For decades, John O’Halloran was the man to see if you wanted something done in Trinidad and Tobago. He had many nicknames—“Johnny O”, “Cockfighting Johnny” and, most notoriously, “Mr. Ten Percent”—and a comfortable home on Flamboyant Avenue in the hills outside Port of Spain. Whatever his official role—from minister of petroleum to chairman of the country’s racing authority—O’Halloran had the ear of Dr. Eric Williams, founder of the People’s National Movement party and Prime Minister from independence in 1962 until his death in 1981.
Among O’Halloran’s many schemes, perhaps the most baleful was the sweetheart deal he arranged for Tesoro Petroleum, a then-small Texas oil company that in 1968 acquired a 49.9% share in the country’s petroleum production with an initial investment of $50,000, the full $10 million to be paid from future profits. When the price of oil soared in the 1970s, the company’s revenues ballooned. O’Halloran got his $2 million—ten percent of the deal’s initial value—and payments continued to be made over the years to a range of “finders” and “consultants” with a hand in the concession’s administration.
The country lived well during the boom years, but the party ended with the oil glut of the 1980s. Recession led to significant cutbacks in salaries and cost-of-living adjustments, and in 1986 the PNM lost its previously unchallenged grip on parliament to the newly formed National Alliance for Reconstruction. Tesoro had left the market by then, selling its share of the operation back to the government in exchange for 3.23 million barrels worth about $200 million. O’Halloran was also out of the picture, having fled to Canada in 1982 after the death of his protector, where he himself passed away in 1985.
The new government, through the efforts of Attorney General Selwyn Richardson, started digging around. They were able to recover a few million from O’Halloran’s son in Canada, and began piecing together the full story behind the Tesoro arrangement. (The SEC’s 1980 consent agreement with Tesoro had addressed the matter only in passing, as one of a number of “finder/consultant” infractions in various countries.) The company eventually agreed to settle the matter for about $3.3 million. The merits of the settlement were under discussion in parliament on July 27, 1990 when the chamber was suddenly overtaken by armed insurgents mounting an attempted coup. The trauma lingers to this day.
This post is part of "The FCPA Files" series, examining key enforcement cases under the Foreign Corrupt Practices Act and the lessons they offer for modern compliance. |
It must have seemed like a great opportunity: three offshore wells in Qatar, pre-drilled, just waiting for someone to reopen them and carry the oil away. When he learned of the concession’s availability in 1975, Gene Holley—chairman of the Georgia Senate Banking and Finance Committee—reached out to an acquaintance, Roy Carver, from whom he had recently bought a private airplane. Holley was paper-rich thanks to some lucky pre-embargo investments in Texas oilfields, but he was also highly leveraged. Carver, a yacht enthusiast who had long-since made his fortune in retread tires, could provide enough liquidity to seize the moment.
As it turns out, the whole thing was a bit of a setup. The wells did have oil, but a sulfurous “sour” type that couldn’t be extracted without exorbitant precautions. That’s why the original investors had walked away—a fact surely known to Qatar’s Director of Petroleum Affairs, Ali Jaideh, when he first pitched the idea to Holley. Ali’s brother, Kassem, had been local agent for Sedco, the abandoned project’s Texas-based drilling contractor. After the project faltered, it was a Sedco executive who found Holley, introduced him to the Jaidehs, and helped hype the wells to the prospective new investors.
Carver and his estate would eventually countersue Sedco for the money he had sunk into the doomed venture, prevailing to the tune of about $13 million. What he couldn’t recover was the $1.5 million Ali had demanded be paid into his brother’s Swiss bank account as a condition of the deal’s approval.
The fact of the payment came to light when an ill-advised attempt to refinance the project was thwarted by the refusal of the new Director of Petroleum Affairs to renew the lease. (Ali Jaideh had moved on to become OPEC’s Secretary General in 1977.) Voicing his frustration in a side meeting with the U.S. Ambassador to Qatar and another foreign service officer, Carver recounted the earlier illicit payment and blurted out: “Who do I go see now, how do I get it done?” The Ambassador balked and the meeting soon ended. A year later, the DOJ obtained a permanent consent injunction.
Carver went back to his globetrotting lifestyle, passing away in Marbella, Spain in 1981. Holley got caught up in a bank fraud scheme and spent 16 months in prison before returning to his home in Augusta and a life of religious contemplation.
This post is part of "The FCPA Files" series, examining key enforcement cases under the Foreign Corrupt Practices Act and the lessons they offer for modern compliance. |
From its debut in 1966, the Grumman Gulfstream II jet stood out as a turbo-powered symbol of luxury business travel. With room for a dozen passengers, a transcontinental flight range, and aerodynamics that would make a NASA engineer blush, it was the vehicle of choice for discerning executives and heads of state worldwide.
Still, they didn’t quite sell themselves; that prerogative belonged to Page Airways, founded in 1939 by James P. Wilmot in his hometown of Rochester, New York. The company began as a flight instruction provider, taking advantage of the U.S. government’s eve-of-war interest in strengthening the nation’s aviation capacity. Over the years it grew in both size and scope, alongside Wilmot’s own formidable clout as a political fundraiser.
The FCPA had been around for only a few months when the SEC filed a civil action against Page, Wilmot, and five other Page executives. The allegations concerned the company’s sales activities in half a dozen countries in Africa, the Middle East, and Southeast Asia.
We see some familiar patterns: presidential kickbacks in Gabon, for example, and side payments to well-connected development organizations in Malaysia and the Ivory Coast. Others details stand out a bit more: certain third-party arrangements in connection with Morocco and Saudi Arabia that “left over $5 million of the proceeds of Gulfstream II sales unaccounted for” and the creation of a secret subsidiary to do business with Idi Amin’s Uganda. (Plus giving the dictator a Cadillac Eldorado—the one allegation tying the case to the FCPA proper, given the events’ timing.)
The case didn’t go to trial. After getting venue transferred from the District of Columbia to Rochester, the company’s lawyer served a subpoena on the CIA demanding any information it might have concerning the above-described activities. Before long, the case was settled—individuals dismissed, company enjoined, monitor appointed—with the telling digest notation: “In reaching settlement of this action, the Commission and Page considered concerns raised by another agency of the United States Government regarding matters of national interest.”
Aviation and national interest have never been far apart. The FCPA itself was born amid concerns about corruption in the sale of military aircraft and its effect on the United States' international repute. It isn’t surprising that an intelligence agency might have connections with those selling private jets to world leaders in global hotspots. We’ll leave further speculation to others.
This post is part of "The FCPA Files" series, examining key enforcement cases under the Foreign Corrupt Practices Act and the lessons they offer for modern compliance. |