Oil bribe inquiry rocked by new dossier

MPs say US govt has proof on payments to ministers

Parliament’s ad hoc committee yesterday heard that Eni and Tullow Oil tried to influence the process of acquiring oil deals in Uganda by approaching three key government officials: Prime Minister Amama Mbabazi and ministers Sam Kutesa (Foreign Affairs) and Hilary Onek (then Energy; currently Internal Affairs).

The committee also heard for the first time that the US Treasury department had a record of transactions from Tullow to the two ministers, and that some of that money could be traced to the Bank of Mellon in New York, “where the Tullow story begins”.

The committee further heard that President Museveni, in a letter to the then Attorney General, Kiddhu Makubuya, had allegedly agreed to the construction of a $3bn oil pipeline from eastern DR Congo through Uganda, to the Indian Ocean in Kenya, and that plans are underway between the three countries.

The revelation is at variance with what Museveni has said publicly that Uganda needs to construct a refinery rather than export its crude oil. This is also contrary to the national oil policy, which government has variously cited. The letter, a copy of which was tendered as evidence to the committee, was penned on May 2, 2011.

“I have been contacted by Foreign minister Sam Kutesa in regard to the memorandum of understanding signed on October 19, 2010 by the respective ministers of Hydrocarbons (DRC) and Energy and Minerals (Uganda and Kenya). I’m aware that the matter will be the subject of discussions at a presidential meeting on May 11, 2011 [the eve of President Museveni’s swearing-in for his fourth electoral term],” the letter said in part.

The letter was asking Makubuya to draft a memorandum of understanding for the three countries since their respective presidents were agreeable to the oil pipeline plan. According to Gerald Karuhanga (Youth, Western Uganda), the letter was based on a meeting between Onek, who was minister of Energy at the time, his Congolese counterpart, Celestine Mbuyu Kabango, and the Kenyan High Commissioner to Uganda.

“Why is the minister insisting that the presidents have agreed on the pipeline? How did the minister become privy of the intentions of the three presidents? Why are they clothing the project into the three countries,” Karuhanga wondered.

The youth MP was part of a group of four legislators that appeared before the committee to help it in its task of investigating the bribery allegations. The other three were Theodore Ssekikubo (Lwemiyaga), Wilfred Niwagaba (Ndorwa East) and Abdu Katuntu (Bugweri).

The MPs presented their evidence in a synchronised fashion that left the seven-man committee headed by Michael Werikhe (Bungokho) in admiration for the entire six hours they spent in Parliament’s Conference Hall.

The revelation about a hitherto unknown oil pipeline idea was the climax, and Karuhanga contended that this was the result of intense lobbying by Italian oil giant Eni to get into Uganda’s oil sector.

ENI involvement

Karuhanga cited a meeting between Onek and former Vice President, Gilbert Bukenya, at the VIP lounge of Kabira Country Club on February 21, 2010, at 8pm. At this meeting, he said, Onek complained that he had tried unsuccessfully for eight months, as Energy minister, to get audience with the President over ENI.

Onek had sought to see Museveni because “he was misled by the then Security minister, Amama Mbabazi, that the government and Museveni were interested in having ENI on board. He wanted an appointment to explain his position,” Karuhanga told the committee.

Letters later submitted as evidence to the committee, and purportedly written by Onek, show the minister claiming that the President was interested in a pipeline to carry crude oil to Mombasa and that one Ciccaveli Giuseppe, a consultant, had convinced Museveni about the matter.

Subsequent investigations showed that Giuseppe headed Africa’s Eni division until late last year when bribery allegations surfaced and he was dismissed.

Farm-down in trouble

The team also tabled documents that indicate that the planned farm-down of oil resources by Tullow Oil, in which the British firm will sell a portion of its share of resources to CNOOC and Total, may be in more trouble that earlier thought. Niwagaba told the committee that Tullow’s licences for Kingfisher, Kaiso Tonya, Buliisa and Butiaba wells expired on October 8, 2009. Although oil had been discovered by this time, the company had limited time for appraisal to determine the amount of oil in these wells.

After this, they were supposed to surrender their interests to government or secure a production licence within two years after appraisal, under section 20 of the petroleum and exploration act.

“Once the exploration licence has expired and no production licence has been issued within two years, you have nothing, so the resources revert to government. Tullow’s licence was non-extendable because the eight-year lifespan of the license had expired. Even the subsequent MoU [with government] is null and void,” Niwagaba said.

According to him, it is this MoU that is the source of trouble. “The MoU has nothing to do with the licence envisaged in the petroleum and exploration act. How do you introduce CNOOC and Total, which had not applied for a production licence? There was corruption. If the wells had reverted to government and then government licensed them, it would have earned Shs 8 trillion instead of the Shs1.6 trillion it made,” Niwagaba reasoned.

Katuntu added: “If government knew that Heritage didn’t intend to produce oil, why did they give it a production licence? If Tullow didn’t intend to produce, why did government give it a production licence? What officials were doing was to connive to deny this country $2.9bn and $1.4 billion [respectively from the companies] worth of certificates,” Katuntu said.

He explained that government officials involved in the negotiations misled the government into going for a farm-down and this is where money could have exchanged hands.
The MPs concluded by asking the committee to investigate two meetings that Mbabazi held in Dubai and London on December 7, 2009 and January 4, 2010.

They allege that these meetings were attended by: Tony Buckingham of Heritage Oil and Capu Zuma, nephew of South African President Jacob Zuma, and the premier’s former aides at the External Security Organisation (ESO), Robert Kabuchu and one Kimbareeba.

The four MPs also want the committee to look into why the Public Procurement and Disposal of Public Assets Authority (PPDA) Act was not followed in procuring oil firms. They also want the committee to ascertain why the production sharing agreements contain stabilisation clauses, contrary to what the President has said.

hbogere@observer.ug
mtalemwa@observer.ug