Rautenbach named in Sudanese oil deal

Businessman Billy Rautenbach, who has been linked with several businesses involving top politicians in the Zimbabwe African National Union-Patriotic Front, was reported to have gone into business with former English cricket player Phil Edmonds whose company was involved in a dispute over oil deals in Sudan.

Edmonds was chairman of White Nile Limited, a company that was listed in London, but was reported to have obtained an oil deal in Sudan which was being contested by a consortium that included top French oil company, Total.

Rautenbach was at the time involved in questionable mineral deals especially in the Democratic Republic of Congo and was wanted in South Africa for fraud.

He was reported to be so close to ZANU-PF and President Robert Mugabe’s government that he was added on to the European Union and United States sanctions lists.

Full cable:

Viewing cable 06KHARTOUM417, SUDAN: TOTAL AND WHITE NILE PETROLEUM MANEUVER TO

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C O N F I D E N T I A L SECTION 01 OF 03 KHARTOUM 000417

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TAGS: EPET ECON EINV PREL EAID PINR SU

SUBJECT: SUDAN: TOTAL AND WHITE NILE PETROLEUM MANEUVER TO

CONTROL BLOCK BA

Classified By: DCM ANDREW STEINFELD FOR REASONS 1.5 (B) (D)

¶1. (U) SUMMARY: The confrontation between Total and the

UK-based White Nile Limited (WNL) continues, with both sides

claiming the right to develop Block Ba in Southern Sudan.

Total, in a consortium that includes Marathon Oil, was

granted the concession over 25 years ago by the government in

Khartoum. However, White Nile Petroleum enjoys the support

from elements in the Government of Southern Sudan (GoSS),

which actually controls the region. The Comprehensive Peace

Agreement (CPA) specifies that all existing petroleum

contracts remain valid, and Total has decided to remain

closely aligned with the NCP and pursue its claim in British

courts. WNL has worked on getting support in the south and

plans to move forward with drilling within the next few

months.

¶2. (U) This dispute has caused political infighting in the

south, divided largely along the lines of existing factions.

Some GoSS members believe that the WNL deal lacks

transparency and runs contrary to the CPA, while others are

investors in the undertaking, including, possibly, GOSS VP

Machar and his wife, who is deputy Energy minister of the

GNU. Further questions as to WNL,s intentions are raised by

the fact that the chairman of WNL is also involved in

separate business deals with Billy Rautenbach, the white

Zimbabwean businessman who has an outstanding warrant for

fraud in South Africa.

¶3. (C) We will continue to monitor developments closely: a

U.S. company is involved; there exists a smell of corruption,

or at least conflict of interests; and a contest over this

oil field could exacerbate tensions between north and south.

End Summary.

———-

Chronology

———-

¶4. (U) The following is an annotated chronology of events

from 1980 to the present:

1980: Total is granted a concession in Block B (central), the

largest and furthest south of the oil blocks. Covering over

118,000 sq. km, the block overlaps four southern states and

7 oil basins: Bor, Pibor Post, Mongalla, Tali East & West,

and Boro North & South.

1981-1985: Total explores its concessions, focusing on the

first three basins, and decides to begin drilling in Bor.

1986: Before drilling can begin, an SPLA attack kills two

Total employees. Total ceases operations, but maintains its

concession with a yearly payment.

Dec 19, 2004: White Nile Limited registers as a company in

England with a capital base of 60,000 pounds and Phil

Edmonds, the famous cricket player, as chairman.

Dec 21, 2004: On the eve of the CPA, Total signs a revised

Exploration and Production (E&P) agreement.

February 2005: WNL is listed on the London Exchange. Its

listing application includes a statement that it signed a

concession agreement with the GoSS sometime in 2004 for Block

Ba, a 70,000 sq km subsection of Block B (central)

encompassing most of the known reserves. Geological data is

identical to Total,s data from the early 1980s.

March 2005: Trading for WNL stock is briefly suspended due to

the dispute with Total. Trading begins again when WNL

produces a contracting license from the GoSS. WNL stock

jumps from a total value of 9 million pounds to 123 million

pounds as the company announces plans to drill in Bor, where

total hidpanned to f2alL iv Q19Q*QQ

~}>~_?=>g>??Q_;CQtV?Q9L through legal

challenges in England, WNL moves ahead. WNL names

exploration expert Phillip Ward as CEO. Ward has worked with

Brown and Root in the Middle East and a British firm in

Libya. He reportedly has a Dinka wife. Terra Seis of Canada

will do seismological work.

———————–

Conflicting Concessions

KHARTOUM 00000417 002 OF 003

———————–

¶5. (U) Total,s concession agreement is a standard

exploration and production contract including clauses

requiring sustainable development and restitution of land.

Total is the sole operator with a 32.5 percent stake. Other

investors include U.S.-based Marathon Oil (32.5 percent),

Kufpec of Kuwait (25 percent), and the Sudanese state-owned

oil company, Sudapet (10% and first oil). After initial

outlays are repaid, profit sharing follows a curve that

guarantees Sudapet up to 85 percent within 12 years. Total

will also build a 450 km spur to the main pipeline at Heglig.

Additionally, Total has hired the Swiss Demining Foundation

to support WFP demining efforts in the area, and has offered

USD 2 million to the UNDP for development programs around Bor.

