Ugandan government accused of getting in bed with Italian oil company

Italy’s oil company Eni has long enjoyed a privileged position in oil and gas deals in both Russia and Kazakhstan. The company enabled Russia’s dismantlement of Yukos, and has been Gazprom’s top-tier partner in tightening its grip on gas supplies to Turkey and Europe. Allegations in one WikiLeaked cable that Italian Prime Minister Silvio Berlusconi and some pals have profited personally from this intimate relationship are not entirely surprising — nor is it particularly shocking to read allegations of similar Eni activity in Uganda.

The details come in an unusually descriptive new cable released by WikiLeaks. The cable describes a Dec. 14, 2009 meeting between U.S. Ambassador Jerry Lanier and Tim O’Hanlon, vice president for Africa for Britain’s Tullow Oil. We have written previously about scrappy Tullow, a serious player around Africa’s Lake Albert region, which is believed to potentially contain more than 1 billion barrels of oil.

Here is the backdrop: Tullow was wishing to exercise a right of first refusal to buy the second half of two Ugandan oilfields in which it already held a 50 percent interest. But Eni somehow stepped in and, right around the time of the Lanier-O’Hanlon meeting, announced that it, and not Tullow, would secure the $1.35 billion purchase.  O’Hanlon asserted that he knew just how Eni had managed it — the Italians had created a London shell company through which they were funneling money to Uganda’s security minister, Amama Mbabazi.

This bit of news really irritated Lanier, who suggested that he was sick and tired of hearing of “corruption scandals” involving Mbabazi. From the cable:

Depending on the outcome of this major deal, we believe it could be time to consider tougher action – to include visa revocation – for senior officials like Mbabazi who are consistently linked to corruption scandals impacting the international activity of U.S. businesses, U.S. foreign assistance goals, and the stability of democratic institutions.

Lanier said in the cable that he planned to confer with the local British High Commission, plus the Irish ambassador, and talk about writing a joint letter to President Yoweri Museveni expressing their dismay “about these very troubling signs of high-level corruption in Uganda’s oil sector, and advocating for the open and transparent sale of oil assets and management of future oil revenues.”

We do not know if those meetings took place or if the letter was written. However, the deal was overturned just seven weeks later and given to Tullow under the same terms as Eni.