By John Stephen Katende

29^th Aug 2011:

Centre: New PM Mbabazi, guilty or not guilty?

Leaked US diplomatic cables released recently by the whistleblower website Wikileaks have revealed that Tullow Oil was convinced that some “…senior Ugandan government officials were “compensated” to support the sale of a partner/rival firm’s exploration and production rights to Italian oil company ENI”.

The diplomatic cable, a copy of which Uganda Correspondent has seen, says in no uncertain terms that, “…Tullow Vice President for Africa Tim O’Hanlon identified [former] Security Minister and National Resistance Movement (NRM) Secretary General Amama Mbabazi and [former] Energy and Mineral Development Minister Hilary Onek as Ugandan officials who benefited from the sale of production rights by Heritage Oil and Gas to ENI”.

Consequently, the leaked diplomatic cable says, Tullow Vice President for Africa “…requested U.S. assistance in ensuring the open and transparent sale of oil assets”. And it appears the US government official who authored the leaked diplomatic cable agreed with the allegation made by Tullow’s Vice President for Africa.

“…If Tullow’s allegations are true – and we believe they are – then this is a critical moment for Uganda’s nascent oil sector.  The Heritage-ENI sale will likely derail any potential partnership between Tullow and Exxon Mobil and have profound consequences for transparency and openness in the future management of the industry”, the US official wrote in the leaked diplomatic cable.

The diplomatic cable reveals that Tullow’s Vice President for Africa Tim O’Hanlon met with Ambassador Lanier to discuss “recent developments in oil exploration in Uganda”. Mr. O’Hanlon explained that the $10+ billion required to produce, refine, and export oil from Uganda far exceeds the financial capacity of Tullow and other mid-sized exploration companies currently working in Uganda.

For that reason, Mr. O’Hanlon said, “…Tullow is therefore considering selling a portion of its Uganda holdings to a larger international oil partner, and has unofficially “short listed” three major companies as potential partners – including Exxon Mobil, Total (France), and the Chinese National Offshore Oil Company (CNOOC)”.

He added that after Tullow concludes its process of selecting a partner, [likely in January or February 2010] it will present the “bids” to the Uganda government and work with Ugandan officials to gain approval of the much larger oil partner. In contrast, Mr. O’Hanlon said, “…the recent effort by Heritage Oil and Gas to sell its oil exploration and production license to ENI was apparently a corrupt back door deal”.

O’Hanlon further observed that since news of the ENI sale broke, even Ministers unrelated to oil (such as Minister of State for Fisheries Fred Mukisa) have issued public statements supporting ENI.  O’Hanlon alleged that [former] Security Minister Mbabazi and [former] Energy Minister Onek received payments from Heritage and/or ENI in exchange for their support.

Mr. O’Hanlon also referred to the then Security Minister Amama Mbabazi, who facilitated an August 2009 meeting between ENI and Tullow, as “…ENI’s patron in Uganda” and said ENI created a shell company in London – TKL Holdings – through frontmen Mark Christian and Moses Seruje – to funnel money to Mbabazi.

The Tullow Vice President also noted what he described as Onek’s recent unsolicited “grandstanding” before Parliament in support of ENI, and similar statements of support during a recent Indo-African energy conference in New Dehli.  It is also alleged that Onek made “…impossible claims at the Indo-African conference regarding ENI’s ability to export 100,000 – 200,000 barrels per day within two years”.

Mr. O’Hanlon concluded by asking the U.S. to help bring these corruption allegations to light and raise concerns – perhaps in concert with the British High Commissioner or other development partners – over how the Heritage-ENI sale has transpired.

In the final comment on matter, the official from the US embassy in Kampala the US State Department that, “…allegations that Minister Mbabazi, who has already been implicated in other government corruption scandals, solicited and/or accepted payment in exchange for government support will, if true, have serious adverse effects on the economic activity of U.S. businesses in Uganda and U.S. Mission goals regarding accountability, good governance, and economic development”.

The US diplomat added that, “…depending on the outcome of this major deal, we believe it could be time to consider tougher action – to include visa revocation – for senior officials like Mbabazi who are consistently linked to corruption scandals impacting the international activity of U.S. businesses, U.S. foreign assistance goals, and the stability of democratic institutions”.

However, at the time the rumours of these massive corruption scandals first emerged, both Ministers [Mbabazi and Onek] denied any involvement in the scandal.  END.  Please login to www.ugandacorrespondent.com every Monday to read our top stories and anytime mid-week for our news updates.