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Riggs Investigation Prompts Inquiry Into 3 Oil Firms

By Kathleen Day
Washington Post Staff Writer
Thursday, August 5, 2004; Page E01

Federal regulators are probing at least three of the nation's largest oil companies -- Marathon Oil Corp., Amerada Hess Corp. and ChevronTexaco Corp. -- for possible violations of securities law prohibiting bribes to foreign government officials.

The Securities and Exchange Commission notified the companies of the probe by letter within the past two weeks, following the release of a Senate report that described transactions handled by Riggs Bank involving the oil companies and the dictator of Equatorial Guinea and his family, spokesmen for the companies confirmed yesterday.

A Senate report on Riggs said oil firms may have contributed to corruption in Equatorial Guinea. (Ronald Edmonds -- AP)

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A grand jury in the District is also investigating Riggs's handling of the Equatorial Guinea accounts.

The Senate inquiry, which included the report and a subsequent hearing, is part of a series of ongoing investigations by Congress, bank regulators and the Justice Department into Riggs Bank and its once-prestigious embassy banking division for long-standing violations of laws designed to prevent money laundering.

The report by the Senate permanent subcommittee on investigations concluded, "Oil companies operating in Equatorial Guinea may have contributed to corrupt practices in that country by making substantial payments to, or entering into business ventures with, individual Equatorial Guinea officials, their family members, or entities they control, with minimal public disclosure of their actions."

The report found that Riggs may have allowed Equatorial Guinea, its largest customer, and the country's dictator, Teodoro Obiang Nguema, to siphon millions of dollars in oil revenue into his personal accounts. Federal regulators also have said Riggs failed to report hundreds of suspicious transactions in more than 150 accounts held by officials of Saudi Arabia. The Senate report also found that the bank helped former Chilean dictator Augusto Pinochet hide millions of dollars from foreign prosecutors.

Marathon Oil, the nation's fourth-largest oil company, disclosed the probe in a filing with the SEC. Jay R. Wilson, a spokesman for Amerada Hess, the nation's fifth-largest oil company, confirmed that it, too, is a subject of the SEC inquiry. Marathon, Amerada Hess and Exxon Mobil Corp., the nation's largest oil company, are the largest oil companies operating in Equatorial Guinea, according to the report.

ChevronTexaco is the second-largest oil company in the United States but has a much smaller presence than the other three in Equatorial Guinea.

A spokesman for Exxon Mobil said it has not been contacted by the SEC in connection with Equatorial Guinea. Spokesmen for Marathon, Amerada Hess and ChevronTexaco said their companies are fully cooperating with the inquiry.

SEC investigators will seek to determine whether the companies broke anti-bribery laws and whether they committed securities fraud by failing to properly disclose disbursements made to a foreign government or official, according to lawyers familiar with the probe who spoke on condition that their names not be used because of the sensitivity of the investigation.

"Amerada Hess has received a letter from the SEC requesting our voluntary cooperation in an informal inquiry into payments made to the government, government officials and persons affiliated with government officials in Equatorial Guinea," spokesman Wilson said. "We will fully cooperate with the SEC."

Marathon, in its SEC filing, said, the SEC "notified Marathon that it was conducting an inquiry into payments made to the government of Equatorial Guinea, or to officials and persons affiliated with officials of the government of Equatorial Guinea. This inquiry follows an investigation and public hearing conducted by the United States Senate Permanent Subcommittee on Investigations, which reviewed the transactions of various foreign governments, including that of Equatorial Guinea, with Riggs Bank. The investigation and hearing also reviewed the operations of U.S. oil companies, including Marathon, in Equatorial Guinea."

Marathon spokesman Paul Weeditz said, "We have conducted our business with full compliance with the law."

The SEC probe is an informal investigation, which means the companies are being asked to voluntarily answer questions, submit records and provide other information. If the SEC staff finds evidence that it needs to investigate further, the next step would be for the agency's five commissioners to approve a formal investigation, which would allow SEC staff to issue subpoenas.

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