Gaining preferential access to potentially lucrative petroleum deposits always attracts ambitious prospectors, in Africa as in Asia and Latin America. Often procuring such preferences can only be accomplished by knowing the politically prominent right persons, or by purchasing the necessary influence and permits.
That is precisely what apparently occurred when a former Hong Kong Secretary of Home Affairs, on behalf of the China Energy Fund Company of Shanghai, sought oil concessions in Chad and Uganda. But, because he and the company used the United States’ banking system in New York to transmit payments (presumed bribes) to the president of Chad and the foreign minister of Uganda, they have now run afoul of the U. S. Foreign Corrupt Practices Act of 1977 and, just possibly, of President Xi Jinping’s crackdown on Chinese corruption.
Ho Chi Ping Patrick, the former Hong Kong official, was presumably acting on behalf of Ye Jianming, the wealthy founder and chair of the China Energy Fund Company (CEFC). Ye’s concern operates joint ventures with a host of state-owned Chinese operators like China State Shipbuilding, and profits from petroleum properties, travel agencies, and financial businesses in China, the Czech Republic, Spain, Kazakhstan, and several Arab countries. It recently paid $9 billion to invest in Russian oil extraction through Rosneft, the state-owned Russian behemoth. In 2015, its total revenue was about $40 billion.
Ye is a fixture on the global celebrity circuit and his China Energy Fund Committee, a Hong Kong-based research organization, has consultative status with UNESCO – the UN Economic and Social Council. The Committee has organized conferences on world civilizations and ethics, at least once with American and Chinese generals in attendance.
The U. S. Department of Justice has arrested Ho and Cheikh Gadio, a former foreign minister of Senegal who was acting as a go-between for Ho. They are charged with bribing African leaders and with international money laundering. Both will be tried in federal court in New York City.
Federal Bureau of Investigation agent William F. Sweeney Jr. explained: “The scheme described in this case boils down to these subjects allegedly trying to get their hands on the rights to lucrative opportunities in Africa. They were allegedly willing to throw money at the leaders of two countries to bypass the normal course of business, but didn’t realize that using the U.S. banking system would be their undoing.”
According to the Department of Justice, CEFC desired entrée into Chad, where the China National Petroleum Company (CNPC) — with which it was cooperating – had already been fined $1.2 billion for violating environmental regulations. Ho and Gadio reached President Idriss Déby and promised him $2 million, ostensibly for “charitable” activities. In return, the fine on CNPC was reduced by two-thirds and CEFC managed to obtain exclusive rights to oil-bearing territories. CNPC and CEFC are now collaborating to pursue oil extraction in Chad. The Department of Justice says that Ho paid Gadio $400,000 for his assistance.
Much of this action took place in New York, where Ho also had many meetings with Sam Kutesa, then the president of the UN General Assembly. Kutesa appointed Ye as a “special honorary advisor.” Following his UN presidency, Kutesa returned to Uganda and his position as its minister of foreign affairs. He then, says the Department of Justice, solicited Ho for a $500,000 “charitable” donation that was in fact a bribe for oil contracts. Kutesa’s wife thanked Ye for the gift to the family charity, but CEFC never obtained petroleum properties in Uganda.
Both the Chad and Ugandan cases, and the allegations of bribery by a prominent Chinese concern, are but tiny glimpses of what occurs across Africa (and globally) when big players seek oil, minerals, timber, and so on in weak countries or in countries where politicians and officials are corruptible and corrupted. In such countries, corrupt practices are illegal, but the laws are as often honored in the breach as in reality. This case came to light only because the Foreign Corrupt Practices Act prohibits all American concerns and anyone using the American banking system from bribing overseas. Ho’s arrest may inhibit similar kinds of transnational purchasing of influence.
In recent years, Britain, Canada, France, Germany, the Netherlands, Sweden, and a few other European countries have followed the American lead and enacted legal bars against bribing in Africa, Asia, and Latin America. Likewise, the Extractive Industries Transparency Initiative, an international non-governmental organization based in Oslo, scrutinizes all arrangements to obtain petroleum and minerals and seeks the kinds of transparency and accountability that make covert deals like those of the CEFC in Chad and Uganda difficult. China has not yet extended its purge of corruption internally with bans of bribery beyond its borders, but that could now occur as the result of the CEFC embarrassment.