Tsikata’s $5m Oil Deal

…New Twist As US SEC., Kosmos & Co. Probe Possible ‘MODEC Violation’ Of FCPA!

Source: NEW CRUSADING GUIDE Business Intelligence Desk (BID), With Additional Files From www.bloomberg.com and www.online.wsj.com

The ongoing investigations by the International Finance Corporation (IFC) and the World Bank (WB) into the role purportedly played by Strategic Oil and Gas Resources Ltd. (SOG), a company 50% owned by Mr. Tsatsu Tsikata, former Chief Executive of the Ghana National Petroleum Corporation (GNPC), in the award of the FPSO contract by Tullow to MODEC in July 2008, have assumed a new twist as the United States’ Securities and Exchange Commission (SEC), and Kosmos Energy Ltd. have initiated a process to interrogate any possible violations of the Foreign Corrupt Practices Act (FCPA) of the United States of America (USA).

According to documents filed last week with the U.S. SEC, Kosmos Energy and its partners in the Jubilee field are looking into "POTENTIAL VIOLATIONS" of the U.S. FOREIGN CORRUPT PRACTICES ACT (FCPA) by one of the contractors of the projects.

According to Bloomberg, “THE INVESTIGATION IS FOCUSING ON MODEC INC., A JAPAN-BASED COMPANY THAT OWNS THE SPECIALIZED VESSEL BEING USED BY KOSMOS AND ITS PARTNERS TO EXTRACT AND COLLECT OIL FROM JUBILEE FIELD OFF GHANA’S COAST”.

The publication further stated that, “MODEC, WHICH DIDN’T RESPOND TO QUESTIONS FROM THE JOURNAL, SAID IN JULY LAST YEAR THAT IT HAD HIRED OUTSIDE COUNSEL TO CARRY OUT DUE DILIGENCE ON A SERVICE CONTRACT IT HAD SIGNED”.

Readers would recall that on July 26th, 2010, The New Crusading GUIDE broke a story with a banner headline “Alarm Blows Over FPSO Kwame Nkrumah Contract. TSIKATA ‘GRABS’ $5m DEAL…But IFC & World Bank Suspect ‘Kululu’ & Initiate ‘Forensic Probe’ Into How MODEC Awarded Contract To His Company (SOG) In June 2008!”and stated that, “Highly-placed sources at the IFC and the World Bank have intimated to the BUSINESS INTELLIGENCE DESK (BID) OF THE NEW CRUSADING GUIDE THAT UPON MODEC’S BELATED DISCLOSURE TO THE IFC/WB OF THE AWARD OF AN ADVISORY SERVICES CONTRACT WORTH $5M TO TSATSU TSIKATA’S SOG COMPANY, THE TWO INSTITUTIONS, APPARENTLY NOT HAPPY WITH THE BELATED DISCLOSURE AND CURIOUS TO KNOW WHAT ROLE SOG HAD PLAYED PRIOR TO WINNING THE CONTRACT, HAVE DECIDED TO CONDUCT ‘DUE DILIGENCE ON THE CONTRACT FOCUSING ON THE NATURE OF THE SERVICES PROVIDED AND THE BASIS OF THE AWARD OF THE CONTRACT’”

MODEC’s belated disclosure which was done on July 13, 2010, two clear years after the alleged award of the contract to SOG, also indicated that MODEC (MV21) had already paid US$2m to SOG and a further US$3m was slated to be paid to it at first oil (possibly November this year - 2010). The IFC, World Bank and the other shareholders including the Jubilee Partners, according to our IFC/WB sources, WERE ALL AWAITING SIGHT OF THE CONTRACT AS AT JULY 13, 2010, THE DAY OF MODEC’s DISCLOSURE OF ITS (CONTRACT’S) EXISTENCE.

“Additionally, IFC would like to do due diligence on the Jubilee Partner’s award of the FPSO contract to MODEC focusing on “How involved GNPC were in the decision to award to MODEC; What were the grounds of the decision to award to MODEC; And also IFC would like to understand how much influence Tsatsu Tsikata had on enabling MODEC obtain a competitive advantage”, disclosed a top official of IFC who spoke to our BID on condition of strict confidentiality.

The IFC top official further revealed that the signing of MODEC’s Financing Deal (Loan Agreement & Shareholders Agreement) for the Kwame Nkrumah FPSO which was slated for July 15, 2010, had had to be postponed at the request of the IFC, in order to enable the latter (IFC) complete its investigations into the MODEC award of the $5m Advisory Services Contract to Tsatsu Tsikata’s SOG in June/July 2008 during the era of Mr. Kufuor’s Administration.

According to the 26th July story of this paper, the “Oil Industry Insider also indicated that the IFC and World Bank, the major Jubilee Partners, Kosmos, Anadarko and Tullow were all reviewing the situation from a US FCPA and UK Bribery Act Standpoint, and that because of the delicate nature and impact of the matter, the Jubilee Partners do not want the issue to become public at this time. The IFC and World Bank, our source further intimated, are also trying to find out who owns the other 50% of SOG which is a company incorporated and existing under the laws of British Virgin Islands, having its registered office at The Mill Mall, P.O. Box 92, Wickhams, CAY I, Roadtown, Tortola, British Virgin Islands”.

A few days after our publications on the same matter last year, Strategic Oil and Gas, (StratOil), the company involved in the $5 million deal with MODEC, hinted it will take legal action against persons who were thwarting their “legitimate business”.

The company, clearly unimpressed with the unfavorable reportage it was getting in the media, rebutted that there were attempts to “misrepresent facts concerning the agreement between MODEC and StratOil and the due diligence process of equity and debt financiers of the FPSO”.
A statement issued by the company and signed by Stuart Sutton-Jones, Corporate Affairs Executive, said the company will take “legal steps” to protect its “legitimate business.”
“It is a matter of great satisfaction to StratOil that the company could play a part in enabling the tremendous achievement of MODEC in winning a highly competitive tender and in supplying this FPSO within a timeframe which is a record in the industry for such a deep water project. It is beneficial to the Jubilee Project and to Ghana that the MODEC bid was a low-priced bid that met the highest technical standards in the industry and that is enabling first oil from the Jubilee field to be achieved in the 4th quarter of this year,” the statement added.
SUTTON-JONES, A FORMER BBC CORRESPONDENT, OFFICIAL RECORDS SHOW, WORKED WITH JERRY RAWLINGS’ PNDC IN THE LATTER’S EARLY BRUTAL YEARS (1982/83), AND SUBSEQUENTLY EARNED HIGH COMMENDATION FROM THAT MILITARY DICTATORSHIP FOR HELPING TO POLISH ITS (PNDC’S) IMAGE IN THE INTERNATIONAL MEDIA AND THE WORLD AT LARGE.
It will be recalled that apart from former Presidents Rawlings and Kufuor, Tsatsu Tsikata was the only other individual Ghanaian citizen who had ‘presidential mention’ for his role in and contribution to Ghana’s protracted search for oil in commercial quantities during the official commissioning of first oil at the twin city of Sekondi-Takoradi on 15 December, 2010.
The New Crusading GUIDE’s monitoring of the US SEC/Kosmos investigations continue. Please stay tuned for more ‘exclusives’ on Ghana’s Jubilee Oil Field.