The door to the 12th-floor office in a posh Caracas building is unmarked. No corporate logos hang on the walls. The thick carpeting leads to a room piled to the ceiling with file containers. The officers of Occidental Petroleum Corp. in Venezuela are uninviting and have an air of transience. Here today, perhaps gone tomorrow.
Occidental is awaiting a Venezuelan Supreme Court decision on the firm's petition for government payment of $42 million for a service contract awarded to the U.S.-based firm by a state oil firm. President Carlos Andres Perez stopped payment to the firm two years ago when a disgruntled Occidental official charged the company with distributing $3 million in bribes to local politicians and public officials.
Despite statements by a criminal court judge who said that no politician or high public official had received under-the-table payments and the release of persons accused of influence peddling, the government has shown no interests in paying the firm. Occidental retaliated by filing suit and demaning payment.
The issue is whether bribery allegations are sufficient reason to cancel payment to Occidental.
Executives of the Los Angeles-based firm have said that the company "did not direct, authorize or have any knowledge of alleged attempts to bribe Venezuelan officials."
But in February of 1976, President Perez gave the attorney general's office the details of how Occidental allegedly laundered funds through the Bahamas and Panama and the names of those who allegedly had received payoffs in Venezuela.
The U.S. Securities and Exchange Commission assisted local investigators by confirming a $3 million transfer by Armand Hammer, Occidental's chairman of the board, to the account of John D. Askew, a U.S. citizen living in Venezuela who had served as an independent consultant for the firm.
Askew denied that the money was used for bribing officials and insisted that it represented a consultant's fee. Continued investigation, however, uncovered a $106,400 check, drawn on a Nassau bank and paid to the father of Venezuela's representative to the Organization of Petroleum Exporting Countries. This official immediately was recalled from his post.
A similar international maze was traced, leading to accusations that seven persons - including two other lower-level officials and two Americans - had conspired to obtain favors from Venezuelan officials so that Occidental could be awarded contracts. But the seven persons were not charged with bribery, according to a judge, because they failed to achieve the objective of the "conspiracy." Despite the intent, there was no acutal influence over the decision-making process for awarding the contract.
This tale of corporate woe began in 1971 when Occidental was awarded a contract to search for oil in the southern portion of Lake Maracaibo. The contract, written by the Venezuelan Petroleum Corporation (CVP), stipulated payment only if Occidental discovered gas and mineral deposits which could be developed commercially. Commercial classification of the fields, known as "blocks," was determined by the CVP, not Occidental.
Three years after it had been awarded the contracts, Occidental discovered sufficient quantities of gas and oil in "Block E" to deem them commercial, a finding which eventually met with the approval of the CVP.
Block E's commercial status became controversial when the government party was turned out of office and new directors of the CVP took a different stand on the issue. Although the two major political parties tried pointing the finger of blame at each other, they ended their battle by agreeing that only Occidental should bear the brunt of responsibility.
Another three years passed, Occidental weathered numerous investigations by different Venezuelan bodies and, while none of the accused was found guilty, the firm did not get any payment from the Venezuelan government. Unable to settle its claim in the proper administrative channels, Occidental entered its lien in the Supreme Court.
Given the history of investigations and criminal proceedings, the Supreme Court must decide of the firm intended to subvert Venezuelan institutions and, if so, whether "intent" is sufficient cause to deny any payment to the company.
Local representatives of the firm are optimistic. The parent company has expressed confidence in the Venezuelan judicial system, but the political implications of the case are hard to ignore.
A congressional commission found the firm guilty of "irregular activities," in attempting to win its contract to explore areas of Lake Maracaibo.
Although the Venezuelan Supreme Court is a body independent of the legislature and executive branch, the justices are identified with different parties, a reality which does not eliminate possible pressure to make a decision against Occidental.
Venezuelan politicians traditionally have looked at the multinational oil companies with little compassion. Then the bribe allegations first were made against Occidental by a former employee, one politician described the accustations as a "falling out among thieves." After Block E was awarded commercial status - meaning that Occidental would have to receive compensation - one congressman caustically remarked that payment would be a "gift for a poor, little multinational."
With regard to the current status of the Occidental case, one observer noted, "When was the last time that a local court issued a decision in favor of a multinational corporation against the interests of the local government?"