KOSMOS ENERGY ACCOUNTS FROZEN IN GHANA

C O N F I D E N T I A L SECTION 01 OF 02 ACCRA 001226 SIPDIS NSC WASHDC FOR MICHELLE GAVIN AF/W FOR NOLE GAREY AF/EPS FOR ELLIOT REPKO TREASURY FOR ADAM BARCAN WHITE HOUSE FOR USTR LAURIE-ANN AGAMA E.O. 12958: DECL: 11/16/2019 TAGS: ECON EPET PGOV EFIN PREL KCOR GH SUBJECT: KOSMOS ENERGY ACCOUNTS FROZEN IN GHANA REF: A) ACCRA 1111 B) STATE 107847 ACCRA 00001226 001.2 OF 002 Classified By: Philip Cummings, Economic Chief, reasons 1.4 (b) and (d) ¶1. (U) Please note that this is an action request. See paragraph 8. ¶2. (C) SUMMARY: The Government of Ghana's Serious Fraud Office has ordered banks immediately to freeze the Ghanaian accounts of Kosmos Energy as part of the Attorney-General's corruption investigation in the oil and gas sector. The move was scooped by a small-circulation opposition tabloid, but press attention is negligible. Kosmos reports that so far, only the bank accounts have been frozen, and there was some confusion over whether Kosmos's banks would freeze both offshore and onshore accounts. The GOG has not moved to seize computers or other company property but the CID is asking Kosmos and other oil company representatives to come in for questioning on November 26. Kosmos Energy continues to proclaim its innocence and characterized the GOG move as an attempt to damage the company's reputation in Ghana and to force the company to sell its share of the Jubilee Field to the GOG at a sharply reduced price. Drilling in the Jubilee Field (and therefore Ghana's first oil) is not expected to be affected by the action. In a November 17 discussion (called for other reasons before Post was aware of the account freeze),the Ambassador drew on reftel B points to urge that any dispute with Kosmos be resolved transparently and within rule of law. Attorney-General Mould-Idrissu stated that the investigation would be carried out in a fair and transparent manner, and noted that the companies in the consortium would be asked to meet with the GOG in the next week. She did not inform the Ambassador that accounts would be frozen. Post requests guidance on cleared language for use with the GOG in response to the asset freeze. END SUMMARY. ¶3. (U) In letters dated October 20 but received by commercial banks on Tuesday, November 17, the Ghanaian Serious Fraud Office (SFO) instructed the Bank of Ghana (BOG) to "freeze the bank accounts, financial assets and other assets" of Houston-based Kosmos Energy LLC, their Ghanaian affiliate Kosmos Energy Ghana HC, Jubilee Field consortium minor stakeholder E.O. Group Ltd., the two representatives of E.O. Group, one Ghana National Petroleum Company (GNPC) employee, a fourth unconfirmed individual, and two additional companies whose relationship to Kosmos Energy or the E.O. Group are still unclear. ¶4. (C) The letters come on the heels of an article scooping the asset freeze on November 16 in the Daily Guide, a small-circulation tabloid run by a well-known opposition New Patriotic Party (NPP) supporter. The Daily Guide quotes the Deputy Minister of Information as denying the action. Last week an NPP parliamentarian chastised the NDC for its unfair treatment of Ghanaians involved in bringing Kosmos Energy to Ghana--namely George Owusu of the E.O. Group--only to have Owusu publicly deny unfair treatment, which led to an NPP retraction of the statement. NOTE: Owusu is a dual Ghanaian/U.S. national. END NOTE. Owusu is one of the E.O. Group representatives named in this letter but already subject to an asset freeze last week. He is currently under investigation by the CID, something that Kosmos Energy Country Manager Kevin Black (strictly protect) feels has restricted Owusu's ability to speak freely about accusations that he is an NPP loyalist who served as a front for former President John Kufuor, something that has never been proven. Press coverage of the freeze has been negligible otherwise. ¶5. (C) Kevin Black (strictly protect) informed Econ Chief of the asset freeze after receiving copies from Kosmos's banks on the 17th. Black noted that there has not been any