Petrodollars: Oman gripped by action against oil corruption

By Tamsin Carlisle | April 28, 2014 12:01 AM Comments (0) In this week’s Oilgram News column Petrodollars, Tamsin Carlisle looks at the anti-corruption drive that has been launched by Oman’s ruler. No surprise, the country’s oil and gas sector is at the heart of the actions that have been taken. ——————————————- The Oman government’s crackdown on graft in oil and gas contracting has become the talk of the town in Muscat, with opinions sharply divided on whether it is going far enough. A number of long sentences handed to industry and government officials in the past three months send a strong signal that the country’s autocratic ruler, Sultan Qaboos, is deadly serious about stamping out corruption. The anti-graft campaign was ordered personally by the sultan in response to Arab Spring-inspired public protests in several Omani cities in 2011 involving Omani oil-sector employees seeking better pay and working conditions and other nationals seeking jobs. A crackdown on corruption was among the protesters’ key demands. Sultan Qaboos responded by ordering an independent judicial probe, which two years later, sparked high-profile court cases over allegations of bribery and influence peddling. Since 2013, more than 20 civil servants and businessmen have been prosecuted. In February, Muscat’s Court of First Instance handed the CEO of state-owned Oman Oil Company, Ahmad al-Wahaibi, jail sentences totaling 23 years after convicting him of accepting bribes, money laundering and abuse of office. The trial implicating the government’s overseas oil investment arm got underway in December 2013 after Swiss authorities alerted their Omani counterparts to suspicious transactions. In the same case, the court convicted a former senior government aide, Adel al-Raise, of organizing the bribe from a senior official of South Korean contractor LGI. It found that LGI vice-CEO Ming Jiao Oyo had illicitly transferred $8 million to a Caribbean-registered company owned by Wahaibi after winning an Omani riyals 1 billion ($2.6 billion) contract to develop a petrochemicals complex at Oman’s Sahar port. Wahaibi’s sentence, unprecedented in an Omani corruption case, included 10 years in jail and a riyals 4 million fine for accepting bribes, a further 10-year prison term and a riyals 1 million fine for money laundering and three years in jail for abuse of office, with the sentences to run successively. The court also confiscated the bribe money from Wahhabi’s frozen Swiss bank account. Raise and Ming were each sentenced to 10 years in jail and fined riyals 4 million. ——————————————- In early March, the court sentenced the former managing director of Oman’s Galfar Engineering and Contracting, P. Mohammad Ali, to 15 years in jail with a riyals 1.7 million fine after convicting him in five bribery cases. The deputy of Galfar’s oil contracting division was also jailed for 10 years. Five officials of the gas division of Petroleum Development Oman, a joint venture between the government of Oman, Royal Dutch Shell, France’s Total and Portugal’s Partex, remain on trial in the Galfar cases, which are still before the court. Later in March the court sentenced the CEO of state-owned Oman Oil Refineries and Petroleum Industries, Adel al-Kindi, to three years in jail with a riyals 1 million fine and banned him from government service for 30 years over accepting a bribe from Athens-based Consolidated Contractors Company related to contract awards in southern Oman’s Duqm area. In the same case, Oman’s Director General of Ports, Qasim al-Shizawi, was handed a three-year jail term, fined riyals 750,000 and was also dismissed from service. The recent verdicts suggest systematic corruption reaching to the executive suites and board rooms of prominent state-controlled companies. Yet, at a press briefing in Muscat March 3, Oil Minister Mohammed al-Rumhy said the ministry had no plans to tighten regulation. “I personally asked the state auditors since year 2000 to audit the oil and gas sector, but I don’t think we have anything in place to eradicate corruption to a zero level,” he said. “We cannot monitor and regulate human behavior and follow people around to find what they are doing all the time.” Rumhy said the spate of convictions would signal that corruption would no longer be tolerated. “Socially they will be finished,” he said of the officials convicted in February PDO Managing Director Raoul Restucci attributed the embroilment of Oman’s flagship oil and gas producer in the corruption scandal to a few bad apples. “We are shocked and angry but it represents a small number of employees,” he told reporters. It is well to remember that Oman might have gone the way of Yemen if Qaboos had not staged a British-backed coup against his father in 1970, aimed at ending two decades of civil conflict between at least three culturally distinct indigenous populations, complicated by foreign insurgencies. He achieved his national unity aim by focusing on advancing the country’s economy and social welfare with the help of foreign investment in the oil sector. — Tamsin Carlisle in Dubai