U.S. diplomat believed Eni bribed Uganda ministers: U.S. cable

KAMPALA Fri Dec 10, 2010 10:00am EST

KAMPALA (Reuters) - A U.S. ambassador to Uganda prodded his government to impose a travel ban on Ugandan cabinet ministers because he believed they had been bribed by Italian oil group Eni, a leaked U.S. diplomatic cable said.

In a December 17, 2009, cable published by the WikiLeaks website, Ambassador Jerry P. Lanier said the ministers should be banned for imperiling U.S. business interests in the east African country.

According to the cable, Lanier told Washington the allegation was made by British oil group Tullow Oil, which was in competition with Eni for oil assets in the country.

"If Tullow's allegations are true -- and we believe they are -- then this is a critical moment for Uganda's nascent oil sector," Lanier said in the cable.

Lanier said Tullow alleged the ministers were bribed to favor the Italian firm in its bid to buy Heritage Oil's exploration assets in Uganda.

Eni and one of the ministers involved both denied the allegation. Tullow said it had not made any.

The cable cites Tullow's vice president for Africa, Tim O'Hanlon, speaking to Lanier on December 14, 2009, and naming Amama Mbabazi and Hilary Onek, Uganda's security and energy ministers, respectively, as the ministers involved.

Onek told Reuters the allegations were false and defamatory and that he might sue for damages.

"So if we took bribes, how come we didn't give these assets to Eni? I want to confirm with the U.S. government, and if I find it's true that Tullow made these grave and unfounded allegations, we'll meet in court soon."

Mbabazi was unavailable to comment.

Eni pulled out of the battle for Heritage in January this year, clearing the way for Tullow to acquire the assets.

"Eni denies the serious allegations, which are completely without foundation," the company said in an emailed statement. It said it would initiate legal proceedings.

Tullow confirmed a discussion with Lanier about "a number of rumors" but denied making any allegations.

"I made reference to a number of rumors then in circulation in the local media in Kampala to illustrate the issues the oil and gas industry faced," said a statement emailed by Tullow representatives and attributed to O'Hanlon.

"At no time did I give any credence to these rumors and would therefore dispute the record of our conversation as detailed by WikiLeaks," O'Hanlon went on.

Lanier's cable said: "Depending on the outcome of this major deal ... we believe it could be time to consider tougher action -- to include visa revocation -- for senior officials like Mbabazi who are consistently linked to corruption scandals impacting the international activity of U.S. businesses, U.S. foreign assistance goals, and the stability of democratic institutions," Lanier wrote.

According to the cable, O'Hanlon also requested the U.S. to intervene and guarantee transparency in the transaction.

Tullow would not comment on whether it requested help from the ambassador.

Tullow Oil was a 50 percent co-owner of the exploration blocks 1 and 3A with Heritage and had first right of refusal on Heritage Oil's then planned sale to Eni.

A successful bid by Eni, Lanier told Washington, would block a potential partnership between Tullow and U.S. explorer Exxon Mobil, and undermine transparency in Uganda's budding oil sector.

Uganda discovered commercial quantities of hydrocarbons in the Albertine rift basin along the border with the Democratic Republic of Congo in 2006. Oil and commercial production is expected to commence in the last quarter of 2011.

(Additional reporting by Svetlana Kovalyova and Tom Bergin; Editing by James Macharia and Andrew Callus)

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