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Deals in Code, Arrests in Raids: The Risky Stakes of Oil Middlemen

Deals in Code, Arrests in Raids: The Risky Stakes of Oil Middlemen thumbnail

The worst day of Saman Ahsani’s life began with a 9:30 a.m. knock on the door of the Monaco apartment where he lived with his wife and children. A scrum of law enforcement officials stood in the hallway, flashing a warrant to search the premises and seize property.

“What is this about?” Mr. Ahsani asked, as agents fanned through different rooms.

“Bribery and corruption,” one replied.

For hours, members of the local police and Britain’s Serious Fraud Office grabbed files, records and computers. Then they placed Mr. Ahsani under arrest and drove him to jail, where he found his older brother, Cyrus, and his father, Ata, whose homes had been raided simultaneously. The three were questioned separately and placed in solitary cells, where they spent the night.

“I remember we could yell to each other through these thick concrete walls,” Mr. Ahsani said. “It was all a shock.

The shock was about to deepen. The Ahsanis’ privately held company, Unaoil, a go-to agent for multinationals operating in the biggest oil patches on earth, would soon become the target of investigations on three continents. The authorities in Britain, the United States and Australia are examining whether the family paid bribes in resource-rich countries, like Iraq and Libya, on behalf of a long list of companies.

Multinationals that vie for contracts in “challenging” markets have been quietly hiring middlemen for decades, seeking help to navigate countries where they don’t know the folkways or politics. It is one of the oil industry’s most enduring but invisible roles.

Many of these middlemen stay on the right side of the law, offering advice and connections. But others cross the line. They grease the palms of officials and local managers, and they put a buffer between the payoff and the client, offering plausible deniability if the authorities catch on.

For Western corporations, such payments and other improprieties can run afoul of corruption laws and can lead to huge fines and, in some cases, prison terms. In 2016, the Securities and Exchange Commission and the Department of Justice collected more than $2 billion in fines from 26 companies that settled charges that they had violated the Foreign Corrupt Practices Act.

The Ahsanis have denied all charges, with vehemence and an armada of lawyers. They say that they had an advisory division, but that work relied on cultivated relationships and hard-won knowledge, not graft. They also oversaw a variety of joint ventures, they say, and at one point employed 1,400 laborers in countries like Iraq and Kazakhstan, working on a variety of engineering and construction projects.

As the Ahsanis seek to clear their name, they face some thorny evidence — their own words. The day after the raid in March 2016, a newspaper in Australia, The Age, published a multipart exposé based largely on the contents of a Unaoil hard drive stuffed with emails, records and receipts. The paper called Unaoil “the company that bribed the world.”

In these documents, the Ahsanis come across as cautious players in a treacherous game. The family and employees communicate with code words and nicknames. When an underling, strategizing about an Iraqi oil official, takes a blunt approach — “The best medicine for a calm life is a dose of George Washington” — he is rebuked. “The way you write your emails may give rise to questions,” Saman Ahsani replied.

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The chief operating officer of Unaoil, Saman Ahsani, in Monaco where investigators raided his home last year and arrested him. Credit Rebecca Marshall for The New York Times

The hard drive itself, which was sent to The Age by an unidentified source, is shrouded in intrigue. Lawyers for the Ahsanis say it was used in an extortion attempt in the months before the raid. Send me $5 million, wrote a blackmailer who asked to be called “Komrade,” or all these documents will wind up on the internet.

But the provenance of the hard drive has not slowed the authorities. Since its contents were published, the British authorities have begun a number of investigations into former Unaoil clients. One of them is Petrofac, a British oil field services company, which suspended its chief operating officer in May after he and the chief executive were arrested, questioned and then released by the Serious Fraud Office. Petrofac later released a statement that said it had taken a number of actions that “signal the board’s determination to cooperate fully with the S.F.O.”

Experts say that in the short term, prosecutors hope that companies will sign settlements and that some executives will go to prison.

“Longer term,” said Andrew Spalding, a professor at the University of Richmond School of Law and senior editor of a blog about foreign corrupt practices, “their hope is that this case changes the cost-benefit analysis of any company that thinks it needs to engage in bribery to compete.”

‘A Toxic Brand’

A soft-spoken 43-year-old with courtly manners and an Oxford education, Saman Ahsani is the family diplomat. When he, his brother and his father decided that they were tired of being portrayed in the media as high-end grifters, Mr. Ahsani was the emissary to The New York Times, in the first sit-down interview given by any of the principles since the raid.

His lawyers, quite sensibly, asked him to avoid legal issues. But he was eager to describe the family’s business history and the personal toll the case has taken.

