Israeli billionaire sells Congo oil rights for 300 times purchase price

[Magda Hassan]

No doubt the be pushed as corrupt African leaders instead of a default business model that benefits captalists.

Israeli billionaire sells Congo oil rights for 300 times purchase price

Wed Jan 22, 2014 7:00pm EST

• Energy »
  

* Controversial businessman sells asset for 300 times purchase price
* Congo and Angola to collaborate in development of offshore oil block
* Company defends deal as beneficial to Congo, campaigners criticise lack of transparency
By Peter Jones
KINSHASA, Jan 23 (Reuters) - Israeli billionaire businessman Dan Gertler sold one of his Congo-based oil companies to the government last year for $150 million - 300 times the amount paid for the oil rights - in a deal criticised by transparency campaigners.
Gertler, an influential figure in Democratic Republic of Congo's mining and oil sectors with close links to the Kinshasa government, denies any wrongdoing in the sale of Nessergy Ltd, which paid a $500,000 signing bonus for its block in 2006.
The block lies near some of neighbouring Angola's most productive oilfields. At the time it was acquired by Nessergy, the block was located in an area at the heart of a maritime border dispute between Kinshasa and Luanda.
However, the two countries have since created a zone of common economic interest in an attempt to settle the border row. Last year, Congo sought to buy back the rights from Nessergy to allow it to negotiate a new production sharing agreement with Angolan state oil company, Sonangol.
According to the contract for the April 2013 transaction seen by Reuters, Sonangol financed the deal, paying Gertler's Fleurette Group $150 million for the rights to the block. Congo will repay Sonangol out of future oil revenue.
Fluerette has been paid the fee but cannot access the money until a deal between the national oil companies of Congo and Angola is finalised.
A Fleurette representative said no major drilling had taken place in the Nessergy block due to disputes over development rights. He said the $500,000 signing bonus was the standard amount companies paid to Congo for oil rights at the time the contract was agreed.
The company said the value of its rights increased dramatically after oil was discovered on the nearby Menongue field in Angolan waters in 2007.
TARGET OF CRITICISM
Campaign group Global Witness, however, said Nessergy's block was always likely to hold significant oil reserves given its proximity to Angolan discoveries totalling around 10 billion barrels.
"In a 2005-06 licensing round signature bonuses for these blocks ranged from $900 million to $1.1 billion," the campaigner said in a statement, referring to the nearby Angolan acreage.
Global Witness also criticised the Congolese government for not publishing the deal within 60 days as required by the law.
Because Nessergy was incorporated in tax havens where owners are not obliged to divulge their identity, it is unclear who owns the minority holding not belonging to Gertler, and therefore who else benefits from the sale, the campaigner said.
"Global Witness is calling for an end to secrecy over beneficial ownership internationally, as an essential step in the fight against corruption," the campaigner said.
Gertler's mining companies have been the target of transparency campaigners in the past. Between 2010 and 2012 they obtained a number properties for sums widely considered to be generous, before selling them on for large profits.
According to the Africa Progress Panel, headed by Kofi Annan, Congo lost out on at least $1.36 billion in potential tax revenue in five deals with Gertler during this period.
Fleurette however stands by the deals. It said the Panel's criticism failed to "take into account a series of other factors which will impact the value of an asset, or simply state the wrong value of the transaction."
The Gertler-controlled group insisted the Nessergy deal was good for Congo. It said that joint production with Angola will earn the cash-strapped central African nation between $1.3 billion and $3.6 billion. (Writing by Joe Bavier; Editing by Daniel Flynn, editing by David Evans)

http://www.reuters.com/article/2014/01/2...WW20140123