Uganda has yet to produce a single barrel of oil, but with three senior ministers accused of accepting bribes from oil companies.
Tullow agreed to sell stakes in its Ugandan assets to Chinese group CNOOC and French oil company Total for $2.9 billion.
Fears continue to linger over the possibility that the windfall from oil will be siphoned by bureaucrats for self-enrichment and that is the direct result of all the secrecy shrouding the contracts government signed with the oil companies.
Officially, Uganda is believed to have oil reserves of up to 2.5 billion barrels in the Albertine Graben, up from 300 million barrels recorded in 2006. With the current pace of drilling and recent finds, some analysts have said Uganda could be producing around 150,000 barrels of oil per day by 2015, a development that would place the country among top 50 oil producing nations.
The US intelligence agency reportedly picked info last year that large transactions of money were being wired to UAE accounts, some over 500,000 Euros (Shs1bn) per day.
You will recall that ever since the 9/11 US terror attacks, CIA started observing keenly international bank transactions.
In fact it’s criminal for instance to move with a sack of dollars into US. One would face charges of money laundering.
At that time, terror cash was being wired through the Middle East banks to facilitate clandestine terror organisations in Africa and US.
Therefore it developed systems to regulate the flow of cash through setting up stringent policies.
For instance before receiving at least 1,000 US Dollars from a foreign account, one has to explain the source and reason of transaction.
Therefore it was not surprising that as the ministers received payments through UAE accounts, the CIA got interested.
According to multiple diplomatic sources we talked to by telephone yesterday, CIA realised that the common denominator in the transactions was the country –Uganda where the principal recipients resided.
“Our CIA teams were shocked that over I million Euros was being wired to a government official in one day. They became suspicious upon realising that the money was being wired in instalments, possibly to avoid detection,” said a source.
She added: “We at first thought the huge sums of money were meant to facilitate a coup against President Yoweri Museveni. We even alerted him of the transactions,” a source notes.
It’s not clear whether this could have been the cause of firing of Onek from Energy Ministry early this year in a cabinet reshuffle.
But what is as clear as day light is that after US mission in Kampala realised that Museveni was not ready to take action against the Ministers but “simply reshuffle” them, documents implicating the ministers were given to Col. Kizza Besigye.
In one of the documents, which could be paraded before the House today, Heritage wrote to Onek, instructing him to “append his signature” on pre-prepared documents especially the Profit-sharing agreements (PSAs).
The document in question was the ministerial consent form required to finalise the deals.
In one of the emails, Heritage chiefs refer to an earlier meeting in Gulu which was “attended by President Museveni and Onek.”
Amusingly, Onek never tried to probe why the Attorney General was not involved in the deal. For example according to PSAs, oil companies will have to first meet their costs of production before sharing profits with government.
Disturbingly, the cost of production, is not being audited by government, meaning the country will shoulder the exorbitant and extravagant costs incurred by oil organisations.
Besigye was told that by US diplomats that oil costs were being inflated. The diplomats told Besigye that for instance a company named Equator Catering Services was providing food and refreshments to oil workers at a cost of shs46m per month!
The opposition dynamite got the info from the US mission in Kampala. The diplomats told Besigye that they were shocked by the details and could hardly understand why Museveni was bent on protecting the individuals.
They further made it clear to Besigye that they were considering travel bans and confiscation of their foreign properties over corruption.
Amusingly, FDC stalwart accused them of being “bedmates” with Museveni’s government and not walking the talk.
According to a FDC top official Michael Kabaziguruka, the party leadership got wind of the murky oil deals in September this year.
MEETING AT BESIGYE’S HOME TOWN “BENGHAZI”
A secret meeting was subsequently held at Col. Besigye’s palatial home in Kasangati, Wakiso district.
The meeting was attended by top FDC leaders including Alice Alaso, Mugisha Muntu, Abdu Katuntu and Salaam Musumba.
At first it was agreed that the reports be forwarded to Daily Monitor as a weekend exclusive.
But the officials later realised that it would not be effectual as ministers would subsequently author press releases denying their involvement.
It was agreed that FDC attorney general generates the needed momentum and drama for a Parliamentary showdown.
Besigye said in this scandal, opposition would hardly work alone.
It was at that time that Besigye said those NRM members opposed to implicated ministers especially Theodore Ssekikuubo and Mohammed Nsereko are involved in the plan to embarrass and impeach the scandal-ridden government officials.
The role of Museveni would be hinted on.
Rehearsals were made in the opposition leaders’ chambers, tea meetings were organised and oratory skills polished.
NRM MPs were secretly lobbied. They supported the initiative. Then after being convinced that he would get over 180 signatures to recall the House, Katuntu openly said Parliament should be recalled.
The petition was even seconded by vice president Gilbert Bukenya after learning that his arch rival Mbabazi was a beneficiary.
Speaker Rebecca Kadaga attempted to overstep her mandate by ignoring the petition with majority signatures only to be reminded that she faced a vote of no confidence for the illegal action.
She called the House.
A day before the session (Sunday), SMS encouraging legislators to stand up and be counted during the oil debate, were sent around. Rosaries were put to good use and prayers held.
The debate had generated the media attention it deserved and the hell broke loose.
The Wikileaks cables claimed that Mukula had, among other things, said the President’s popularity was waning and he (the President) was preparing his son to succeed him.
The US embassy in Uganda has, at least for now, lost informants from within NRM government systems although some of them are not very reliable since the information they peddle are half truths, deliberately inaccurate, exaggerated, and sometimes tinged with political partisan sour-grapping. Some of the leaks are patch-wok of known talented liars.