“Our reputation has been shredded,” he said, sitting on a Louis XVI-style sofa in his Monaco apartment with a striking view of the ocean. “Within 24 hours, we became pariahs. A toxic brand, overnight.”

The publication of Cyrus Ahsani’s sometimes fratboyish musings, and the investigation, sent him into a deep depression that lasted for months, his brother said. Their father’s trouble with heart palpitations has worsened, along with some memory loss.

“It’s been incredibly frustrating for him,” Mr. Ahsani said. “It’d be tough for anyone, especially when you think this is all completely unjustified.”

For much of a 90-minute interview, he described Unaoil’s work for an array of companies, including BP and Shell, handling jobs like on-site inspections and equipment maintenance. To buttress his account, he handed over a color brochure with photographs and descriptions of projects, all of them in Iraq. One project was installing “new interface facilities” in the West Qurna oil field on behalf of the Basrah Gas Company.

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A Unaoil facility in Iraq. Authorities are investigating whether the family paid bribes here and elsewhere on behalf of other companies. Credit Unaoil

“We’re portrayed as this brass-plate money-laundering operation,” Mr. Ahsani said. “With just a few phone calls, you can see this is a company that, year in, year out, is delivering projects for large companies.”

A number of former clients declined to discuss Unaoil. Neither BP nor Shell would comment, and emails to the Basrah Gas Company were not returned.

The batch of leaked documents, by contrast, is like an informant who won’t shut up. An excerpt of about 100 pages was provided to The Times by The Age. Many transactions are detailed, including $400,000 given to an Iranian expatriate with connections to Azerbaijan’s oil minister, and 2.75 million euros given to a businessman tight with the Syrian regime.

Without context and a basic grasp of in-house terminology, some sentences read like nonsense. When a Unaoil manager wants to boast to a potential American client about how much sway the company has with key players in Kazakhstan, he writes about the need to demonstrate that “we own the Spaghetti House and have a lease on the Shashlik takeaway.” But the exchange is in the midst of discussion that is not about food. It’s about an Italian oil company (“Spaghetti House”) with strong links to Kazakh oil officials (“Shashlik,” a popular dish in Kazakhstan).

In a recent email, Mr. Ahsani said he was unable to comment on the specifics of the internal documents because anything he says may hinder an eventual defense. He added, “There is a great deal we would like to say.” The Ahsanis have never said the cache of documents is not authentic.

What the documents show is that the Ahsanis operate in a realm that is both competitive and exasperating. The politicians they deal with are high maintenance — cranky, greedy and unreliable. The Ahsanis and colleagues describe doling out cash for flights, five-star hotels, clothing, even CDs and perfume. An Iraqi heavy hitter gets two shopping sprees and English lessons for his son.

There are indignities, too. When an oil executive with ties to Kazakhstan’s president was invited to the wedding of the Ahsanis’ other brother, Sassan, an assistant wrote to say a pop-star friend would attend instead.

“His name is Yensepov,” the assistant emailed in a document dated May 2006. “Can you book a single room for him in the same hotel, please?”

Saman Ahsani forwarded the email to his brother and father, adding: “Is he joking?”

Changing Circumstances

The Ahsanis have resided for years in Monaco, a principality of 500 impeccably maintained acres of luxury shopping and manicured streets — like a World’s Fair in which the theme is “Money,” or what you’d expect if Rodeo Drive were a country. Tourists cluster around the elegant Casino de Monte-Carlo and gawk at Lamborghinis and Bentleys in steady orbit on an adjacent street. Roughly 40,000 people call this place home, lured by some combination of fine weather, price-on-request real estate and favorable tax treatment.

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The landmark Casino de Monte-Carlo in Monaco, the principality where the family has lived for years. Credit Steve Allen/Getty Images

The social scene is tightly knit, and the Ahsanis were once prominent members of it. Cyrus Ahsani was treasurer of the Monaco Ambassadors Club, an elite group of executives, diplomats and celebrities that claims Prince Albert II as honorary president.

The Ahsanis’ party-going days are behind them. Bankers and accountants, once so eager to help, now shun the family. Even small decisions must first be run by professionals.

“Your life suddenly becomes: Are the lawyers going to approve this, are they going to approve that?” Saman Ahsani said. “Every day there are not one or two fires. There are 15 fires.”

The family’s current circumstances — both its riches and its unwanted notoriety — are a world away from its origins. Ata Ahsani grew up in a modest home in an ancient town in the south of Iran, the son of a carpet designer. Scholarships sent him to universities in both England and the United States, but he returned to work for years at Western oil companies in Iran. After the revolution in 1978, he moved to London and started all over in the chemical trade. More than a decade later, he founded Unaoil in 1991.

