UPDATE 2-Cobalt denies wrongdoing in Angola; shares slide

Mon Apr 16, 2012 12:57pm EDT

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April 16 (Reuters) - Cobalt International Energy Inc said on Monday it "strongly refuted" allegations of wrongdoing after a newspaper reported that three Angolan officials held concealed shares in an oil venture linked to the company.

Cobalt shares dropped 10 percent after a Sunday Financial Times article shed more light on allegations of a relationship between Angolan officials and Nazaki Oil and Gaz, one of its partners in the country, that Cobalt says it was first told of in late 2010.

Cobalt shares had tripled in value since it announced a big oil discovery off Angola's coast late last year.

The Financial Times said the recently departed head of the national oil company and an influential general confirmed that they, along with another general, have held shares in Nazaki.

The article said Manuel Vicente, head of state-owned Sonangol until his appointment in January as minister of state for economic co-ordination, and General Manuel Helder Vieira Dias Junior, known as Kopelipa, head of the presidency's military bureau, had confirmed their holdings in letters.

The FT identified the third official as General Leopoldino Fragoso do Nascimento.

Vicente and General Kopelipa are cited as saying they exerted no influence over the award of Cobalt's oil rights.

There was no immediate response to emailed requests for comment from Vicente's ministry office on Monday.

Their interests were held through Grupo Aquattro Internacional. Aquattro, the FT said, was named as a Nazaki shareholder in two company documents from 2007 and 2010.

U.S. authorities have been formally investigating Cobalt's Angolan operations since November of last year. The Securities and Exchange Commission began an informal inquiry in March 2011, at which point Cobalt says it contacted the U.S. Department of Justice to offer to respond to any requests.

Cobalt said in a filing in February that, as part of its agreements to explore off Angola struck in February 2010, it was assigned to a contractor group including state oil company Sonangol, Nazaki and another firm, Alper Oil.

In its disclosure in February, Cobalt said Nazaki had "repeatedly denied" allegations of a connection between Nazaki and senior Angola government officials.

When the SEC issued Cobalt a formal order of investigation in November, the Goldman Sachs-backed company said that, after its own probe, it believed its activities "complied with all laws," including the Foreign Corrupt Practices Act (FCPA).

FCPA experts have said that the lack of wiggle room Cobalt has given itself in its public responses indicate it is unlikely to face much liability.

But Cobalt shares, which have fluctuated dramatically in the months since its big discovery, were down 10.8 percent at $25.31 in midday trading on the New York Stock Exchange.

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