The energy company founded by the late Bay Street financier Brad Griffiths pleaded guilty to bribery charges Tuesday and agreed to pay a $10.35-million penalty – the largest fine the RCMP has garnered since establishing specialized teams to investigate foreign corruption.
The plea by Griffiths Energy International Inc., a small privately held oil and gas company based in Calgary, stands to settle charges it faces under Canada’s Corruption of Foreign Public Officials Act after a company investigation unearthed payments made in an attempt to secure lucrative energy properties in Africa.
According to an agreed statement of facts filed in court, Mr. Griffiths and one of his business partners, Naeem Tyab, spent six months in 2008 establishing contacts within Chad’s embassy and inquiring about oil and gas leases in the African country.
The pair, along with Parvez Tyab, founded Griffiths Energy, which considered bribing Chad’s ambassador to Canada in September, 2009, but instead paid funds to a company controlled by his wife, according to the statement filed in court.
Canada has cranked up its pursuit of corruption by Canadian companies abroad after countries around the world accused Ottawa of dragging its feet.
It is illegal for Canadian companies to bribe foreign officials – transactions that were once viewed as routine business deals, particularly for resource outfits. The Griffiths case will mark the second conviction for the RCMP since it established teams dedicated to investigating foreign corruption.
The company’s guilty plea reveals another dramatic slice of Mr. Griffiths‘ high-profile career. Mr. Griffiths was a top player in Canada’s investment scene, helping domestic companies explore foreign opportunities. He co-founded the investment dealer GMP Capital Inc., and helped pioneer so-called “bought deals,” giving companies an alternative financing option. Mr. Griffiths died in July, 2011, in a boating incident.
According to the statement filed in court, Griffiths Energy’s outside legal counsel advised against paying off ambassador Mahamoud Adam Bechir, who was based in Washington, D.C., because he was a government official. Instead, Griffiths paid a fee to a company owned by the ambassador’s wife, handing over a $2-million bribe in February, 2011, under the guise of consulting contracts, according to the filing. The Calgary judge hearing the case put off sentencing until Friday.
“Mr. Griffiths and Naeem Tyab made initial inquiries about acquiring [oil and gas] blocks in Chad and established contacts with the Chadian Embassy” between June, 2008 and November, 2008, according to the agreed statement of facts Griffiths and the Crown presented Tuesday. A company tied to Mr. Griffiths and the Tyabs were introduced to Chad’s then Minister of Petroleum and Energy through the embassy. Years of negotiations followed, and Griffiths was eventually awarded production deals in Chad.
With leases in hand, Mr. Griffiths needed executives who could turn the company into an oil producer, the court heard. As a result, Gary Guidry became the energy company’s chief executive on July 1, 2011. The company continued to bring in new executives and directors. They discovered Griffiths’ bribery activities as they prepared for an initial public offering. They created a special committee to investigate and hired Gowling Lafleur Henderson LLP. Griffiths argues that the judge should weigh its pro-active and co-operative approach to dealing with corruption when considering whether the $10.35-million settlement is appropriate.
The Tyab brothers are still connected to North America’s oil patch. Naeem Tyab, for example, increased his stake in United Hunter Oil & Gas Corp. to 10.43 per cent in August, 2012, according to a statement he released. Mr. Griffiths was United’s chairman, and the company trades on Canada’s junior exchange. A receptionist at Mr. Tyab’s office in Bermuda said he was travelling in Europe and unavailable to answer questions. United’s chief executive Arthur Halleran confirmed that the Mr. Tyab who invested in his company is the same investor tied to Griffiths. Mr. Halleran said he is not concerned about Mr. Tyab’s involvement with Griffiths because his outfit is “a total different company.”
Parvez Tyab also remains active. For example, he serves as a director of Texas’s Rift Energy Corp., which has operations in Africa, according to the company’s website. Rift did not return a call seeking comment.
The RCMP racked up a major win when it pursued Niko Resources Ltd. That corruption case ended with the company paying $9.5-million for bribing Bangladesh’s Energy Minister. Niko’s bribes, which came in the form of an luxury vehicle and trips to the United States, were worth less than $200,000.
The difference between the two cases, Griffiths argues, is that it reported itself, while the RCMP had to chase after Niko. Griffiths, which had to cancel its IPO and instead raised millions in the private market, expects to produce its first drops of oil in Chad soon. Crown prosecutor Robert Sigurdson told reporters after the hearing that he expects the United States to back off its Griffiths investigation now that Canada has dealt with the charges.