Saman Ahsani said that over the years the company had spent millions building repair and service centers in Algeria, Azerbaijan and various countries in the Middle East, to fix or upgrade equipment like pumps and compressors. The British authorities seem to believe that these enterprises were largely a cover. The Serious Fraud Office stated in a court filing last year that it was “unpersuaded that Unaoil conducts any lawful business.”

That offends the Ahsanis. To rebut the charge, they set up an interview with a former oil field manager, who agreed to talk on the phone if he was not named. It was hard enough, this former senior vice president said, to find a new job.

His division had 230 people in Iraq, doing pump maintenance and site inspections, he said over the course of a half-hour discussion. The story was detailed, and it ended with a grim description of laying off his entire crew soon after the raid of the Ahsanis’ homes. But he acknowledged that he knew nothing about the advisory division of the company, where, the British authorities indicate, the bribery is alleged to have taken place.

Lindsey Mitchell, on the other hand, knew that division well. He worked there in 2009.

A 30-year veteran of the oil industry, Mr. Mitchell was hired by Unaoil because, he said in a recent phone interview, the Ahsanis were impressed by his connections to the regime of Muammar el-Qaddafi in Libya.

“The Ahsanis are likable guys,” said Mr. Mitchell, who moved with his wife to Monaco for the job. “Very welcoming.”

Nine months after he started, Mr. Mitchell flew to Tripoli to secure a $45 million environmental cleanup contract. When he later reported to the Ahsanis, via Skype, that a manager at Waha Oil Company, a subsidiary of Libya’s state-owned oil business, had demanded a payoff, the family did not demur, Mr. Mitchell recalled. Soon, he said, an Ahsani relative, who ran Unaoil’s office in Tripoli, handed him an envelope that contained at least $10,000.

Mr. Mitchell said he had delivered the envelope, then started to feel awful. He had never bribed anyone in his life.

“I took a hard look at what I’d done,” he said. “I’ve got kids, and I thought if they knew what just happened, they would lose all respect.”

The day after the envelope drop, Mr. Mitchell said, he emailed a resignation letter to the Ahsanis. When he read the article in The Age, he contacted the lead reporter and had a request: Tell the authorities in the United States and Britain how to get in touch.

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Lindsey Mitchell, a former employee who knows Libya, has been in touch with investigators. Credit Bryce Meyer for The New York Times

“I knew my name was all over those documents,” Mr. Mitchell said. “So I figured I wouldn’t wait for them to come find me.”

He has since debriefed the British authorities at a meeting in Vienna and the Federal Bureau of Investigation at a hotel near the airport in Calgary, Alberta. Without asking for immunity, he described everything he knew. Whether he is currently in legal jeopardy is unclear.

Asked about Mr. Mitchell, a lawyer for the Ahsanis, Roger Burlingame, said, “We cannot comment at this stage, but we look forward to addressing Mr. Mitchell’s claims at the appropriate time.”

Soul of a Spy Novelist

The identity of the person who leaked documents about Unaoil to The Age has not been made public. But this much is obvious: Whoever it was has the soul of a spy novelist.

Before sending anything, the source asked the paper to demonstrate its commitment by placing an ad in a French magazine, Le Figaro, that included the words “Monte Christo.” A reporter, Nick McKenzie, followed those instructions, posting a for-sale notice for a nonexistent home in Sydney, Australia.

The source, soon nicknamed “Le Figaro,” ultimately provided hundreds of thousands of documents. In the hopes of maximizing publicity about the case, The Age shared the tranche with its media partner The Huffington Post, which published its own articles the same day as The Age.

“Le Figaro” also wanted the documents shared with law enforcement in Australia. Mr. McKenzie said a heads-up had been given to officials about the date when The Age and The Huffington Post would publish, which helps explains the one-two timing of the raid and the exposés.

The Ahsanis knew that a public-relations nightmare could be imminent. In December 2015, the family says, the company had been contacted by someone identified as Komrade, whom we will assume is male, for the sake of a pronoun. Documents provided to The Times by a publicist for the Ahsanis show that Komrade claimed to have spent $50,000 for a Unaoil hard drive sold by a hacker. For $5 million in Bitcoin, Komrade offered to destroy the lot. If he wasn’t paid in three days, everything would be sent to newspapers and WikiLeaks.

“Some people very stupid, emotion get in the way,” Komrade wrote, using what was either Russian-accented prose or an English speaker’s attempt to sound Russian. “Ignore my request and your family business comes to an end.”

