(C) BELIZE OIL: CORRUPTION ALLEGATIONS REACH PRIME

C O N F I D E N T I A L BELMOPAN 000713

SIPDIS

SIPDIS

STATE FOR WHA/CEN -- ROIS BEAL

E.O. 12958: DECL: 12/10/2017
TAGS: PGOV ECON EFIN ENRG EPET SOCI BH
SUBJECT: (C) BELIZE OIL: CORRUPTION ALLEGATIONS REACH PRIME
MINISTER'S OFFICE

REF: BELMOPAN 624

Classified By: Ambassador Robert J. Dieter for reason 1.5(d).


1. (C) Summary: Two U.S. energy firms have complained to
the Embassy that bribes determine who receives oil
exploration contracts in Belize. One company official who
claims to have actually paid a bribe and has electronically
recorded numerous conversations, alleges that the Prime
Minister's driver/bodyguard was the bag man for the
transaction. Both companies sent strongly worded protest
letters and the GOB has responded by threatening legal action
and deportation. End Summary.

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U.S. Companies' Corruption Allegations
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2. (C) Lagoon Resources, a U.S. company with experience in
the oil sector on whose complaints we have previously
reported (reftel),has alleged that a production contract the
firm applied for was awarded to a local business with no oil
exploration experience and that the deciding factor was a
sizeable bribe paid to Johnny Briceno the then-Minister of
Natural Resources. The firm claimed that the money was
routed to the Minister through the purchase of a cable
television business. These allegations subsequently became
public when a letter the company wrote was leaked to the
press by the opposition leader. On December 7 econoff met to
discuss the case with former Minister Briceno who stated
that he was planning to sue the company for libel.


3. (C) A second U.S. company, Miles Tropical Energy (MTE),
claims to have actually paid a bribe and produced recordings
it claims support the allegations. MTE principal Allen Saum
told econoff (as well as the press) that he paid US$100,000
to obtain an oil production contract. Saum stated that he
wired funds to Belize and that his Belizean business partner
delivered the money in cash to Prime Minister Said Musa's
driver/bodyguard. MTE stated that Musa's son facilitated the
exchange and served as local attorney for the company.


4. (C) The Belizean Director of Geology and Petroleum
(protect) (the GOB's lead expert and director of oil issues)
confirmed that several contracts were awarded against his
professional recommendations for what he thinks are purely
political reasons. When questioned about the companies that
were actually awarded the contracts he explained that the
companies had no qualifications or prior experience in the
sector and were awarded the contracts because the owners are
strong supporters of the governing People's United Party.

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Political Fallout
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5. (C) Allen Saum delivered digital recordings to the
opposition party leader and some recordings were subsequently
aired by the opposition party radio station. Econoff has
listened to them, and although they are somewhat random and
the quality is varied, the recordings seem to support the
bribery allegations. In addition several individuals econoff
has spoken to about the allegations are convinced the
transaction took place.


6. (C) The Director of Petroleum noted that the process for
awarding the contract to MTE did not follow normal procedures
and that the Prime Minister's bodyguard pressured the
Ministry into signing the contract and waited outside the
Ministry CEO's office door to personally take possession of
the document as soon as it was signed. (Note: Embassy
investigation confirmed that the MTE contract was sent to the
Cabinet for approval separately from all other oil contracts
which were later delivered to Cabinet as a group. End note.)

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Accusations and Counter-accusations
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7. (C) After being awarded a contract in an exploration
block different than where he was seeking, MTE representative
Saum on November 14 addressed a complaint letter to the Prime
Minister's office alleging criminal conspiracy, corruption,
and lack of transparency. The letter demanded the return of
the US$100,000 paid and noted he did not want "any cocaine
smudged money." The letter closes by challenging the Prime
Minister "to hold me responsible, but keep in mind I never
fight a battle I will not win. I await your immediate reply.
Let's say 24 hours."



8. (C) The GoB's response was swift. The Ambassador was
called to the MFA, shown the letter, and told that the PM was
very upset by the unfounded allegations and tone,
particularly with an election looming. The MFA would be
reviewing Saum's immigration status and he might be deported.
The Embassy was asked to contact Saum and let him know of
the GoB's displeasure. We made it clear that Saum was not
under our control but that his legal rights should be
observed. Subsequent attempts to reach Saum were not
successful.


9. (C) Saum has since telephoned the Embassy on several
occasions to demand intervention with the GOB. He stated
that he "has been speaking with our attorneys in the United
States including an attorney at the United Nations" and they
felt that the problem should primarily be addressed by the
Embassy. Econoff advised Saum as he has before, to consult
with both local and U.S. legal counsel and that if he
believed a crime was committed against him he should file a
report with local police.


10. (C) During a recent trip to Orange Walk where Saum
remains at a local hotel, econoff spoke with a number of
people to seek additional information on this case. The
responses are fairly uniform: Saum seems to be an erratic
figure, but most people think there is something to his
allegations.


11. (C) Comment. Scandals have continued to dog the Musa
government, but they have largely been neutralized or swept
under the rug, and the opposition has done a poor job of
capitalizing on the apparent sleaze. In this case, we have
found Saum to be a very unpredictable interlocutor, but note
that there is significant circumstantial evidence to support
his claim. The PM's involvement will probably never be
known, although his driver/bodyguard has long been rumored to
have a major role in handling illicit payoffs of various
sorts. As the election looms and the PUP faces the
possibility of defeat at the polls, party members seem to be
grabbing everything they can possibly to fund the campaign
and possibly as a retirement nest egg. Sadly, conventional
wisdom is that even if the opposition wins the election,
nothing much will change. End comment.

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