WGTL SETTLEMENT DEADLINE MAY PASS WITHOUT GOTT ACTION

UNCLAS PORT OF SPAIN 000468

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EINV KIDE ECON EPET PGOV TRGY BTIO TD
SUBJECT: WGTL SETTLEMENT DEADLINE MAY PASS WITHOUT GOTT ACTION

REF: PORT OF SPAIN 430; PORT OF SPAIN 401
LETTER FROM WGTL TO CHARGE 11-06-2009 (ATTACHED)
OFFER LETTER FROM WGTL 11-02-2009 (ATTACHED)

BUSINESS SENSTIVE INFORMATION: PLEASE PROTECT ACCORDINGLY




1. (SBU) SUMMARY: World GTL's (WGTL) dispute with Trinidad
and Tobago's national oil company Petrotrin (reftels) is reaching a
watershed moment as its offer for settlement expires December 3.
The Minister of Trade told Charge that the GOTT considers the
dispute a commercial matter, and Petrotrin's president told us
November 25 that the company's lawyers are reviewing the offer and
threatened law suit (refs C,D),but we expect no action will be
taken by Petrotrin or the GOTT prior to the settlement deadline.
WGTL's president has repeatedly told us he fears that a lawsuit
will drag on for years, and has asked if the USG regards the
dispute as a purely commercial matter or one of expropriation, as
the company asserts. We continue to urge Petrotrin and the GOTT to
settle the dispute without a lawsuit or arbitration, but the
national oil company remains confident that its actions were
appropriate, and does not seem to feel pressured by WGTL's
deadline. The Prime Minister, meanwhile, categorically told an
international audience attending a business forum associated with
the Commonwealth Heads of Government Meeting (CHOGM) November 24
that his government does not expropriate property. END SUMMARY.



DECEMBER 3 SETTLEMENT DEADLINE LOOMS




2. (SBU) Attorneys for US-based energy processing firm World
GTL (WGTL) sent a settlement offer (ref D) to the Attorney General
of Trinidad and Tobago and to Petrotrin's legal advisor on November
2, seeking $50 million to settle the dispute. The offer letter
stated that, unless a cash settlement is reached beforehand, WGTL
will file on December 3 either a lawsuit in the U.S. federal
District Court for the Southern District of New York or an
arbitration demand before the International Center for Settlement
of Investment Disputes (ICSID). WGTL's attorneys included a draft
of the lawsuit that claims, among other things, expropriation,
fraud and negligent misrepresentation in the way Petrotrin assumed
a private loan on the WGTL-Petrotrin joint venture in a
gas-to-liquids (GTL) plant for which the venture defaulted,
forcing it into receivership and giving Petrotrin an opportunity to
take control of the venture's management (refs A, B). WGTL's
president David Loring has told us several times that while he
fears Petrotrin and the GOTT would try to drag out a lawsuit for
many years, he also feels that they would not act on his company's
claims without the threat of a specific legal action.



YOUR DEADLINE IS NOT MY DEADLINE




3. (SBU) Petrotrin's president Kenneth Allum told us
November 25 that the company's legal team is reviewing the offer
and lawsuit, and would advise him of a recommended course of
action. He added that "our doors are always open," reiterating his
assertion that Petrotrin has been forthcoming with WGTL regarding
the transactions that led to WGTL's current complaint, but that
Loring and other WGTL representatives refused to communicate with
Petrotrin officials after the venture went into receivership (ref
A). Allum told us that it was "unlikely" that his legal advisors
would provide him a recommendation by WGTL's December 3 deadline.
"Remember," he said, "we don't see this the same way Mr. Loring
does."




4. (SBU) We again urged Allum to consider the settlement as
a better alternative to a lawsuit. We told him that more than one
US Senator was following the case, which may create an impetus for
the USG to decide whether to define this matter as an
expropriation. We noted that, during a speech November 24 at a
business forum associated with the Commonwealth Heads of Government
Meeting (CHOGM) taking place in Port of Spain this week, Prime
Minister Manning declared Trinidad and Tobago open for business
with foreign investors, and announced new tax incentives for
investment here. We argued that a pending lawsuit filed by an
investor in new technologies would be incongruous with the Prime
Minister's message, particularly a lawsuit based on a claim of

expropriation. Allum immediately pointed to another part of
Manning's speech in which the PM said, "We have adopted the British
system of jurisprudence which means that we do not expropriate
people's property nor do we expropriate the property of our local
business people."



GOTT: THIS IS A COMMERCIAL MATTER




5. (SBU) Pursuant to discussions we had with WGTL's
president David Loring, the Charge directly forwarded copies of
WGTL's settlement offer to the Ministers of Foreign Affairs and
Trade, and was made aware that Trade Minister Mariano Browne (who
is also Minister of State for Finance and a confidant of the PM)
forwarded the same to the Minister of Energy. Browne told the
Charge that he considered the dispute a commercial matter,
suggesting it would not warrant political action by the government.
For his part, Loring has expressed his gratitude for the advocacy
efforts undertaken on behalf of his company (ref C),but has also
asked us if the USG considers the events leading to the venture's
receivership as an expropriation or a purely commercial matter over
which his company should file suit.



COMMENT: ACTION UNLIKELY




6. (SBU) COMMENT: It is unlikely that Petrotrin and/or the
GOTT will take any action regarding the WGTL dispute and settlement
offer in time for WGTL's December deadline. Allum's awareness of
the deadline and his assertion that his legal team is reviewing the
matter, however, offer some encouragement, since much of his
attention since November 2 most certainly would have been split
between CHOGM events, union calls for work stoppages against his
company, and follow up to reports he made public that the company
is facing budget shortfalls. We do not know if Manning's reference
to expropriation in his November 24 speech was in any way related
to the WGTL dispute, but Allum appeared to take stock of the PM's
assertion, telling us "I don't think I need to say much more on
that topic." Petrotrin, as we have reported, is confident that it
acted appropriately to save a faltering project that had been
mismanaged by WGTL (ref A). Unless otherwise directed by the
Department, we will refrain from offering a view on the
expropriation/commercial dispute question and will continue to urge
Petrotrin and the GOTT to be flexible in their approach to the
matter and to reach a settlement. Given the current state of play,
though, litigation seems inevitable.




7. (U) Refs C and D are attached to this cable in SMART
format.
KUSNITZ