A cybersecurity firm, Guidepost Solutions, advised the Ahsanis to pay a fraction of the demanded ransom to keep talks going and perhaps reel Komrade in. A tense, four-month negotiation ensued. Saman Ahsani again served as diplomat, according to the documents provided by the Ahsanis’ publicist.

“We are in the process of sending the initial payment,” he wrote to Komrade in late December, on the verge of sending $50,000. “This is done as a sign of good faith and keeps to our word.”

Komrade was ultimately sent an additional $100,000, which was far short of expectations. The documents provided by the Ahsanis’ publicist show him growing more irritated and profane. His final words arrived on March 25: “Is time now for you feel some pain.”

Four days later, the police in Monaco came knocking.

Are “Le Figaro” and Komrade the same person, an extortionist masquerading as a whistle-blower, or perhaps a whistle-blower who dabbles in extortion? Lawyers for the Ahsanis think the answer is “yes,” and they have tried to turn the extortion plot into a media ethics matter, suggesting that The Age was relying on information used to commit blackmail.

Editors at The Age, which is owned by Fairfax Media, counter that the Ahsanis never mentioned blackmail when contacted with prepublication questions. They add that “Le Figaro” did not ask for money, nor did anyone else reached by reporters after they started digging into the story. These additional sources include former employees of Unaoil, according to Mr. McKenzie.

“We have no evidence that our sources were involved in extortion attempts, and any alleged extortion bid has nothing to do with Fairfax Media,” Alex Lavelle, editor of The Age, said in an email. “We maintain our stories on Unaoil are true, in the public interest and unimpeachable.”

For the Serious Fraud Office, the stakes in the Unaoil case are high. It has struggled for respect in the realm of corporate prosecutions and has badly lagged behind the Department of Justice in foreign corruption actions. A spokesman for the office noted an in email that the Bribery Act, the country’s answer to the Foreign Corrupt Practices Act, didn’t go into effect until 2011.

“We have secured successful outcomes in all cases brought under the law,” said the spokesman, Adam Lilley.

For the Ahsanis, the stakes are far higher. Monaco is a signatory to the European Convention on Extradition, which means the family is shadowed by the possibility that the local police may one day return, and this time hand the Ahsanis over to the British authorities, who could seek prison sentences.

The Ahsanis now have little choice but to wind down what is left of the company, confer with attorneys and wait. Lawyers in the white-collar field say that if charges are ultimately filed against the family, a case will not be easy for the government to win. Following the money in these investigations is time consuming and difficult, and internal emails alone are hardly proof of a crime. Also, it would be hugely difficult to obtain witnesses in countries like Iraq.

But Saman Ahsani said some of his neighbors had already come up with a verdict of their own.

“There are certain individuals, you can see written on their face, while you are talking, at best a presumption of guilt,” he said. “At worst, a little bit of a smirk, like they are getting enjoyment out of the misery of others.”

NY Times



4 Comments on "Deals in Code, Arrests in Raids: The Risky Stakes of Oil Middlemen"

  1. Keith McClary on Sat, 23rd Sep 2017 3:17 pm 

    “For Western corporations, such payments and other improprieties can run afoul of corruption laws and can lead to huge fines and, in some cases, prison terms. In 2016, the Securities and Exchange Commission and the Department of Justice collected more than $2 billion in fines from 26 companies that settled charges that they had violated the Foreign Corrupt Practices Act.”

    Trump wants to get rid of those bothersome regulations.

  2. rockman on Sat, 23rd Sep 2017 4:24 pm 

    Blah, blah, blah: dealing with foreign countries and govt often involves corruption. I’m shocked, you hear, shocked! LOL.

    I grew up in Louisiana and began my career there. The state often referred to as “Half underwater and half under indictment”.

    So many stories but here’s just one. About 20 years ago met with 2 Americans representing a Chinese drilling company. The offer: they would ship rigs and crews to the US and drill wells for free and, in doing so, earn a share of the production. I’m certain no one took them up on the offer: way too much liability exposure. But here’s the great part: they showed me a detailed budget plan put together in China. And one line of the spread sheet caught my eye. In simple English: “Bribes for local officials – $2,500,000”.

    I assumed they planned to drill a lot in Louisiana. LOL.

    But this where the Chinese have a huge advantage over US companies. A US company caught bribing a foreign official is subject to criminal prosecution. In China it’s allowed as a tax write off.

    And on a personal note: when I adopted my daughter in China it was required to pay the govt fee in $US cash. First and only time I ever wore a “waist wallet”. Additionally the local “facilitator” for my group collected a small “appreciation fee” for the orphanage manager. Which I sure she kept a bit for her self. But none was actually illegal since the govt expects it to happen and considers it part of their salaries. Monies the govt doesn’t have to pay them. Same thing exists in the Middle East. There’s even a semiofficial term for it: bakshish. For many American workers it’s the first Arab word they learn. Usually within 20 minutes of getting off the plane. LOL.

