The Fuse

The Unaoil Bribery Scandal: Examining Critical Facts, and Media Exaggeration

by Nick Cunningham | April 07, 2016

They call it “The Bribe Factory.” A joint investigation between Australia’s Fairfax Media and The Huffington Post found that the Monaco-based Unaoil, a family run company, established an international bribing network to secure oil and gas contracts for its clients.

Pouring over an enormous cache of leaked documents and emails, the investigation documents dozens of cases in which Unaoil bribed government officials in countries across the world—including Iraq, Iran, Libya, UAE, Kuwait, Kazakhstan, among others—to win contracts for a long list of multinational companies including Halliburton, Honeywell, FMC Technologies, Rolls Royce, Eni, Saipem, Samsung, Sinopec, Petronas and more.

Here’s how it worked. Unaoil would convince a client to earmark a percentage of a contract that Unaoil helped it win. Unaoil would then use part of those funds to bribe government officials to shift contracts in favor of the client, while pocketing the remaining portion.

Libya, Kazakhstan, Iraq and beyond

The investigation is loaded with detailed examples of bribery conducted by Unaoil, in some cases with the participation of its client.

In one blatant example, a top employee of Canadian-based oilfield services company Canuck Completions asked Unaoil how to administer a bribe in Libya. “What we are curious about is to what type of Baksheesh is needed to present to these men in order to get work started. I believe this is common practice in Libya,” the employee at Canuck Completions wrote in an email to a Unaoil associate. Baksheesh is a slang term for bribe. “Is this something that needs to be done after work hours one on one? A added value amount to the ticket for them, or a flat fee a month, we are not sure. What are your thoughts on this?”

The FBI, the U.S. Department of Justice, and the British and Australian governments have initiated a joint investigation into the Unaoil bribery ring.

The report says that Unaoil paid millions of dollars in bribes to the right-hand man of Saif al-Islam, the son of the late dictator Muammar Gaddafi. Unaoil also bribed another Libyan man who had contacts inside the National Oil Corporation. In exchange for the bribes, the Libyan contacts were able to leak critical information on contract tenders for Unaoil’s clients looking to win business in Gaddafi’s Libya, which by the late 2000’s had emerged from western sanctions. The clients included Malaysian company Ranhill, Spain’s Tecnicas Reunidas, Canuck Completions, and a handful of Korean firms.

In Kazakhstan, Unaoil worked to win contracts for Halliburton’s then-subsidiary KBR at the massive Kashagan oil field, often described as the largest oil discovery in the last several decades. Kashagan is a gargantuan offshore project in the Caspian Sea that is years overdue and has cost tens of billions of dollars, in spite of not yet producing any oil. The Italian oil giant Eni was the lead operator on the project, and as such, helped determine millions of dollars in sub-contracts. Unaoil reportedly bribed top Eni officials to release highly confidential information on the tenders and details on the evaluations of those contracts to KBR, which the Eni manager was officially overseeing.

Unaoil was successful in Iraq as well. In one intercepted email, Unaoil’s country manager, Basil Al Jarah, listed several actions he took to woo Iraq’s current deputy oil minister, Dhia Jaffar al Mousawi, who worked for Iraq’s South Oil Company at the time:

We haven’t done much for [Dhia Jaffar] really, but here is a list:

  1. Took him clothes shopping on two occasions (around $1-2K each time)
  2. Related sub agent got $30k for assistance with al Kassim order.
  3. Gave his son a 2 week English course in Dubai. Arranged interviews to employ the son in Adnan’s company, but the boy found alternative work.
  4. For the past 8 months working on getting him a UAE residency visa, but without success.

That’s It.

Unaoil also bribed a top Iraqi oil official, Kifah Numan, to curry favor for its client, Rolls-Royce. Unaoil showered gifts on Numan, spending thousands of dollars on, “Perfume, Various CD’s, Mobile Top-Up and Leather Jacket.” But, according to Unaoil’s Al Jarah, “spending $2,684 on a key decision maker and remain in his good books to process things… is worth 100 times that value, without which we would have no contract [for Rolls-Royce] in our hands now.” Numan apparently advised Unaoil that Rolls-Royce could overcharge the Iraqi government, submitting inflated cost figures for the generators it would supply.

The British Serious Fraud Office is looking into the matter, and Rolls-Royce said that it is cooperating and won’t comment “on ongoing investigations.”

International fallout

Shortly after the publication of the investigation, Monaco raided the offices of Unaoil at the request of the UK. The FBI, the U.S. Department of Justice, and the British and Australian governments have initiated a joint investigation into the Unaoil bribery ring.

Eni launched an internal investigation, but “[n]one of the people mentioned in the articles are currently employed by Eni,” the spokesman for the Italian company wrote in an emailed response to Reuters.

Iraqi Prime Minister Haider al-Abadi ordered its anti-corruption Integrity Commission to investigate the allegations made in the Fairfax Media/Huffington Post article. “Prime Minister Haider al-Abadi directs the Integrity Commission to take legal measures and calls on the judiciary to open immediate legal proceedings concerning the grave newspaper reports,” the PM’s office said in a statement.

The report from Fairfax Media and The Huffington Post is not without shortcomings.

Unaoil denies any involvement in bribery. “Over the past few days grave allegations have been made against us. Unaoil and the Ahsani family take these extremely seriously and will do all that we can to defend ourselves,” the company said in an April 4 statement. “Many appalling things have been said about our business, allegations are being treated as fact, and speculation is rife. We have been shocked by how these allegations have, without any due process, been repeated. We are determined to ensure that we are not wronged, and we are starting that process. At this point we are engaging with authorities and are considering what actions we will take.”

Exaggerations of global conspiracy

The report from Fairfax Media and The Huffington Post is not without shortcomings. For example, it alludes to the fact that the shady dealings between Unaoil and one Petrofac executive “almost certainly” were made “to influence those with the power to award contracts to Petrofac,” but then two paragraphs later, the article admits that there is no evidence that Petrofac had any knowledge of the dealings. Many other companies named in the report were also unaware of Unaoil’s activities (although that may not protect them from prosecution in the U.S., UK, or Australia). The effect is to imply a much grander global conspiracy than perhaps was the case.

Moreover, the article is billed as “the world’s biggest bribery scandal,” but there are few blockbuster incidents. The report also suggests that the chaos in many countries named in the report stem from the dealings of these western companies. But there are a lot of reasons that Iraq, for example, is suffering from instability. It is a bit of a leap to imply that the country’s widespread violence is the direct result of an individual oil company winning a contract over a competitor because it bribed Iraqi officials.

Nevertheless, the report’s findings remain damning, illustrating widespread criminal behavior in which many oil companies willingly participated. It is indeed true that persistent corruption and the mismanagement of resource extraction has kept the populations of many commodity-exporting countries in poverty and fueled instability. The Fairfax Media and The Huffington Post investigation, then, has done the world a strong public service by shining a light on these dynamics.