¶6. (U) The terms of the WNL deal are not public, although

newspapers have reported that Nilepet, the GoSS-owned oil

company, was given 50 percent of the shares in WNL and a 40

percent stake in the concession. It is unclear if the WNL

shares were given to the GoSS or individual members of the

GoSS. Newspapers also report that White Nile has agreed to a

variety of development programs around Bor. Dinka Bor chiefs

have signed a petition supporting WNL,s claims. The

Governor of Bor has shown similar support. Although only

part of Total,s Block B (central), Block Ba covers all the

proven reserves. Blocks Bb and Bc remain unexplored and are

characterized by malaria, non-existent development, and

unstable security.

¶7. (U) Total believes it has a strong legal case — the CPA

guarantees oil agreements signed before January 9, 2005.

Total is also quick to point out that WNL is a paper company

with no petroleum experience or financial infrastructure.

However, they admit that if WNL begins drilling, they will be

difficult to dislodge. As a result, Total has also announced

plans to begin drilling soon.

¶8. (SBU) There are other questions regarding WNL,s

legitimacy, including the recent announcement that Edmonds

has gone into business with Billy Rauchtenbach.

Rauchtenbach, a white Zimbabwean and close associate of

Robert Mugabe, has been involved in questionable mineral

exploitation deals throughout Central and Southern Africa and

is currently wanted for fraud in South Africa.

———————————

Questionable Deals and Suspicions

———————————

¶9. (C) Many in the GoSS feel that it can hold 100 percent of

the oil revenues in the deal with WNL because they interpret

the CPA to read that the 50/50 split only applies to revenues

collected by the GNU. Southern support is led by GoSS Vice

President Riek Machar, and his wife Angelina Teny, who is

also GNU State Minister of Energy and Mines. There are also

rumors that Machar and his wife were the recipients of large

blocks in WNL stock. Other GoSS supporters are the Minister

of Culture, Youth and Sports John Luc Jok (formerly GNU State

Minister for Energy before joining the GoSS), Minister of

Gender, Social Welfare and Religious Affairs Mary Kiden Wani,

and former SPLA security head and GoSS legal advisor Paul

Mayom. Mayom may also become a member of the board for

Nilepet.

¶10. (C) Not everyone in the GoSS supports WNL. Minister of

Legal Affairs Michael Makuai, Minister of Regional

Cooperation Nhial Deng Nhial, and Minister of Industry and

Mining Albino Akol Akol, oppose the deal because of its

opacity and believe, at a minimum, that it has the appearance

of impropriety. They also believe that Total has the legal

claim under the CPA. GoSS President Salva Kiir has yet to

take sides. However, after Akol threatened to resign over

Machar,s suggested appointments to the Nilepet Board of

Directors, Kiir stopped the appointments and agreed to take

another look at the entire issue. Kiir plans on convening a

full cabinet meeting to discuss Nilepet, WNL, and Block B as

soon as he has a quorum, most likely this week.

¶11. (U) Meanwhile, Teny, speaking at a development

conference in Dubai, said that the National Petroleum

Commission (NPC) will meet to resolve the dispute. The SPLM

members on the NPC are Teny, Deng, Wani and Jok, with Kiir

serving as co-chairman. The NCP has said that the petroleum

commission has no jurisdiction over the Total contract

KHARTOUM 00000417 003 OF 003

because it was signed before the CPA.

¶12. (C) For its part, Total must overcome a lot of suspicion

in the south. In general, the French are not trusted in

Southern Sudan due to the perception of close ties to the

north and minimal involvement with reconstruction in the

south. The French are also largely blamed for the Jonglei

canal because the contractor building the canal was French.

Many in the SPLA believe the French supported the north

during the war and provided satellite data to northern forces

in exchange for Carlos the Jackal.

¶13. (C) Total has started to reach out to the south and has

had meetings with Kiir, who was positive and speculated that

a compromise could be worked out. An official for Total,

however, told CG Juba that executives in Paris still favor

close alignment with the North. The North has attempted to

prevent Total contacts with the GoSS. GNU Vice President Ali

Osman Taha has reportedly assured Total executives that he

could solve the problem.

¶14. (C) Despite these efforts, Total has faced difficulties

in both the north and the south. In the south, the GoSS has

denied them access to Bor, while in the North they have had

trouble getting flight clearances (Note: Petronas and other

oil companies are permitted to fly without prior

notification). Total has also been forced to hire the nephew

of GNU Minister of Energy and Mines Al Jaz. The Total

official said his strongest northern ally is GNU Minister of

International Cooperation Tijani al Faidal, the former

Ambassador to France. The Total official also said unnamed

government security forces offered to clear the Bor area, an

offer Total declined.

——-

Comment

——-

¶15. (U) For a variety of reasons, we should continue to

track this issue:

— (SBU) The Total-led consortium includes a reputable U.S.

company (Marathon) that has made a significant investment.

— (SBU) Failure of the GOSS to undertake transparent and

fair public tenders will damage donor and investor confidence.

— (SBU) GoSS failures to honor CPA commitments could

jeopardize long-term peace and reconciliation.

— (C) The involvement of GoSS Vice President Machar and his

wife, State Minister Teny, bears watching because of issues

regarding conflicts of interest and the potential for

corruption at the highest levels of government

HUME

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