ghana.

DUE DILIGENCE

The controversy regarding the conduct of Kosmos Energy and its carried partners-EO Group, started as far back in late 2006, with a jaw-dropping due diligence conducted by Anadarko, a US oil giant with expertise in deepwater exploration, who was invited by partners in the WCTP block to bring on board their expertise.

Anadarko, a publicly listed company, in their bid to avoid entering into any questionable partnership, engaged the services of an experienced attorney, whose findings revealed red flags over the relationship between Kosmos Energy and the E.O. Group.

While Tullow Energy and Sabre Oil had co-operated with Anadarko in their quest for information, Kosmos Energy and the E.O. Group were very dodgy.

Anadarko therefore started the due diligence that cost them about $2.5million, and during which several red flags popped up.

Anadarko subsequently deposited their report with the Department of Justice, under the Foreign Corrupt Practices Act (FCPA), for a 70-day mandatory period. The E.O. Group, a company whose 3.5% interest in Ghana’s first oil find is estimated to be worth over $200 million, never operated any visible office. Investigators say they traced the registered address given by the company as their place of work to Darko Farms.

Meanwhile, apart from hen coops and animal shelter, investigators could not locate any office belonging to the EO Group, whose promoters are about to face trial for various acts, which are said to border on criminality.

The Police Criminal Investigation Department (CID) say they have uncovered a web of shocking criminal conduct involving the promoters of the Group and some top government officials connected to former President John Kufuor.

According to deep throat sources within government, the evidence against the promoters of EO Group, who introduced Kosmos Energy, a US-based oil company to Ghana and walked away with a whopping 3.5% (worth over $200 million) is very weighty and has the potential of nullifying the legal existence of the company. Investigators say, right from whistle blow, some of the promoters of the EO Group demonstrated their criminal intents by falsifying claims and public documents, which enabled them to obtain shares in the name of the company. EO Group was formed in 2002, between Dr. Kwame Barwuah Edusei and George Owusu as partners, with the initials of their surnames forming the company’s name. On the company’s registration documents, George Owusu is said to have forged Edusei’s signature as shareholder and a director.

George Owusu is also said to have forged another signature of his partner on the Oath of Declaration forms.

Dr. Bawuah Edusei, whose interest in EO was predicated on a forged document, served as one of the most trusted appointees of then President Kufuor. He was appointed as ambassador to Switzerland in August 2004 and later posted to Washington to head Ghana’s Embassy in the US.

George Owusu, the other partner in EO Group remained a close associate of former president Kufuor at all times, as well as a close buddy to Kan Dapaah, one time Energy Ministers under the Kufuor administration.

In December 2004, George Owusu of the EO Group incorporated another company called Newbridge Hospitality Services Limited – to provide transportation services.

On the company’s registration forms, Owusu is said to have once again forged the signatures of one Gustav Acquaye, Rex Opoku and Evangeline Boatey as shareholder-directors.

Again in February, 2005, George Owusu, established another company called Equiva Services Limited, to provide human resource services. There, too, he allegedly forged the signature of one Evangeline Boatey as a director of the company on the registration documents.

Whilst serving as the country representative for Kosmos Energy, George Owusu is said to have run the two companies from the office of Kosmos Energy in Accra. Kosmos is said to have allowed George to have his way because he was said to have become too powerful because of his political connections.

By 2007, Kosmos was paying George Owusu $25,000 salary as country representative for Kosmos, plus accommodation, a cook, and a car. Surprisingly, whilst paying these salaries, sources say Kosmos brought down to Ghana another expatriate to do the same job for which George was being paid.

In total, George Owusu was said to have received salary in excess of $2 million from Kosmos Energy as country representative over a three-year period. Surprisingly, soon after George Owusu was questioned by investigators in connection with fictitious invoices during the ongoing probe, Kosmos fired him, supposedly for making certain serious admissions, some of which touched on the credibility of Kosmos.

During a $2.5 million investigation initiated by one of the oil companies in jubilee field, George Owusu was interviewed at the Golden Tulip Hotel in Accra, in the presence of four lawyers on his side, where he was again said to have admitted to forging another document.

George, according to sources, claimed that invoices amounting to about $250,000.00 included work supposedly done by EO Group in 2002.

When it was put to George Owusu by US lawyers that at the time he claimed EO Group undertook the said job for which Kosmos was paying them, EO didn’t exist, George Owusu is said to have told them that one Glick, a top officer of Kosmos asked him to forge that invoice.

