The Washington lawyer for Orin E. Atkins, former chairman and chief executive officer of Ashland Oil Inc., said yesterday that Securities and Exchange Commission civil lawsuits against Atkins and the company will pivot on bribery allegations involving Ashland's loss of at least $25 million that it invested in a chromium mine in Zimbabwe.
The lawyer, Werner J. Kronstein of Arnold & Porter, said in a telephone interview that, based on what the SEC enforcement staff told Atkins on Tuesday, "The case relates only to the chrome mine.
"We think that, on the law and on the facts, we have a very good position," Kronstein said. Ashland and Atkins have denied any improprieties.
In a 2-to-1 vote March 12, the commission rejected a staff recommendation to sue Atkins and Ashland, a diversified corporation based in Kentucky that is the nation's largest independent petroleum refiner, for violating the Foreign Corrupt Practices Act of 1977. But the commission, reportedly heeding a staff appeal, reversed itself on Tuesday by an undisclosed vote. Kronstein said the reversal was the first he had heard of in 20 years of SEC practice.
He also said he expects the SEC, following its usual course, to prepare lawsuits, but then to enter into negotiations under which the suits might be filed simultaneously with consent agreements barring future violations.
On the public record, the most extensive version of the chromium mine episode is in court papers filed by Bill D. McKay, who created and was the first president of Ashland Development Inc., an Ashland Oil subsidiary. McKay is suing the companies and Atkins for "wrongful discharge."
McKay alleged that he was fired for refusing to cooperate with Atkins' proposals to use Ashland Development in "a myriad of projects . . . designed to provide a conduit for the payment of Ashland funds to foreign government officials, and other foreign citizens, through foreign entities. Most of these proposed projects benefited Yehia Omar or his close business associates."
Omar, a central figure in the chrome mine episode, is a former Libyan citizen who had a diplomatic passport from the oil-producing Sultanate of Oman. He once lived in Washington, but now is said to reside in Geneva and Cairo. Atkins' son Charles, in a 1979 letter to Omar, spoke of "the long and profitable relationship between the Atkins and Omar families."
Between 1969 and 1971, Omar received certain Ashland payments, according to McKay. In 1975, these payments led Ashland and four of its officers and counsel, including Orin Atkins, to sign SEC consent decrees prohibiting future use of corporate funds for illegal political contributions or other unlawful purposes, McKay said.
Another key figure in the mine episode is Timothy Landon of London, who was the sultan of Oman's official personal adviser.
In early 1980, Ashland caused Ashland Development -- through a Bermuda corporation acquired for the purpose -- to pay the $25 million to a Liechtenstein entity for a 75 percent interest in the mine, McKay said. Atkins claimed the transaction would help Ashland obtain crude from Oman, McKay said.
He said that the remaining 25 percent of the mine venture was retained by Bolac, a separate Liechtenstein entity formed by Omar "to shield the identities of the parties involved in the mining operation. Yehia Omar and Landon were among the beneficial owners of Bolac."
McKay alleged that Omar received about $5 million of Ashland's initial payment of $8.3 million in April 1980, and that Omar and Landon "may also have shared" in semiannual payments made into 1982, when Ashland abandoned the property.
McKay said he flatly refused to participate in the payments, calling them part of a "circle of funds" from Ashland to Yehia Omar back to the Atkins family. He also called the payments "without merit" and violations of the Foreign Corrupt Practices Act and the 1975 consent decrees because "there was ample reason to believe that both Yehia Omar and Landon were officials of the Government of Oman."
Ashland's board retained Pittsburgh attorney Charles J. Queenan Jr. to investigate. Relying partly on a Scottish solicitor, Queenan concluded that Yehia Omar and Landon were not Oman officials under the U.S. act and that the antibribery law consequently hadn't been violated. His report went to Ashland in 1981. The SEC learned of it in 1983.