UK firm Tullow Oil has strongly denied accusations made by Ugandan MPs that it paid bribes to influential members of the country's elite – an accusation which has contributed to the suspension of all new oil deals.
As well as the graft accusations, parliament has also criticised the government's dealings with Tullow on tax grounds, arguing that Tullow's sale of stakes intended to raise capital for further investment should be blocked until a dispute over a US$472 million tax bill is resolved.
Allegations of corruption were aired in a stormy session of the Ugandan legislature on 11th October by Gerald Karuhanga, an MP for the ruling National Resistance Movement. Karuhanga tabled documents alleging that Tullow paid Prime Minister Amama Mbabazi, Foreign Minister Sam Kutesa and former Energy Minister Hilary Onek multi-million dollar sums for favourable decisions.
The officials involved all strenuously deny the accusations, as does Tullow. In a statement by chief executive Aidan Heavey, the company said that it “rejects the outrageous and defamatory accusations of corruption” and would “examine all possible legal action to protect the reputations of the company and its employees”. Heavey added that the accusations “appear to be founded on misunderstandings about how the global oil and gas industry works”.
Tullow currently owns three blocks in Uganda, and is seeking to sell off two-thirds of its stakes in the blocks to Total and the Chinese state-owned firm CNOOC. The move follows the purchase of Heritage Oil's stakes in the country's oil and gas blocks.
The legislature has now voted to suspend all new deals in the sector, including the sell-off of Tullow's stakes, until a 2010 bill regulating the oil sector – and promoting greater transparency – is passed.
The support which the suspension gathered from ruling party MPs suggests that long-time President Yoweri Museveni, who has backed the Tullow deals, is losing control of his party. He has come under increased pressure this year following a February poll marred by fraud and stirrings of popular unrest. The attack on key ruling figures suggests that domestic politics as much as concern for transparency is a key factor in the row.
The UK government, in line with the 2010 Bribery Act, has announced that it will investigate the allegations. The High Commission in Kampala told reporters that “Bribery of foreign public officials is of course an offence under UK law, and it would therefore be for the British Police to decide whether to open an investigation into allegations made against a British company”.
Sources: BBC, Wall Street Journal, Daily Monitor
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