Senegal justice ministry calls for inquiry into energy contracts

DAKAR (Reuters) - Senegal’s justice ministry asked prosecutors on Monday to launch an inquiry into the country’s energy contracts after a report alleged that the president’s brother was involved in fraud related to two offshore gas blocks being developed by BP.

After the publication of the investigation by the BBC last week, President Macky Sall said the truth would be established although the government’s first response was to dismiss allegations in the report as false.

In the latest statement, the justice ministry called for “a full investigation into all alleged facts”.

The claims have cast a shadow over Senegal’s energy plans long before the first oil and gas starts flowing and despite assurances from the president that he would root out corruption.

The BBC report said that, in a previously unpublished arrangement, BP had agreed to pay Timis Corporation, a firm run by Romanian-Australian tycoon Frank Timis, about $10 billion (7.9 billion pounds) in royalty payments for its stake in the two blocks.

The BBC said that, based on documents it had reviewed, a secret payment of $250,000 was made by Timis to a company run by the president’s brother.

Aliou Sall has denied receiving the payment and called the BBC’s report “totally false”.

Timis has not been reachable for comment, but told the BBC in a statement that there had been “no wrongdoing whatsoever”.

The blocks are currently operated by BP, which has said it “rejects any implication that it acted improperly in the acquisition of our interests in Senegal”.

Senegal’s offshore oil and gas reserves have the potential to transform the poor West African country when they start flowing in the next decade, with volumes expected to rival some of the region’s biggest producers.

The blocks, called Cayar Offshore Profond and St. Louis Profond, have caused controversy since 2012, when a previously unknown company called Petro-Tim was unexpectedly awarded the licence to explore them despite having no known track record in the industry. Soon after, the president’s brother was hired at the company.

Reporting by Diadie Ba; Writing by Alessandra Prentice; Editing by Kevin Liffey