In particular, MP Mike Mukula and presidential adviser John Nagenda may be very embarrassed by the Wikileaks, but I think it is the Americans who will be the net losers because their future ‘sources’ will have to be very discreet and apprehensive fearing to be foxed out again.
Mukela was interviewed and no mention of the resistance.
What will you be doing be¬tween now and 2016 as you prepare for the 2016 race?
I will be working hard both in the party and in Parliament. I am a strong mobiliser of the party. I know that there are people who will attack and undermine me but they will not deter me.
Some people have also questioned your qualifications
I hold an honorary PHD from Latin University in the US. I have a Masters degree from Nkumba University and I am a professional pilot trained from the East African School of Pilots, Soroti.
I am a strong NRM carder and if my party and family accept my proposal, I should not be seen in bad faith.
I don’t smoke and drink alcohol. I have been elected in NRM twice with high scores. In 2005, I won with 91% of the votes emerging the best candidate and in 2010, I went through unopposed.
Good election results and a senior position in NRM. Why are you not in cabinet?
I am not the appointing authority. But I wrote to President Museveni asking to be excluded for three reasons.
Allegations that two ministers received money to push for ENI’s botched bid to buy Heritage Oil assets for $1.5bn late last year in “a corrupt back-door deal” have thrown Uganda’s oil industry on its head.
The whistleblower website, WikiLeaks, last week released a summary of a private conservation in which Tim O’Hanlon, Tullow Oil’s Vice President in Africa, reportedly told the US Ambassador to Uganda, Jerry Lanier, that energy minister Hilary Onek and Security Minister Amama Mbabazi benefited when ENI signed an agreement to buy Heritage Oil’s assets in the Albertine Grabben.
ENI’s bid later collapsed because Tullow, as Heritage’s partner in the exploration of oil in Lake Albert, had the right to purchase the assets. Uganda has about two billion barrels of oil and Tullow is the main exploration firm.
WikiLeaks has lately rattled American diplomats with its access to over 250,000 secret correspondences between top US diplomats and their government.
The cable on the alleged corruption within Uganda’s oil industry, written by Donald Cordell, the Economic Officer at the US State Department, was drawn up to have the US raise the issue of transparency and accountability with the government of Uganda.
The timing of the release of the cables, however, could not have come at a worse time for ENI, Tullow, or government. The revelations have damaged ENI’s image, rattled Tullow officials, raised public doubt over the custodians of Uganda’s interests in oil, and placed at least two massive investment deals on the line.
While Tullow Oil has rubbished the reports, describing them as “false,” the company’s rebuttal is not expected to mend its already fractured relationship with top government officials.
Tullow Oil is currently trying to recover two exploration licences from government that formed part of the $1.5 bn acquisition of Heritage Oil assets.
Government reclaimed the exploration licences as part of a bargaining chip to get $404 million in capital gains tax from the $1.5 bn deal between Heritage and Tullow. The licences were reclaimed on grounds that Heritage had not renewed them.
Tullow has suspended drilling in Western Uganda until the tax dispute is resolved. The Irish company has had a tetchy relationship with some government officials ever since the ENI bid came up.
The release of the leaked cable is now expected to damage whatever cordial relationship that had been built between Tullow and government over the last couple of months, at the very least. But on a broader side, with the leak, there is tension that the accusation – regardless of its level of credibility – could undermine quick resolution of the tax dispute.
When the impasse between Tullow and government is resolved, it will open the way for the Chinese firm, CNOOC, and France’s Total, into Uganda’s oil industry. Tullow has issued both a public statement, and written a letter of clarification to President Museveni over the WikiLeaks cable.
In his defence, O’Hanlon notes: “As part of a private discussion about doing business in Africa with the US ambassador to Uganda, I made reference to a number of rumours then in circulation in Kampala to illustrate the issues the oil and gas industry faced.
At no time did I give any credence to these rumours nor did I make any allegations of corruption against government ministers, ENI or Heritage. Indeed, I have no reason, either now or then, to believe any of these rumours were true and do not recognise, in any way, the conversation as recorded.”
For ENI, the timing of the leaked cable, in which Lanier proposes harsh repercussions such as visa revocations for Onek and Mbabazi, who the cable notes as Italian firm’s “patron” in Uganda, could not have come at a worse time, and ENI is not taking the accusations lightly.
The release of the cable comes at a time when ENI, a company many thought had lost interest in Uganda after its failure to buy Heritage Oil’s exploration rights, is pushing for a meeting with President Museveni to invest in the country’s oil sector.
The Observer has a letter that shows that Hilary Onek is to coordinate a meeting between top officials from ENI and President Museveni.
In that November 10, 2010 letter from Hilary Onek to Paolo Scaroni, the Chief Executive Officer of ENI, the minister says: “I am glad that you have continued to show interest in our country…I have now requested H.E the President to meet you any day during 17th – 24th November, 2010 at his convenience and will communicate to you after confirmation from his office.”
The meeting has not happened yet because Museveni is on a campaign trail seeking reelection.
The secret files from WikiLeaks now jeopardize that meeting.
The meeting is expected to be postponed in the wake of the release of the cables because any formal announcement between government and ENI, with Onek at the centre of it, could easily be linked to the corruption allegations.
ENI has threatened to take legal action against Tullow although the details of this action are still unclear. Tullow notes that it intends to get in touch with ENI and convince the Italians that O’Hanlon was quoted out of context.