Identifier
Created
Classification
Origin
08CONAKRY112
2008-02-12 12:09:00
CONFIDENTIAL//NOFORN
Embassy Conakry
Cable title:  

HYPERDYNAMICS, A FIRM AT ODDS WITH ITSELF

Tags:  ECON EPET PGOV KCRM PREL GV 
pdf how-to read a cable
VZCZCXYZ0001
PP RUEHWEB

DE RUEHRY #0112/01 0431209
ZNY CCCCC ZZH
P 121209Z FEB 08
FM AMEMBASSY CONAKRY
TO SECSTATE WASHDC PRIORITY 2158
C O N F I D E N T I A L CONAKRY 000112 

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NOFORN
SIPDIS

DEPT FOR AF/W, AF/EPS, EB, L/AF

E.O. 12958: DECL: 02/10/2018
TAGS: ECON EPET PGOV KCRM PREL GV
SUBJECT: HYPERDYNAMICS, A FIRM AT ODDS WITH ITSELF

REF: A. CONAKRY 81

B. CONAKRY 87

Classified By: ECON OFF KIM JORDAN FOR REASON 1.4 B AND D

C O N F I D E N T I A L CONAKRY 000112

SIPDIS

NOFORN
SIPDIS

DEPT FOR AF/W, AF/EPS, EB, L/AF

E.O. 12958: DECL: 02/10/2018
TAGS: ECON EPET PGOV KCRM PREL GV
SUBJECT: HYPERDYNAMICS, A FIRM AT ODDS WITH ITSELF

REF: A. CONAKRY 81

B. CONAKRY 87

Classified By: ECON OFF KIM JORDAN FOR REASON 1.4 B AND D


1. (C) SUMMARY. Divisions are becoming apparent at
Hyperdynamics, while concerns about possible FCPA violations
continue to surface. The top management of the company know
little about what is going on in Guinea and have virtually
ignored political insights provided by the Embassy. With
virtually no experience in the oil sector, it appears that
Hyperdynamics may have been looking to sign a big contract
for a quick and tidy profit, and that they now find
themselves in over their heads. Given FCPA considerations,
Post has ceased advocacy support for this firm with the GoG.
END SUMMARY.


2. (C) On February 8, Ambassador and Econoff met with Harry
Briers, the Executive Vice President of Hyperdynamics (HYPD).
Mr. Briers explained that he has been an employee of the
SCS/Hyperdynamics Corp. business entity for 10 years. He
went on to confide that he personally has two million shares
of HYPD and would like to see the stock go to $5 before he
cashes out. However, he admitted neither he nor the CEO Ken
Watts have any previous experience in the oil industry. He
said his goal in coming to Conakry this visit is to meet with
Prime Minister Kouyate and the Minister of Mines to clarify
and solve the current impasse over their contract.


3. (C) Briers explained that the HYPD/SCS entity had become
a service company by purchasing around 10 different
companies. They then merged and shed companies until today
all that is left is parent company HYPD and its subsidiary
SCS Corp. (NOTE: Recent public reports by HYPD indicate that
there are at least two other subsidiaries operating in the US
which Mr. Briers failed to mention. END NOTE.) Mr. Briers
said their original goal was to sell Hyperdynamics after
signing the oil exploration contract with Guinea as quickly
as possible, or in other words, to 'flip' it. However, he

said that over the last year the stock price has gone down
due to the difficulties encountered in Guinea. (NOTE:
Current price is $1.23. END NOTE.)


4. (C) Briers complained of divisions within the company,
both within the US office as well as between the US main
office and the Conakry operation. He said he did not trust
the local team, especially Mr. Kourouma. He was uncertain
that the documents he has sent to be given to the government
were passed on by the local management team. Briers provided
copies of these documents, saying that was prepared to hand
over a similar package to the Prime Minister and Minister of
Mines as soon as he could. He said that he and the CEO are
at odds over the course to take in Guinea, especially with
regards to the local management team in Conakry. He noted
that two American Ambassadors (the previous and current COMs)
had expressed reservations about the character and quality of
the firm's local management team but that his CEO steadfastly
supports Kourouma and his team.


5. (C) Briers raised the issue of FCPA violations without
prompting. He said he has been concerned over possible
violations, but denied that the company had paid anti-Kouyate
youth groups to protest against the government earlier this
year as had been rumored in the press. When asked directly
by Econoff, he denied that HYPD had paid the Secretary
General of the Presidency, Sam Soumah, to push through their
contract.


6. (C) Briers was clearly concerned about OPIC's decision
not to provide political risk insurance to his firm and asked
for the Ambassador to intervene with OPIC on HYPD's behalf.
The Ambassador responded that he and the embassy fully
supported OPIC's decision and that OPIC had made its decision
in part on information provided by the embassy. In the
regard, the Ambassador highlighted recent public statements
by GoG officials about HYPD's contract. In particular, the
Ambassador noted the December/January edition of the
magazine, Jeune Afrique, that had an extensive spread on
Guinea's economy and mining sector specifically. In these
articles, the Minister of Finance was quoted as naming HYPD
as one contract that had to be renegotiated. The Ambassador
also mention the December Council of Ministers meetingwhere
the PM stated that the HYPD contract was not binding and
needed to be renegotiated. Briers informed the Ambassador
that he was completely unaware of these public statements by
GoG officials about his firm. In fact, Briers was unaware of
the magazine Jeune Afrique or that the Gog issued
communique's after each weekly Council of Ministers meetings.
Nor was he aware that HYPD's putative champion, the
Secretary General of the Presidency, was a member of the

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Coouncil of Ministers.


7. (C) When Briers stated that he did not understand why the
PM had focused his attention on HYPD's contract, the Econoff
described the mandate of the GoG following the January 2007
Accords. Mr. Briers was completely unaware that the
renegotiation of mining and oil contracts is one of the terms
of the tripartite agreement which ended the strikes in
January and February 2007, and which came into force before
Kouyate was named PM.


8. (C) The Ambassador stated clearly that there was nothing
further the Embassy could do for HYPD with respect to its
relations and engagement with the Guinean government. By all
accounts, GoG was ready and willing to meet with the firm and
resolve this dispute. It was now a business matter, and the
Embassy had given all of the political insight it could
provide. Briers said that he fully understood the
Ambassador's position and that he would do his best to meet
with the PM and Minister of Mines as soon as possible. He
noted that he was pursuing these appointments through the
firm's local attorney, Alpha Omar Diallo, rather than through
his local management team. The Ambassador applauded Briers'
course of action, noting Mr, Diallo's reputation as one of
Guinea's best private attorneys.


9. (C) COMMENT. It is apparent that HYPD has ignored post's
advice. It is also apparent that HYPD is not listening to
their Special Advisor, Amb Hank Cohen. When Briers sought
the Amb Cohen's advice just prior to this trip, he was
informed for the first time of President Conte's
unfamiliarity with HYPD and its contract. He was shocked.
The lack of knowledge about current events in Guinea, coupled
with the complete lack of oil experience for the CEO and
ExecVP, suggests that they were (and still are) looking for a
quick flip of the contract, not a long term investment in
Guinea. Brier's suspicions of FCPA violations coupled with
similar suspicions (REFTEL) by the Financial Director of the
company, add further weight to concerns that HYPD is possibly
in violation of the FCPA. Considering the lack of funds
(REFTEL) the company reportedly has currently and the
widening divisions within the company, HYPD's tenure in
Guinea appears more tenuous than ever before. Given possible
FCPA concerns and considerations, post has ceased any and all
advocacy work for this firm with the GoG and will only
monitor developments as they occur. END COMMENT.

CARTER