… No Violation of US Law-FCPA

SOURCE: NEW CRUSADING GUIDE

An inaccurate statement made by former President John Agyekum Kufuor in a recent interview with the UK-based Financial Times (FT) to the effect that Dr. Kwame Bawuah-Edusei, one of the two partners of the EO Group which has a stake in the Jubilee Oil Field, was the Chairman of the North America branch of the New Patriotic Party (NPP) at the time the EO Group attracted Kosmos into oil exploration in Ghana, appears to have provided an opportunity for the detractors of the former President, to re-launch their worn-out and discredited campaign of lies against him(Kufuor) and the governments(NPP 1&2 administrations) he led from 2001 to 2009.

According to the detractors, the former President’s statement was proof or evidence that there had been a violation of the US Foreign Corrupt Practices Act (FCPA) relative to some payments Kosmos made to the EO Group in 2004 because Dr. Bawuah-Edusei was a party official; something the FCPA frowns upon.

The US Department of Justice (DoJ) in June this year cleared both Kosmos and the EO Group, after over a year long investigation into the allegation of a possible violation of the FPCA ignited by a US$ 3m plus due diligence on the Kosmos/ EO Group role in the Jubilee Oil Field business undertaken by Anadarko, a US oil giant.

Protracted investigation by Ghana’s Attorney General, the Police Criminal Investigation Department (CID) and the former Serious Fraud Office (SFO) now the Organized Crime and Economic Unit into the same allegation has so far proved futile, and virtually turned into a crude form of political witch–hunting.

The investigation was stillborn at birth because there was nothing of evidential value for the investigators to proceed or rely on except mere suspicion and negative perception of “Kufuor and the NPP Administrations (1&2) having used front men and party cronies to take a stake in the oil industry.”

The futility of the latest attempt to re –launch the discredited, bankrupt and infantile campaign of lies and distortions is underscored by the records which are verifiable and beyond doubt. A TOP OFFICIAL OF THE US DEPARTMENT OF JUSTICE (DOJ) WHO SPOKE TO OUR US SOURCES ON CONDITION OF STRICT ANONYMITY, DISMISSED THE SUGGESTION THAT THE FORMER PRESIDENT’S INACCURATE STATEMENT COULD PROVIDE THE BASIS FOR THEM (DOJ) TO RE–ACTIVATE THEIR INVESTIGATION INTO THE ALLEGATIONS OF POSSIBLE VIOLATION OF THE FCPA BY KOSMOS RELATIVE TO THEIR DEALINGS WITH THE EO GROUP AS FAR AS THE JUBILEE OIL FIELD BUSINESS GOES.

“WE CHECKED AND DOUBLE–CHECKED ALL DETAILS RELATING TO THE STATUS OF DR. BAWUAH–EDUSEI AND MR. GEROGE OWUSU, AND WERE SATISFIED THAT NONE OF THEM HELD ANY PARTY OR GOVERNMENT POSITION AT THE TIME KOSMOS ENTERED GHANA TO DO OIL BUSINESS AND WHEN THEY (KOSMOS) MADE PAYMENTS TO THE EO GROUP. THE MATTER IN THE CONTEXT OF A FCPA VIOLATION IS CLOSED FOR NOW; YOUR FORMER PRESIDENT’S ANSWER TO THE FINANCIAL TIMES, NOTWITHSTANDING “, emphasized the top US DOJ Official.

Meanwhile, the official file of the North America branch of NPP which is a public record indicates that Dr. Bawuah–Edusei had never been the Chairman of that branch.

The records also show that the last executive position he held was Secretary, from 1998 to 2001.

The records further show that since giving up an active role in the North America branch of the NPP as Secretary in 2001, Dr. Bawuah – Edusei has never taken any party position in any other jurisdiction or branch of overseas NPP.

The names of NPP Chairmen in North America since the party branch was first formed in 1992 are as follows:

*Mr. Boakye Agyarko: 1992 - 1998

*Mr. Charles Amoamah: 1998 – 2001

*Mr. Philip Tawiah: 2001 – 2003

*Mr. Mohammed Idris: 2003 – 2007

*Mr. Kofi Boateng: 2007 – 2009

*Mr. Kwaku Adgyei Yeboah: 2009 – to present

Dr. Bawuah–Edusei and his partner, Mr. Owusu jointly formed the EO Group in August 2002, and initially brought Ennex International PIC, an Irish company to Ghana in November 2002 for exploration purposes. The EO Group and Ennex agreed to form a joint venture to acquire the West Cape Three Points (WCTP) block. The EO Group was slated to have 15% interest while Ennex was to take 85%, and would bear all of the costs of the EO Group.

By April 2003 GNPC, Ennex , EO Group and the Ministry of Energy had completed negotiations for a Memorandum of Understanding (MoU), setting out all the key commercial terms and conditions of a Petroleum Agreement. The Ministry of Energy (MoE) and GNPC signed the MoU, subject to Ennex demonstrating financial capability and committing to the minimum work programme.

However, by late November 2003 it had become apparent that Ennex was not willing to bear the financial commitment of the minimum work obligation. EO Group therefore notified the Government of its intention to find a substitute co–venturer.

GNPC initially allowed EO Group to pursue the search for a substitute co – venturer. However, on January 5, 2004 GNPC notified EO Group that pursuant to a November 27, 2003 decision by the Ministry of Energy, the application of Ennex and EO Group and the Memorandum of Understanding (MoU) for the WCTP block had been declared null and void, and that the WCTP block was open for bids by all parties.

