Federal prosecutors have initiated proceedings to recover more than $20-million of Griffiths Energy International Inc. shares granted to two relatives and a friend of Chad diplomats in 2009, when the company was seeking to obtain rights to some of the country's rich oil and gas properties.
The shares and a $2-million (U.S.) cash payment to the wife of Chad's Washington-based ambassador are at the heart of a bribery case that saw Griffiths Energy pay $10.35-million last week to settle a criminal investigation into cash and stock paid to relatives of Chad officials.
According to an agreed statement of facts issued by the Crown last week, a total of four million shares were granted in 2009 to Nouracham Niam, wife of Chad's Washington-based ambassador Mahamoud Adam Bechir; Ikram Saleh, wife of the deputy chief of Chad's embassy; and a man identified as Adoum Hassan, who is believed to be a friend of the diplomats.
The stock, known as founders' shares, was sold to the trio in September, 2009, at a price of less than a penny each for a total $1,600.
Griffiths Energy is not a publicly traded company, but some of the 40 million founders' shares it issued ahead of an aborted initial public offering now trade on the so-called grey market.
Currently the shares are being offered at a price of more than $6 apiece, giving the disputed stock held by the three individuals an indicated value of more than $20-million.
According to people familiar with the case, prosecutors have placed a priority on recovering the shares because they are so lucrative and easy to trace.
A $2-million consulting payment by Griffiths Energy to a company controlled Ms. Niam, the Chad ambassador's wife, has proven more difficult to trace, sources said, because the cash is no longer in the Washington-based bank account to which the money was transferred in 2011.
Crown attorney Robert Sigurdson told a judge with the Alberta Court of Queen's Bench on Friday that his office wants to reclaim the shares on the grounds that they are proceeds of a crime related the Griffiths Energy bribery case. Mr. Sigurdson declined to talk about the forfeiture proceedings, but he is set to return to court Feb. 15 to obtain court approval to force Ms. Niam and the other two individuals to forfeit the shares. The three are entitled to oppose the move, but it is unclear whether they have hired lawyers or plan to appear in court to contest the forfeiture.
Ms. Niam has not returned several calls seeking comment. A man who answered Ms. Niam's phone in Silver Spring, Md., this week hung up on a reporter who asked to speak with her. Chad's Washington ambassador has been reposted to Pretoria. Last week, a man who answered the phone at that embassy said the ambassador was travelling in Chad. Ms. Saleh and Mr. Hassan could not be located.
Griffiths Energy issued the disputed stock in September, 2009, one month after the company was founded by Brad Griffiths, a maverick Bay Street investment banker who drowned after falling from a boat in 2011. His co-founders were brothers Naeem Tyab and Parvez Tyab. Founders of junior companies often privately sell early shares to their friends or family ahead a planned initial public offering.
Under Canadian securities laws, founders shares can only be sold to so-called exempt investors who, among other things, have an income exceeding $200,000. The statement of agreed facts said the three stated in writing that they met the income threshold, but when they were questioned during a recent Griffiths Energy internal probe, their income was not substantiated.
The Griffiths Energy shares were distributed to the three at the same time that Naeem Tyab and Mr. Griffiths were engaged in difficult negotiations to strike an agreement to co-produce oil with the Chad government in its rich southern oil fields.
Chad ranks as one of the world's most corrupt regimes and Griffiths Energy's efforts to secure the oil and gas rights involved two years of difficult negotiations. Griffiths Energy initially offered a $2-million signing bonus to the government to secure rights to the oil fields.
Signing bonuses are common and legal. By the time Griffiths Energy signed a memorandum of understanding to develop the Chad oil fields in 2011, the signing bonus had grown to $40-million.
The illegal $2-million cash payment to Ms. Niam's company and the lucrative stock transfers were uncovered in late 2011 by a new slate of Griffiths Energy executives. The company alerted police about the transactions and took the extraordinary step of sharing the legally privileged communications the company had with its former outside law firms.
Neither the Crown nor Griffiths Energy have identified the law firms, but Montreal lawyer Jacques Bouchard Jr. confirmed in an interview that he and his former employer Heenan Blaikie acted for the company from August, 2009, to January, 2011. Mr. Bouchard left Heenan Blaikie in December, 2011. Mr. Bouchard said he was Griffiths Energy's lead lawyer during his tenure at Heenan, but he said he was not aware of the $2-million bribe and he never travelled to Chad.
Norton Rose has confirmed that a small team of Calgary lawyers from the former law firm Macleod Dixon acted for Griffiths Energy in early 2011 and facilitated the $2-million transfer to a consulting company controlled by Ms. Niam. The law firm said last week the Macleod Dixon lawyers were not aware the consulting company was connected to a public official from Chad. Macleod Dixon announced a merger agreement with Norton Rose in October, 2011.
Editor's note: An earlier online version of this story and the original newspaper version of this story gave an incorrect date for the merger of Macleod Dixon with Norton Rose. This online version has been corrected.