IFC ON THE RUN

By J. Ato Kobbie, Managing Editor

Within weeks after the World Bank Group had made a public show of a new access to information and transparency policy, the International Finance Corporation, a member of the Group that focuses on private sector investments, has turned tail-wards, diving for cover from probing questions from The Business Analyst.
In a response to the paper’s question as to whether it carried out due diligence on the kind of relationships that existed between Kosmos Energy and E.O. Group, and also Tullow Oil and Sabre Oil and Gas, all partners in Ghana’s Jubilee Oil Field, before advancing credit to Kosmos and Tullow, the IFC says it would not answer.
“I would like to thank you for interest in IFC's support for the Jubilee oilfield. At this time, as MODEC has indicated in a public statement, the prospective financiers of the Jubilee FPSO project are further exploring issues surrounding a contract related to its FPSO bid. The intention of all financiers is to review the issues thoroughly and fairly before deciding on a way forward. At this point we have no further information to share on this process or previous due diligence on other Jubilee-related projects,” came the response from Desmond Dodd, Head of Communications for Sub-Saharan Africa of the IFC.
The World Bank Group had announced that its access to information and greater transparency became effective on 1st July this year.
Surprisingly, the IFC’s blunt refusal to disclose the requested information to the paper, followed an earlier response in which it had linked due diligence to good governance and said it conducted due diligence on all of its projects and yet could not confirm conducting due diligence on the specific relationships in question.
“IFC is committed to good governance and conducts due diligence on all of its projects on an ongoing basis … (and) was necessary to ensure projects followed the highest standards,” Dodd, had stated in that earlier response, cleverly evading the specific question and others, some of which impugned their integrity.
The IFC admitted in an earlier response that it had provided a $100 million loan to Kosmos Energy and $115 million loan to Tullow Oil and that its engagement helps ensure that the project has the proper social and environmental safeguards and management plans and that it “promotes good governance and revenue transparency in Ghana’s growing oil and gas sector”
Some of the other questions The Business Analyst had posed to the IFC included: whether it was not kicking a storm over the due diligence on the said relationship between MODEC and StratOil over its longstanding tango with the former CEO of GNPC, when it refused to come to testify in the law courts of Ghana to advance the course of justice, in a trial of Tsikata, which eventually saw him jailed;
The paper sought also from the IFC, if it was not dancing to the tune of Kosmos hired lobbyist Riva Levinson, who had, in a promotional video, stated her role for Kosmos as lobbying the IFC and U.S. Congress among others, to bring pressure to bear on the government of Ghana for Kosmos to have its way.
The IFC, in exploring the possibility of financing the floating production storage and offloading (FPSO) Kwame Nkrumah, alongside other investors, embarked on a due diligence to find out the relationship that existed between MODEC, the Japanese company that won the contract to construct the vessel through a competitive tender in July 2008, and Strategic Oil Resources Limited (StratOil).
StratOil, a company in which Mr. Tsatsu Tsikata, former Chief Executive Officer (CEO) of the Ghana National Petroleum Corporation (GNPC) has interest, has in a press release admitted having rendered advisory services to MODEC, which culminated in that company’s successful bid that won the FPSO construction contract.
The $5million contract between MODEC and StratOil, is the subject of the due diligence and media reports had linked the exercise to a threat to the flow of first oil from the Jubilee Field in November – December this year.
The said service contract was signed on June 4, 2008 at a time when Tsikata was facing trial under the President John Kufuor regime on charges of causing financial loss to the state and two weeks before he was jailed by the Fast Track High Court in Accra.
The contract for the construction of FPSO Kwame Nkrumah was awarded to MODEC in July 2008, at a time that Tsikata was in jail.
A subsequent Multilateral Investment Guarantee Agency (MIGA), another arm of the World Bank that guarantees investors against despotic threats to their investments, announcing its suspension of guarantee to potential investors exploring the possibility of investing in Jubilee Ghana MV21, a wholly-owned subsidiary company of MODEC which owns FPSO Kwame Nkrumah MV2, said it was suspending its guarantee for ‘the Jubilee FPSO.’
These issues were raised at a time that a sale and purchase agreement (spa) between Kosmos Energy and ExxonMobil was pending before the Minister for Energy seeking his consent to seal the deal that would have enabled the former to transfer its total holdings in Ghana’s oil to the latter as required by law.
A Committee had been set by Government to review issues surrounding the deal at the time, after GNPC had declined consent citing the process that culminated in the deal as being in breach of the petroleum agreement and the petroleum exploration and production law of Ghana.
FPSO Kwame Nkrumah, which is currently being installed in approximately 1,100 meters water depth on the Jubilee Field, is on a 7-year charter with additional 13 one-year options. It is thus designed to remain on the field for up to 20 years. The FPSO has a storage capacity of 1,600,000 bbls of oil.
The FPSO will process 120,000 barrels of oil per day, and injecting more than 230,000 barrels of water per day and 160 MMscfd of produced gas.
The Jubilee Field is one of the largest oil fields discovered offshore West Africa within the last 10 years.
Read below the latest correspondence between The Business Analyst and IFC/World Bank Group:



The Business Analyst’s 2nd Query to the IFC/World Bank Group

Subject: RE: ARE THE WB/IFC DANCING TO THE TUNE OF RIGHTWING KOSMOS’ LOBBYIST RIVA LEVINSON?


August 3, 2010
Desmond Dodd

Head of Communications
IFC, Sub-Saharan Africa

Dear Mr. Dodd,
Re: IFC and Jubilee Field
I received yesterday your response to my letter of July 29, 2010 addressed to various officials of The World Bank and IFC, which unfortunately begged the questions I raised bordering on the integrity of the two institutions.

Specifically:
1. I raised issue with the IFC singling out a relationship between MODEC and Strategic Oil and Gas (StratOil) ‘a company in which Mr. Tsatsu Tsikata, a former Chief Executive Officer of the Ghana National Petroleum Corporation (GNPC) has a stake - for scrutiny, amidst leaking its business to pro-Kosmos media in Ghana, obviously with intent to creating 'panic and alarm' about threat to first oil time-table.’

2. I alluded to malice and double standards on the part of the IFC, following from the above, by referring to the IFC’s refusal ‘to come to provide vital information to the courts of Ghana in connection with its dealings in a project it supported in Ghana, which was needed to advance the course of justice in the trial of the same Tsatsu Tsikata that they seem to be targeting now on behalf of Kosmos Energy and its rightwing financiers!’

3. I sought ‘to know and communicate to the good people of Ghana, why the IFC would not be interested in investigating the relationship that exists between Kosmos Energy, which it has financed to the tune of $100 million and the E.O. Group,’ with reference to some publications, which raised issues on the relationship between the partners in the latter company and former President John Kufuor as well as issues bordering on criminality in the incorporation of the E.O. Group, for which I provided linkages.

4. I alluded to the IFC employing bullying, arm-twisting and blackmailing ‘tactics meant to whip GNPC to reverse its decision declining consent to a sale and purchase agreement (SPA) between Kosmos Energy and ExxonMobil, on the grounds that the two had engaged in a flawed process over which they had previously been notified.’

5. I asked specifically ‘to know if the World Bank and the IFC have become party to this blackmailing process targeting a country that is only trying to enforce its laws work.’

6. I referred to a Kosmos hired lobbyist’s lying statement in a promotional video clip* that ‘the government of Ghana had changed the terms of the original petroleum agreement with Kosmos Energy, and states her role specifically as lobbying the IFC and the US Congress among others, to put pressure on the Government of Ghana as a way of getting it to buckle down on its dealings with Kosmos Energy! ‘

*I had difficulty sending the said video clip referred to in (6) above, but I am attaching the audio extract from it to this mail and will also deposit a copy of the video clip at the World Bank office in Accra, Ghana.