The EO Group, believing in the value of the Ennex/EO Group MoU, protested the MoE’s decision and appealed to Government to allow EO Group to retain the exclusive right to negotiate for the WCTP block on basis of the previous MoU but the EO Group was unsuccessful in that effort.

With the collapse of the Ennex connection, Mr. Edusei and Mr. Owusu (EO Group) went across the world exploring for oil companies to come to Ghana. The list of companies included Shell, Hess, and a Chinese petrochemical company. When none of those companies showed the appropriate interest and commitment, the EO Group turned to Dallas, the US, and there the Kosmos connection materialized.

One of Kosmos’ top guys, Musselman had previously been an officer of Triton Energy, which under his (Musselman’s) leadership had made commercial discoveries in Equatorial Guinea. After Triton Energy was acquired by Hess, Blackstone Group and Warburg Pincus formed Kosmos Energy LLC and hired Musselman and a group of former Triton Energy employees, including Brain Maxted and Mr. Daily, to explore for the high risk reward petroleum prospects.

The expertise and experience of the Kosmos personnel and the financial capability of Kosmos’ shareholders were a potent combination and very attractive to GNPC and the Ministry of Energy (MoE).

In December 2003, EO Group was able to arrange for Kosmos Energy LLC to meet the Ministry of Energy and GNPC in January 2004 to review the technical data with respect to the WCTP block. Eventually, the MoE and GNPC determined that the Kosmos/EO application proposed the best work programme and budget, commercial terms and conditions and that Kosmos/ EO Group venture was the best technically and financially qualified of the applications submitted.

With negotiations for the WCTP block underway, EO Group and Kosmos undertook to set out the terms of the agreement between them. After several weeks of negotiation between Dr. Bawuah-Edusei and Mr. Craig Click, EO Group and Kosmos signed a letter of agreement dated April 30, 2004 (“Carry Letter”). The letter set out the consideration that Kosmos would pay EO Group if Kosmos and EO Group were successful in acquiring the WCTP block.

The details were as follows:
* i. Kosmos shall pay to the EO Group US$ 250,000 upon execution (the “Closing”) of a final production sharing agreement with the government of Ghana and GNPC and receipt of all required approvals of such production sharing agreement from the government of Ghana, including without limitation, the Cabinet and Parliament. At the request of the EO Group, Kosmos will advance to the EO Group US$ 75,000 out of such $250,000 prior to the Closing, but not earlier than one day after the date of this Agreement.

*ii. The EO Group shall have a 3.5% carried working interest in the Block. In other words, Kosmos or its successors and assignees will pay all capital costs required to be paid by the EO Group in connection with such 3.5% interest in the Block including all exploration, appraisal and development costs. Prior to the EO Group receiving any proceeds from the Block, Kosmos will be repaid all capital associated with development out of the EO Group’s share of profit oil from the Block.

Further to the Carry Letter Kosmos paid $75,000 to EO Group on 7 May 2004.

On 14 May 2004, the Minister (on behalf of the Republic of Ghana), the Ghana National Petroleum Corporation (“GNPC”), Kosmos (on behalf of Kosmos Energy Ghana HC) and EO Group entered into a Memorandum of Understanding relating to the acquisition of petroleum exploration and production rights over the West Cape Three Points Block offshore Ghana.

Pursuant to the Memorandum, the Ministry of Energy, GNPC and the contractor group consisting of Kosmos and EO Group began negotiating the terms and conditions of a Petroleum Agreement.

Kosmos Energy Ghana HC and EO Group demonstrated to the satisfaction of the Ministry of Energy and GNPC that as a contractor group they had the requisite technical competence, financial capability and Ghanaian indigenous participation to qualify to be granted a Petroleum Agreement.

Having obtained all the necessary approvals and authorizations in accordance with the Petroleum Law, which included obtaining approval of the Cabinet and the Ghanaian Parliament, the Republic of Ghana and GNPC entered into a Petroleum Agreement dated 22 July 2004 with Kosmos Energy Ghana HC and EO Group relating to the exploration, development and production of petroleum with respect to the West Cape Three Points Block offshore Ghana (the “WCTP Agreement”).

Also on 22 July 2004 EO Group and Kosmos Energy Ghana HC entered into a Joint Operating Agreement defining their rights and obligations with respect to operations under the WCTP Agreement (“JOA”).

At the time the WCTP Agreement was executed neither Dr. Bawuah- Edusei nor Mr. Owusu held a government office. Subsequently, in August 2004, the Government of Ghana asked Bawuah-Edusei to become the Ghanaian Ambassador to Switzerland and in 2006 to become the Ghanaian Ambassador to the United States.

In 2006 Kosmos Energy Ghana HC farmed out a part of its interest in the WCTP block to Sabre Oil and Gas Limited and Tullow Ghana Limited, and part of its interest to Anadarko WCTP Company. EO Group did not participate in or receive any benefit from either of the farm out arrangements.

In October 2006 Anadarko WCTP Company, Sabre Oil and Gas Limited, and Tullow Ghana Limited became parties to the WCTP Agreement and the JOA.

“It must be clearly stated in no uncertain term that EO Group has at all times been owned and controlled by Dr. Edusei and Mr. Owusu. They were never a front for anybody or any government official, and they are not political fanatics. The shareholders of EO Group have spent their own hard earned money sometimes, using their retirement accounts and family savings at the risk of marital and family turmoil to finance this initiative. Dr. Edusei and Mr. Owusu were blessed by God and were lucky to have found, at a time when other oil companies were not keenly interested in Ghana, the right company to join them and with the help of science and business acumen to make a world class petroleum discovery which can change the economic fortunes of Ghana”, observed an Oil Industry Analyst based in the USA. Stay tuned.