police action against his employees or the Kosmos Energy office in Accra, and no seizures of documents or computers. Nor has there been any talk of seizing or expropriating Kosmos's legal share of the Jubilee Field in the Gulf of Guinea, which it is developing as part of an international consortium. Furthermore, he said that Ecobank, which holds both Ghanaian cedi (GHC) and USD onshore accounts for local expenses, will freeze both onshore and African offshore accounts of the company. However, the local branch of Standard Chartered Bank of the UK is still studying the freeze request and has not taken action as of COB on the 17th. Black stated that ACCRA 00001226 002 OF 002 most of the firm's assets were located offshore and not held in Ghanaian banks. The CID has requested that Black come in to answer questions related to "E.O. Group Ltd. and other oil companies" next Thursday, November 26th, at 2 PM GMT. Black, who had planned to be in Europe that day, has canceled his travel plans in order to comply with the CID invitation. NOTE: Neither the SFO nor the BOG have alleged any wrongdoing by Kosmos itself at this point. END NOTE. ¶6. (C) Following the publication of the Daily Guide article, Kosmos Energy COO Brian Maxted (strictly protect) briefed the Ambassador and Econ Chief telephonically about what were then rumors of potential action by the Bank of Ghana against its partner banks. According to Maxted, the company feared that the GOG was trying to damage its reputation and therefore put the firm in a situation where it would be more likely to sell its share to the GNPC at a sharply reduced price. Maxted feared that although an asset freeze would not affect development of the Jubilee Field because it was not the operator, it could affect Kosmos's two drilling operations of exploratory appraisal wells, which he said cost the firm USD 1 million/day to operate. Maxted said that the GNPC had most recently asked Kosmos to come to Accra on November 30 to try to resolve a separate outstanding legal issue between the parties. Maxted characterized the GOG motivation for the rumored action as "retribution" against Kosmos for the way in which it secured funding from the World Bank's IFC so that GOG approval was not necessary.(NOTE: Post believes it is likely that this action would have been in process well before the resolution of the IFC dispute. END NOTE.) ¶7. (C) After hearing Maxted's concerns, the Ambassador used a coincidental November 17 meeting with Attorney-General Mould-Iddrisu to draw upon reftel B points, urging the GOG to address dispute with Kosmos transparently and within the rule of law. The AG said the GOG would invite all of the representatives of the Jubilee Field consortium (which includes U.S. firm Anadarko Energy, Tullow Energy, and several smaller foreign firms) to meet with the GOG to discuss the case in the next week. The AG stressed that the GOG was not singling out U.S. companies and that all actions would be carried out in a transparent and legal fashion. Mould-Iddrisu noted her dim view of the leaks to the media on the case. ¶8. (SBU) Post requests cleared language on potential responses to the GOG about the asset freeze. In the interim, Post will use cleared language from reftels A and B on an if-asked basis. Post will refrain from issuing statements to the press while the investigation is ongoing. ¶9. (SBU) ENTITIES AFFECTED BY THE FREEZE ORDER -------------- - INDIVIDUALS ¶A. Dr. Kwame Bawuah Edusei (former Ghanaian Ambassador to the U.S. under the Kufuor Administration, and partner in E.O. Group) ¶B. George Yaw Owusu (Partner and co-founder of E.O. Group Ltd. with Amb. Edusei; former Country Manager of Kosmos Energy Ghana HC) ¶C. Theophilous Ahwireng (GNPC Geophysics Manager) ¶D. Evangeline Bootey (unknown to Embassy) COMPANIES ¶A. E.O. Group Ltd. (small stakeholder in Jubilee Field consortium) ¶B. Kosmos Energy LLC ¶C. Kosmos Energy Ghana HC (Ghana affiliate of Kosmos Energy LLC) ¶D. Newbridge Hospitality Services Ltd. (affiliated with George Owusu) ¶E. Equiva Services Ltd. (unknown to Embassy) TEITELBAUM