Griffith pleads guilty to corruption charge

Court action: Griffith pleaded guilty to a corruption charge related to its dealings in Chad

A Canadian oil company that bribed the wife of a Chadian diplomat in hopes of landing exploration blocks in the African country pleaded guilty in a Calgary court to a corruption charge, in a case that came to light when the company blew the whistle on itself.

Reuters reported that Griffiths Energy International, a private company based in Calgary that had intended to go public before its founder died in an accident, agreed with prosecutors to pay C$10.35 million (US$10.4 million) in fines following an internal investigation that uncovered the crime, which dates back to 2009 under former management.

The company turned its findings, including more than 1000 pages of documents, over to the Royal Canadian Mounted Police.

"We essentially provided a case, neatly organized and ready for prosecution," Reuters quited Griffiths’ lawyer, Kristine Robidoux, as saying in court on Tuesday.

Robidoux said Griffiths wanted to pay its fine and proceed with its business without the taint of corruption.

A Calgary judge said he will rule on the sentencing on Friday. It is one of a handful of prosecutions under Canada's 14-year-old Corruption of Foreign Public Officials Act.

Questions over Griffiths' dealings in Chad, an impoverished country whose oil wealth has caught the attention of the world's oil industry, arose in late 2011 when newly hired managers were gathering information for a planned initial public offering, according to an agreed statement of facts.

Financier and company founder Brad Griffiths had brought in the new management team in early July of that year. Just over two weeks later he drowned in a boating accident in Ontario.

In 2009, Griffiths and two other founding shareholders were pursuing exploration blocks in Chad and offered the country's ministry of petroleum and energy a US$2 million signature bonus to acquire the acreage, Reuters reported.

Such bonuses are legally permissible upfront payments to host governments as part of monetary commitments to obtain exclusive rights to a block. They are common in many oil-producing countries.

The executives were advised it was too low, according to the court document. The bonus offer was subsequently raised to US$10 million. Before Griffith would eventually secure the blocks the price would rise to US$40 million.

Earlier, Griffith's executives had met Chad's then-Ambassador to Canada and the US, Mahamoud Adam Bechir, who was based in Washington. The company struck a deal with the diplomat to pay his consulting company US$2 million for "advisory, logistics, operational and other assistance" in Chad, the statement said.

However, Griffith's outside legal council advised the company against going ahead with that agreement as Bechir was a public official. The deal was terminated and no payments were made.

About two weeks later, the company signed a second agreement, with identical terms, with a Nevada-incorporated consulting firm that had been set up by the ambassador's wife, Nouracham Niam, just days before, according to the statement of facts.

She and two others were also given the opportunity to buy a total of 2.4 million shares of Griffiths at US$0.001 each, the statement said. On Tuesday, the prosecutor in the case, Robert Sigurdson, said the company still had the share certificates.

The ambassador and his wife were not immediately available for comment when contacted by Reuters.

Before Griffith could secure the blocks, Chad established a new method for bidding for production sharing contracts that involved a three-step process with participation by the petroleum ministry, a council of ministers and the president, in hopes in improving the country's poor reputation for transparency, according to the statement.

In 2012, Chad ranked 165th of 176 countries in Transparency International's Corruption Transparency Index, which measures how corrupt nations' public sectors are seen to be.

Griffith secured its contract in January 2011, with terms that included a US$40 million signature bonus. There was no evidence that the US$2 million paid to the consulting company had any effect, however.

According to Chad's petroleum and energy minister, the diplomat has no influence on the process for selecting successful bidders for oil projects, the court document said.

Still, the company on Tuesday acknowledged the US$2 million payment to the consulting company represented money "to a foreign public official to attempt to induce the official to use his position to influence decisions."

As a result of its findings, the new Griffith management scrapped plans for its IPO and wrote off C$1.8 million in costs.

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