Sadly, you were unable to respond to these very serious issues specifically directed at the IFC and the Bank, the latter being roped in because you are a member of the group.


OUTSTANDING QUESTIONS

For the avoidance of doubt, I am raising the outstanding questions again, numbering them so you respond to each of them, hoping that you feel able to relate them to the question number:

1. Did the IFC carry out due diligence into the conditions of the relationship between Kosmos Energy and the E.O. Group before advancing to Kosmos Energy (and by extension EO Group, which Kosmos is financing) the said $100 million loan in your pursuit of ‘(good) governance and revenue transparency in Ghana’s growing oil and gas sector’?

2. Did the IFC carry out due diligence on the relationship between Tullow Oil and Sabre Oil and Gas,before advancing to Tullow Oil, the said $115 million loan in its quest to promoting ‘(good) governance and revenue transparency in Ghana’s growing oil and gas sector’?

3. You state that ‘A consortium of lenders and investors, including IFC, is currently carrying out due diligence to explore the possibility of financing a floating production storage and off-loading vessel for the Jubilee Field.’

i. At whose instance is the due diligence on the relationship between MODEC and StratOil being carried out - the IFC, Kosmos Energy or Lobbyists?

ii. Is it the norm that even in ‘carrying out due diligence to explore the possibility of financing’ a project such as the FPSO for the Jubilee Field, the IFC announces to media houses, including publicizing the specific queries you are raising in your purported due diligence on a potential client’s relationship with third parties?

If indeed the IFC believes that Kosmos’ sale of its stake in Ghana’s oilfields would have to follow Ghanaian lawthen I believe it must not behave in the manner it has, in its handling of this matter and apparent double standards.

I implore the IFC and the Bank not to conduct yourselves in anyways that have the potential of undermining the trust that many Ghanaians have for your institutions.

I wonder why you will for one moment consider the thought and hope this issue will not hold up the development of the Jubilee oilfield, when besides Ghanaian Law, which governs the Petroleum Agreement among GNPC, Government of Ghana and Kosmos Energy, the parties have recourse to international arbitration, to settle any disputes.

Finally, I have a disclosure to make, which I believe would help you understand my passion on this matter: I worked at GNPC for over nine years, during the hard times the corporation was promoting Ghana’s oil potential and on many occasions worked for an average of ten hours a day!
My joy in Ghana’s oil discovery, unlike many who are thinking more of what to line their pockets with, rests in the fact that the dream we shared of Ghana becoming a commercial oil producer and worked towards, amidst heckling from many doubting Thomases, eventually culminated in Ghana’s commercial oil find in 2007!

I look forward to your prompt response to this humble request.



Yours truly,


J. Ato Kobbie
Managing Editor, The Business Analyst
j.atokobbie@yahoo.com
thebusinessanalsytgh@gmail.com

CC: Distribution list of original mail (i.e. WBG President, IFC President, Country Director etc.)




…But IFC Dodges

Re: ARE THE WB/IFC DANCING TO THE TUNE OF RIGHTWING KOSMOS? LOBBYIST RIVA LEVINSON?



Dear Mr. Ato Kobbie,

I would like to thank you for interest in IFC's support for the Jubilee oilfield. At this time, as MODEC has indicated in a public statement, the prospective financiers of the Jubilee FPSO project are further exploring issues surrounding a contract related to its FPSO bid. The intention of all financiers is to review the issues thoroughly and fairly before deciding on a way forward. At this point we have no further information to share on this process or previous due diligence on other Jubilee-related projects.

As indicated in my previous correspondence, IFC is committed to helping Ghana develop its offshore oil resources. We hope that the outstanding issues will not hold up the development of the Jubilee oilfield so that Ghana’s benefits can flow at the earliest possible time.

Yours sincerely,

Desmond Dodd
Head of Communications
IFC Sub-Saharan Africa – Corporate

Cc: Mary-Jean Lindile Ndlovu