NO BRIBERY, NO CORRUPTION

….Five-month Investigations Reveal

By J. Ato Kobbie, Managing Editor

A five-month thorough investigation conducted into the award of a $5million
service contract towards the construction of the Jubilee Field production
vessel, FPSO Kwame Nkrumah, has established that there was neither corruption
nor bribery in the award of the contract by Mitsui Ocean Development &
Engineering Company Ltd (MODEC).

A terse statement issued by MODEC last Sunday, states that an independent
investigation commissioned by its Board into its service agreement with its
contractor - Strategic Oil and Gas Resources Limited - (StratOil), at the
instance of prospective equity partners in the Jubilee FPSO, could not establish
that any laws were violated.

A former Chief Executive of the Ghana National Petroleum Corporation (GNPC),
Tsatsu Tsikata, is reported to have an interest in StratOil.

The International Finance Corporation (IFC), a member of the World Bank Group,
in July last year raised an alarm over a $5million service contract between
MODEC and StratOil in connection with the award of the contract for the
construction of FPSO Kwame Nkrumah M.V. 21 in 2008.

As a result of the concerns raised by the IFC and its request for a due
diligence, the Multilateral Investment Guarantee Agency (MIGA) suspended a $225
million political risk guarantee (insurance) it was about to provide for the
prospective equity partners.

The prospective equity partners were seeking to invest in MODEC’s wholly-owned
Netherlands-registered subsidiary, Jubilee Ghana M.V. 21, which owns the Jubilee
floating, production, storage and offloading vessel, FPSO Kwame Nkrumah M.V. 21.
MODEC states that the thorough inquiry, conducted into the matter by a well
recognized law firm with specialty in such matters, “has found no evidence of
any violation of the U.S. Foreign Corrupt Practices Act or any other applicable
jurisdiction's anti-bribery laws in relation to its arrangement.”
MODEC, on July 29th, 2010 announced through a press release that MIGA was
suspending its guarantee for the Jubilee FPSO, a statement which was widely
misconstrued to mean the withdrawal of physical insurance cover on FPSO Kwame
Nkrumah.

An official statement issued by Stuart Sutton-Jones, Corporate Affairs Executive
of StratOil at the time the news about the MIGA suspension and insinuations of
possible graft welcomed the due diligence indicating it had already given
permission to MODEC to disclose details of their confidentiality agreement.
Mr. Sutton-Jones revealed in his statement that StratOil, provided advice and
consulting services to MODEC for the preparation of their tender that won the
bid to supply an FPSO to the Jubilee consortium and related services.
He said StratOil rendered very extensive services to MODEC, which included
recommending the use of financing from the International Finance Corporation
(IFC) as well as African Development Bank, AfreximBank, US Overseas Private
Investment Corporation (OPIC), and the African Finance Corporation (AFC).
“It was stratOil who also introduced MODEC to equity providers in the Middle
East and carried out extensive economic modeling work for the project,” StratOil
stated.

The company expressed with great satisfaction its role that enabled the
tremendous achievement of MODEC in winning a highly competitive tender and in
supplying the FPSO within a time frame, which is adjudged a record in the
industry for such a deep water project.

StratOil noted with satisfaction that it was beneficial to the Jubilee project
and to Ghana that the MODEC bid was a low-priced one that met the highest
technical standards in the industry, a situation they said would enable first
oil flow from the jubilee field in the 4th quarter of last year.
StratOil warned at the time that it reserved the right to take legal steps
against those who had misrepresented facts concerning the agreement between
themselves and MODEC and the due diligence process of equity and debt financiers
of the FPSO.

The full MODEC statement is reproduced below:

Update on the Jubilee Due Diligence

Tokyo, January 23, 2011 – MODEC, Inc. announced today that, further to the
request of prospective equity partners in the Jubilee FPSO, MODEC commissioned
an independent investigation into its service agreement with its contractor.
Following a thorough inquiry into this matter, conducted, over the last five
months, by a well recognized law firm specializing in such matters,
independently retained for this purpose by MODEC Board, this investigation has
found no evidence of any violation of the U.S. Foreign Corrupt Practices Act or
any other applicable jurisdiction's anti-bribery laws in relation to its
arrangement.

MODEC will provide an update as matters develop. In the meantime, if there is
any request for information kindly contact Otori Masayoshi
at Masayoshi.Otori@modec.com.