Within a month, Glick was fired by Kosmos. Glick is believed to be back in America. After George Owusu’s allegations, the investigation wrote to Glick for comments but he refused to cooperate.

On January 21, 2009, the US lawyers who were conducting the due diligence for one of the partners in the jubilee field, sought to interview Dr Barwuah Edusei. He gave them 45 minutes, during which he picked and chose which questions to answer.

KOSMOS, EO GROUP, AND GHANA’S OIL (Recap)

April 30, 2004: Kosmos and EO Group entered into a letter agreement signed between Kwame Barwuah Edusei, for EO and Glick, for Kosmos Energy. The E.O. Group, under the said agreement had 3.5%, whilst Kosmos Energy had 86.5%.

The agreement stated that Kosmos would carry the E.O. Group and additionally, pay them $250,000.00

The EO Group then approached GNPC, seeking to substitute a previous agreement with Ennex it with Kosmos Energy.

On May 12, 2004 the GNPC/Ministry of Energy, in a letter to the EO Group, told the latter that they did not have an agreement.

On the same day, May 12, 2004 the EO Group wrote a letter to GNPC, copied to the Ministry of Energy (MOE) and President John Kufuor, saying their letter terminating the agreement was a misunderstanding because they meant to terminate their relationship with Ennex and not GNPC.

Three days later, May 15, 2004 the Application with Kosmos Energy was approved and a Memorandum of Understanding (MOU) signed, stating that they have a license.

That was a record time, as petroleum agreements generally are preceded by due diligence and hard negotiations to maximize benefits for Ghana.

In July 2004, they signed a petroleum agreement with GNPC/Government of Ghana. The Petroleum Agreement was signed on behalf of the EO Group by Derrick Oppong Agyare. Even though he was neither an official, director nor a shareholder of the company, he was supposed to have done so under a Power of Attorney, granted him by the group.

Kosmos then came to Ghana. They appointed George Owusu as their Country Representative at an initial fee of $3,000 per month, increasing it to $8,000 and then to $10,000.

In July 2004, Kosmos paid the EO Group $75,000.00 as part of the $250, 000.00. In August 2004, Kosmos paid the Group another $75,000.00. In the same month of August 2004, Edusei was appointed Ghana’s Ambassador to Switzerland.

The closeness between the last payment and the appointment of Dr. Edusei as Ambassador to Switzerland got Anadarko’s investigators worried. This was because under the FCPA it is an offence for American companies to pay monies that benefit foreign public officers.

KOSMOS/EXXONMOBIL CONTROVERSY

This controversy also started when Kosmos, in its desire to sell off its stake in the West Cape Three Points (WCTP) and Deepwater Tano Blocks, exposed GNPC seismic data to over twenty international oil companies, in clear violation of the confidentiality agreement governing the use of such data.

In early 2009 Ghana’s Minister of Energy picked intelligence that Kosmos was looking for prospective buyers of its stake in Ghana’s oil fields and drew the latter’s attention to the illegality of their condict.

The illegality we in reference to the other partners in the consortium of partners, complaining about what Kosmos was doing but Kosmos reportedly denied any intention to sell their interest.

Moreover, by exposing GNPC data to third parties, GNPC was deprived of revenue it would have made from the licensing of such data to those companies that Kosmos exposed the data to enrich itself.

Article 16.6 in the Petroleum Agreements GNPC/Government of Ghana signs with companies states : “Any Party disclosing information or providing data to any third party under this Article shall require such person to undertake the confidentiality of such data. Promptly after the Effective Date, the Parties shall agree upon a mutually acceptable international petroleum industry standard form of confidentiality agreement. Contractor shall require the execution of such agreement by a potential assignee prior to disclosure of such data; and shall provide copies of all such signed agreements to GNPC.” This requirement was flouted by Kosmos, who kept other partners in the consortium such as Tullow Oil, Anadarko, and Sabre Oil in the dark about their intentions.

GNPC protested that by violating its data rights, Kosmos had undermined the integrity of such data and at the same time flouted the laws of the country governing such a valuable national asset.

Kosmos eventually admitted that it was selling its interest in Ghana’s block. However, it insisted that it had done no wrong and eventually went ahead to broker a deal under which it sought to sell its stakes in Ghana’s oil fields to US Oil giant, ExxonMobil.

Whilst GNPC was ensuring that the nation’s interest was safeguarded, Kosmos quietly instigated publication in pro American journals portraying Ghana Government as harassing investors.

They also attempted to play the controversy in the arena of geopolitics where they insinuated that Ghana was choosing China over America, knowing very well the excellent relationship between Ghana and the US.

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