Washington, DC – Global Witness calls on the US Department of Justice (DOJ) and the US Securities and Exchange Commission (SEC) to investigate US oil giant Exxon for its 2013 business deal in the West African country of Liberia, where the company spent $120 million on an oil block it knew was tainted by corruption.
A new Global Witness investigation released this week uncovered Exxon’s complicity in oil sector corruption in the country, with evidence suggesting Exxon may have violated US anti-money laundering laws as well as the Foreign Corrupt Practices Act.
“While Exxon was busy negotiating a deal for a corruption-tainted oil block in Liberia, the company was also engaged in a fierce assault on an oil and gas anti-corruption law in the US,” said Stefanie Ostfeld, Deputy Head of Global Witness’ US office. “Exxon’s decision to get entangled in oil sector corruption in Liberia shows that the company was willing to advance its oil exploration efforts at any cost – possibly at the expense of US anti-corruption laws.”
In a December 2011 presentation given by Exxon to the Liberian Government, Exxon stated that it had “concern over issues regarding US anti-corruption laws.”
Exxon knew that the oil block, known as Block 13, had previously been awarded to the company Broadway Consolidated/Peppercoast (BCP) through bribes paid by the Liberia state oil agency. It also suspected that BCP was partially owned by former Liberian Government officials who may have illegally granted themselves the block while holding office. Global Witness’ research has shown that former officials likely did have an ownership interest in BCP at some point in time, which means that Exxon’s purchase of Block 13 could potentially enrich these former officials.
Despite this, Exxon went ahead with the deal and devised a plan to attempt to skirt US legal exposure.
US law prohibits a company from using a financial institution to purchase an asset worth more than $10,000 that it knows was acquired through bribery. US companies are also prohibited from paying a foreign official in order to obtain or retain business.
US oil competitor Chevron had previously passed up a deal to buy the same oil block, expressing similar corruption concerns, according to an individual with knowledge of the negotiations.
To address its legal concerns, Exxon devised a two-step transaction to purchase the oil block. A Canadian company, COPL (Canadian Overseas Petroleum Limited), was apparently used as a go-between to purchase the block so that Exxon would not have to purchase it directly from BCP.
Global Witness is unaware of what due diligence Exxon may have undertaken between its December 2011 presentation and April 2013, when it purchased the oil block. Exxon has not responded to Global Witness’ request for comment. COPL has, saying its due diligence showed that there were no legal problems with the deal, that the block was not owned by former Liberian officials, and the deal was structured as it was because the Liberia Government wanted an agreement with two oil companies rather than one. The company received legal advice in the US, UK, Canada, and Liberia, including on its anti-corruption and anti-money laundering obligations.
“Evidence that Exxon may have violated US anti-corruption laws is damning. US authorities must investigate to determine if Exxon broke the law when it spent $120 million in 2013 to acquire a corruption-tainted Liberian oil block – a purchase it earlier suspected could line the pockets of former Liberian officials,” said Ostfeld.
The Liberian Government has since announced that it will undertake a preliminary investigation into corruption in Liberia’s oil sector. The investigation will examine “allegations of bribery and misuse of office” outlined in multiple recent publications, including the Global Witness report.