Willbros opens another scandal of improper payments to Nigeria

May 23, 2005 02:00 AM

Even as the dust over alleged bribe-for-gas contracts involving a unit of oil service firm, Halliburton, is yet to settle, another US oil firm, Willbros, has opened another scandal of improper payments of money allegedly to some Nigerian government officials to win contracts.
Willbros's local unit, Willbros West Africa, was awarded last December, the Engineering, Procurement and Construction (EPC) contract for the onshore pipeline and facilities of the $ 600 mm West African Gas Pipeline Project by the West African Pipeline Company, comprised of ChevronTexaco, Nigerian National Petroleum Corporation (NNPC), Shell, and the Takoradi Power Company of Ghana.

The oil services firm, which has its Nigerian unit based in Port Harcourt, also bagged the $ 780 mm contract along with South Korea's Hyundai Heavy Industries, to build the third phase of the NNPC/Chevron Escravos Gas Pipeline (EGP) project. However, the Willbros Group said that an investigation by its Audit Committee into the activities of the former head of the Company's international operations, "unveiled a catalogue of dubious dealings by existing and former employees, including possible improper payments and bid-rigging in Nigeria, Bolivia, Ecuador and possibly Mexico."
The company said that Mr James Tillery, its former president of international operations, some 12 other employees who reported to him and possibly six consultants, "may have falsified reports, compromised the company before government authorities and clients and violated US and foreign laws."

It said the audit discovered that Tillery and other Willbros International employees or consultants owned interests in enterprises with whom Willbros International did business, and may have usurped corporate opportunities, received payments and other improper benefits from consultants, suppliers or competitors.
"Mr Tillery and other Willbros International employees or consultants may have directly and indirectly promised to make, made, caused to be made, or approved paymentsto government officials in Bolivia, Nigeria and Ecuador," it said.

The company said that it had reported its findings to both the US Securities and Exchange Commission (SEC) and the US Department of Justice, which have already launched investigation into the allegations.
"Bad behaviour and collusion defeated our system of internal controls," said Willbros CEO Michael Curran. "It is like a spread of cancer that has gone to different places in our organisation," he added.

The company said that as a result of the problem, it would have to restate its financial statements for the 2002 and 2003 fiscal years and the first three quarters of 2004. For the first quarter, it expects to post between $ 5 mm to $ 7 mm loss, including the $ 4 mm cost of the investigation.
"Until the investigation is complete, Willbros will not be able to fully assess the impact of these actions on the company. The company is working diligently to complete this investigation in the near term," it said.

The Willbros' WAGP project includes the installation of custody transfer metering in Nigeria and a 30-inch natural gas pipeline from the existing Escravos Lagos gas pipeline system, near Itoki, Nigeria, to the initial compressor station at Lagos Beach, and the point of departure for the offshore section.
Additional pipelines and regulating and metering facilities for the onshore portions of the project in Benin, Togo, and Ghana are included in the project scope, as well as the engineering, procurement, construction and tie-in of the initial compressor station and land pipeline section.

Groundbreaking ceremonies for the project were held at Takoradi, Ghana, on December 3, 2004. Engineering and procurement activities for the onshore portions were expected to commence in January, 2005, with field activities scheduled to begin in the fourth quarter of 2005, and project completion in the fourth quarter 2006.
For the EGP 3 Project, the contracts cover the construction and installation of offshore platforms and pipelines, as well as an onshore gas plant expansion and floating storage and offloading modifications, it said. The third phase of the plant is expected to provide about 330 mm cfpd of natural gas for the Escravos gas-to-liquids project.

The House of Representatives is currently investigating alleged payment of $ 180 mm bribe by a unit of the US oil services firm Halliburton, KBR, to Nigerian officials, to clinch gas contracts. The House had since passed a motion calling for the ban on further award of contracts for Nigerian oil and gas projects to Halliburton.
Other Halliburton subsidiaries in Nigeria have however, launched strident campaign to distinguish the company from KBR, which is part of the consortium that has come under the probe.

Source: This Day
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