    And words don’t even have to be spoken. A friend knew that if he wanted to get something (bottle of booze, Playboy magazine, etc) through customs when he landed in Nigeria he would just pack two. As customs would check his bag they would pull the extra out and set it aside. No words needed to be exchanged.

    It’s really not a bad system IF you know what to expect.

  3. Anonymouse1 on Sat, 23rd Sep 2017 7:40 pm 

    LoL @ Narrativeman

    “But this where the Chinese have a huge advantage over US companies. A US company caught bribing a foreign official is subject to criminal prosecution. In China it’s allowed as a tax write off.”

    That shit is golden, black gold that is, narrativeman.

    But prosecute by *whom* narrativeman? The uSgov? That’s a good one. uSgov-A wholly owned subsidiary of Exicon-mobil-chevron-halitosis-BP and onandonandon ULC. (An Unlimited Liability Cartel).

    They don’t prosecute oilmen narrativeman, they subsidize them, and on occasion, make them president, or Secretaries of Snake even. I would be willing to bet China has a better record prosecuting corruption than the uS. How could they not? THere is no place on earth, more corrupt than the uS.

    Meanwhile, back in the real world.

    https://www.nrdc.org/trump-watch/trump-gives-his-ok-big-oil-bribing-foreign-governments

    https://www.pri.org/stories/2017-02-03/victory-oil-industry-congress-makes-it-easier-pay-bribes-drilling-rights.

    http://www.salon.com/2016/03/30/worlds_biggest_bribe_scandal_report_on_oil_corruption_exposes_how_corporations_help_destabilize_middle_east/

  4. rockman on Sat, 23rd Sep 2017 10:40 pm 

    A – Ask and ye shall receive. Here are some of the companies caught breaking that law:

    DOJ and SEC enforcement has increased the prominence of the FCPA from 2010 onwards. The SEC website shows a complete list of enforcement cases since 1978. Notable select cases of the application of FCPA since 2008 are with ALCOA, Biomet, Bizjet, Hewlett Packard Company, KBR, Marubeni Corporation, News Corporation, Siemens, Smith & Nephew and Walmart de Mexico as follows:

    In 2008, Siemens AG paid a $450 million fine for violating the FCPA. This is one of the largest penalties ever collected by the DOJ for an FCPA case.

    In 2012, Japanese firm Marubeni Corporation paid a criminal penalty of US$54.6 million for FCPA violations when acting as an agent of the TKSJ joint venture, which comprised Technip, Snamprogetti Netherlands B.V., Kellogg Brown & Root Inc., and JGC Corporation. Between 1995 and 2004, the joint venture won four contracts in Nigeria worth more than US$6 billion, as a direct result of having paid US$51 million to Marubeni to be used to bribe Nigerian government officials.

    In 2012 Smith & Nephew paid US$22.2 million to the DOJ and SEC, and Bizjet International Sales and Support Inc. paid US$11.8 million to the DOJ for bribery of foreign government officials. Both companies entered into a deferred prosecution agreement.

    In March 2012, Biomet Inc. paid a criminal fine of US$17.3 million to resolve charges of FCPA violations and US$5.5 million in disgorgement of profits and pre-judgment interest to the SEC.

    In January 2014, ALCOA paid $175 million in disgorgement of revenues and a fine of $209 million to settle charges that its Australian bauxite mining subsidiary retained an agent that made bribes to government officials in Bahrain and to officers of Aluminum Bahrain B.S.C. to secure long-term contracts to supply the company with bauxite ore.

    In March 2014, Marubeni Corporation agreed with the DOJ to pay a US$88 million fine after pleading guilty to taking part in a scheme to pay bribes to high ranking Indonesian officials in order to secure a lucrative power project.

    On February 24, 2015, the Goodyear Tire and Rubber Company “Goodyear” agreed to pay more than $16 million to settle FCPA charges that two of its African subsidiaries allegedly paid $3.2 million in bribes that generated $14,122,535 in illicit profits. The SEC FCPA charges involved Goodyear subsidiaries in Kenya and Angola for allegedly paying bribes to government and private-sector workers in exchange for sales in each country.

    According to the SEC because “Goodyear did not prevent or detect these improper payments because it failed to implement adequate FCPA compliance controls at its subsidiaries” and, for the Kenyan subsidiary, “because it failed to conduct adequate due diligence” prior to its acquisition. It was not alleged that Goodyear had any involvement with or knowledge of its subsidiaries’ improper conduct.

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