The FCPA Files: Ashland Oil, Inc. (1986)
The precondition could not have been clearer: Ashland Oil, a Kentucky-based refiner and distributor, would have a chance to buy crude oil from the Sultanate of Oman at the most favorable of prices, but only by detour through Rhodesia (soon to be Zimbabwe)—specifically, the mineral-rich Great Dyke spanning that country’s Midlands province, where one Brigadier James T. W. “Tim” Landon had several years earlier acquired certain chromite-mining rights for something under a million dollars.
As it happened, Landon was more than a prospecting enthusiast: though born in Vancouver and raised in Britain, he had been seconded to the Omani armed forces in 1966 in connection with the fight against the Soviet-backed Dhofar insurgency, where he was able to reconnect with an old friend from the Sandhurst military academy: Qaboos bin Said Al Said, who would soon usurp his father as Sultan in a 1970 bloodless coup largely orchestrated by Landon himself. From then on, little of importance happened in Oman without Landon’s involvement.
Ashland had already been enjoined once before, in a 1975 SEC consent decree, not to misuse corporate funds “for unlawful political contributions or other similar unlawful purposes”; it would therefore have been convenient if the Midlands Chrome deal had represented some genuine commercial value. Sadly, no matter how many times the company’s geologist was asked to revisit his conclusions, the outcome was the same: this was a middling investment at best, at worst a full-blown money sink.
Still, Ashland went ahead with its $25 million offer to Landon, and in time managed to obtain its deal with Oman for a daily 20,000 barrels of crude at roughly three dollars less than the country’s going rate, as well as a contract to provide management and operating services for a domestic refinery. It made efforts to unload its worthless mining interest, but eventually opted to file a certificate of abandonment with the government of Zimbabwe. The entire affair led to an SEC investigation and another injunction in 1986. As for Landon, he would return to the UK, in time becoming one of the country’s wealthiest men. His name would also go on to appear in connection with a number of other global corruption scandals, including deals involving defense contractor BAE Systems and the telecom company Ericsson.
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. |