Niko Resources Ltd., a Calgary-based oil and gas company, will admit in court Friday that it bribed a Bangladeshi minister after explosions from one of the company’s natural gas fields sparked protests in a nearby village and complaints of environmental contamination.
The plea agreement, the first of its kind under a new RCMP initiative to combat foreign bribery, is expected to include a multimillion-dollar fine, The Globe has learned.
Niko, which has oil and gas exploration projects scattered around the developing world in countries such as Indonesia and Iraq, has skyrocketed on the stock market since it debuted as a junior on the Alberta Stock Exchange in 1987. Its CEO, Ed Sampson, was the highest compensated CEO last year – earning more than $16-million, the bulk of which was in stock options – according to a survey of executive pay by The Globe and Mail’s Report on Business.
For several years, a team of RCMP officers, known as the force’s international anti-corruption unit, has been probing the company, after the arrests of several Bangladeshi politicians on corruption charges by authorities in Dhaka.
The Mounties’ case against Niko centres around alleged gifts for a junior energy minister in Bangladesh, A.K.M. Mosharraf Hossain. In 2005, at a time when Mr. Hossain was responsible for assessing what compensation Niko should provide to villagers after explosions at one of the company’s drilling sites, a new Toyota Land Cruiser, purchased by Niko, was delivered to his house. At the time, Niko said that it had provided the luxury SUV to its partner in Bangladesh, the state-owned gas company known as BAPEX, and denied having any knowledge about the vehicle’s ultimate destination.
A trip to New York taken by Mr. Hossain and his family is also central to the RCMP’s case.
The 2005 explosion, which took place near a rural village called Tengratila, was a public relations disaster. The company provided a total of $525,000 (U.S.) in cash payments to locals, who complained of contaminated drinking water and devastated agriculture, as well as $100,000 in services to the surrounding villages. The company’s offers did not placate the Bangladeshi government, which entered into a protracted dispute with Niko over the price of the gas it had yet to uncover.
No individuals from the company have been charged. In a statement, it said that its board of directors audit committee voted to enter the guilty plea. The plea “is expected to resolve all matters investigated by the RCMP in relation to Niko’s activities,” the statement said. A joint-sentencing submission will be made by an assistant Crown attorney and lawyers for the company at a hearing Friday at Alberta’s Court of Queen’s Bench in Calgary.
The federal government has been under much international pressure to land such convictions. The Corruption of Foreign Public Officials Act was created as a result of Canada’s obligations under the OECD’s anti-bribery convention, which Canada signed in 1997.
Since that time, Canada has secured under the act just one conviction against a small Alberta company, Hydro Kleen, for offering a bribe to a U.S. customs official. Another case that is still pending involves an Ottawa man, Nazir Karigar, whom the RCMP charged a year ago with allegedly violating the act in a business deal in India. But those efforts have not been enough for the OECD and other international observers.
In a report released in May, Transparency International identified Canada as the worst-performing G7 country when it came to cracking down on overseas bribery, characterizing it as a country with “little or no enforcement” and ranking it amongst Greece, Slovakia and Slovenia.
“Hopefully businesses will take this as a warning that corruption is no longer acceptable for Canadian corporations abroad,” James Klotz, the president and chair of Transparency International Canada, said in reaction to Niko’s statement.