Senegal probes corruption allegations
The government has moved fast to investigate block sale
Senegalese authorities have begun a formal inquiry into the government award of offshore acreage to the Romanian-Australian extractive industries investor Frank Timis. The blocks—which form part of the Tortue/Ahmeyin gas project, one of the world's largest offshore gas finds of recent years—were subsequently sold to BP and are in the process of being developed.
The spotlight is on the circumstances in which Timis secured the rights in the first place, the financial terms he later agreed with BP and payments allegedly relating to Aliou Sall—brother of Senegal's President Macky Sall—who used to be a senior executive of Timis' business in the country.
A BBC Panorama documentary broadcast on 3 June alleged that Timis paid or offered a series of sums to Aliou: a $250,000 payment to Agritrans, a company said to be run by Aliou Sall, in 2014; $1.5mn salary over five years; and the offer of $3mn in shares in Timis' companies. Aliou Sall has denied receiving $250,000 and described the BBC report as "totally false".
However, these alleged inducements pale into insignificance compared with the allegation that BP had agreed to pay royalties to Timis that could add up to $10bn over several decades. BP denied that it had acted improperly, insisting that it conducted "extensive and appropriate due diligence". It described the $10bn figure as "wholly inaccurate".
The investigation was ordered by the chief prosecutor of the Senegal appeal court, Serigne Bassirou Guèye, acting at the behest of the justice ministry. On announcing the probe, Guèye called on all those that might have information or documents relating to the affair to submit them to the police, which have been ordered not to indulge any of the implicated parties.
Senegal has successfully presented itself to potential international hydrocarbon investors as a stable and well-governed economy. Although relatively new to hosting major oil and gas investments, it has been steadily building up expertise in government institutions to properly oversee the sector.
The Senegalese government has demonstrated that it appreciates the economic and political urgency for a response. It needs to retain the confidence of major international oil companies (IOCs) that have interests in the country—including BP, Kosmos, Total, Woodside and Cairn Energy—to develop its resources.
Macky Sall also faces a domestic political imperative. The exclusion of former Dakar mayor Khalifa Sall and former minister Karim Wade from this year's presidential race—following convictions for financial misdemeanours and corruption respectively—have led critics to claim the justice system is being used for political ends.
When the president's own brother became the target of accusations, the government needed to demonstrate that he would be properly investigated.
Aliou Sall has previously attracted controversy over his work for Timis and his 2017 appointment—by Macky Sall—as head of a government investment fund, the Caisse de dépot et de Consignation.
The affair raises a wider policy challenge for the major IOCs in an era of much greater transparency in the industry. Assets, of course, need to be acquired by an IOC in a clear and transparent way. But there is increasing shareholder and legal pressure—especially in Western jurisdictions—to ensure that blocks are also originally obtained by the seller in a legal and transparent process.
The events in Senegal may lead major IOCs to review whether they need to tighten up their procedures to guard against the impact on future operations of problems that pre-date their investment.
For Senegal, the affair is a reminder of how important governance issues have become—especially for a country that is seeking to aim high in attracting the first division international investors.