(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. -------------- --- U.S. Companies' Corruption Allegations -------------- --- ¶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. -------------- Political Fallout -------------- ¶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.) -------------- Accusations and Counter-accusations -------------- ¶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. DIETER