VZCZCXYZ0008
PP RUEHWEB

DE RUEHBE #0624/01 2962053
ZNY CCCCC ZZH
P 232053Z OCT 07
FM AMEMBASSY BELMOPAN
TO RUEHC/SECSTATE WASHDC PRIORITY 0865
RUCNCOM/EC CARICOM COLLECTIVE
RUEHZA/WHA CENTRAL AMERICA COLLECTIVE

C O N F I D E N T I A L BELMOPAN 000624 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT OF ENERGY FOR LINDSAY EINSTEIN 
STATE FOR WHA/CEN -- ROIS BEAL 
 
E.O. 12958: DECL: 10/19/2017 
TAGS: EPET PGOV ECON EFIN ENRG KCOR BH
SUBJECT: (C) CORRUPTION ALLEGATIONS IN THE BELIZE OIL SECTOR 
 
Classified By: Ambassador Robert J. Dieter for reason 1.5d. 
 
¶1.  (C)  Summary:  Several U.S. firms have complained to the 
Embassy that bribes are determining which companies are being 
awarded oil exploration contracts in Belize.  One company 
claims to have recorded several government ministers 
soliciting bribes.  The opposition party has taken the 
information and gone public.  Another political scandal is in 
the works and the businessman who made the recordings tells 
us that he fears for his life.  End Summary. 
 
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Two companies ) same song and dance 
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¶2.  (U)  Lagoon Resources:  In May 2005 the government 
awarded oil exploration company Lagoon Resources (a U.S. 
company) a 2-year Seismic Option Agreement (SOA) to compile 
and evaluate geological data on six blocks of land 
(approximately 1.1 million acres).  The SOA entitled the 
government to the results of the seismic studies.  Lagoon was 
free to apply for a full Production Sharing Agreement (PSA) 
and Lagoon spent USD 100,000 in seismic studies and just 
prior to expiration of the SOA the government requested a 
full update of all materials and work completed. 
 
¶3.  (C)  Lagoon Resources was subsequently the first to 
submit a PSA application to the Department of Geology and 
Petroleum (DGP) for land under the SOA.  During negotiations, 
Lagoon accepted all terms and conditions proposed by the 
government, including increased royalty and tax rates. 
Nevertheless, the DGP awarded the contract to a politically 
connected local company with no prior experience in oil 
exploration.  Lagoon Resources noted that they offered the 
government far higher royalty and production sharing rates 
than those extended to the local company that was awarded the 
PSA, and alleged that the Minister of Natural Resources 
accepted a bribe of USD 1.5 million from the company that was 
awarded the contract.  Lagoon claimed that the money was 
routed to the Minister through the purchase of a cable 
television business in northern Belize.  (Comment:  Embassy 
investigation confirmed the Minister's family recently 
acquired two cable companies.  End Comment.) 
 
¶4.  (C)  Miles Tropical Energy:  Miles Tropical Energy (MTE) 
shared with Econoff a similar experience.  They were awarded 
a SOA and spent nearly USD 100,000 and were asked just prior 
to expiration to submit all work completed to the government. 
 They allege that they were subsequently told that the 
contract would be awarded to "our friends" unless MTE would 
agree to a financial contribution of USD 300,000 to the 
government's re-election campaign.  They alleged that they 
were also told that the "friends" would become 50 percent 
owners of a new company that would then be awarded the 
contract.  The Miles Tropical Energy principal refused the 
offer and lost the contract.  He subsequently told the 
Embassy that he could support his accusations because he had 
electronically recorded all the conversations. 
 
¶5.  (C)  Separately, the Belizean Director of Geology and 
Petroleum (protect) (a "non-political" bureaucrat) confirmed 
to us that the decisions at the department were made, not for 
business reasons, but were predetermined at a higher level 
for political reasons.  When questioned about the companies 
that were actually awarded the contracts he explained that 
they were local companies whose shareholders are strong 
supporters of the governing People's United Party.  He also 
noted that the companies have no experience in the oil 
industry. 
 
¶6.  (C) While the events unfolded the Minister of Natural 
Resources was replaced.  The former minister recently claimed 
that the terms originally offered by the local companies were 
more favorable to the Government than Lagoon's.  He noted 
that he would not have supported the lower rates that were 
eventually accepted.  The agreements were subsequently 
approved by the Cabinet on the more favorable terms. 
 
----------------- 
Political Fallout 
----------------- 
 
¶7.  (C)  On October 17, MTE contacted us stating that digital 
recording materials had been turned over to a local radio 
station.  The MTE representative stated that the recordings 
implicated several government ministers in a bribery scandal 
concerning oil rights.  He also noted that he had been 
threatened and was leaving the country in fear for his life. 
He explained that a USD 100,000 fee had been sent to the 
government by MTE to obtain a new agreement but that he 
thought the fee could be considered a bribe.  Econoff advised 
consulting with legal counsel. 
 
¶8.  (U)  The opposition United Democratic Party (UDP) 
received the recordings and copies of contracts and 
correspondence from both companies and detailed the 
allegations at a press conference called by opposition leader 
Dean Barrow.  In response the CEO (Deputy Minister 
equivalent) of the Ministry of Natural Resources went on 
record to try to explain and justify how the PSAs were 
awarded. 
 
¶9.  (C)  Comment:  As one scandal fades, another rises, and 
the latest is untimely for the government as elections must 
take place before March 2008.  The opposition has thus far 
been unable to take political advantage of the missteps and 
seemed ill prepared at their press conference. 
 
¶10.  (C)  These recent allegations come on the heels of a 
significant drop in Belize's ranking in the Transparency 
International Corruption Perception Index.  While proof is 
often elusive in these sorts of cases and there has never 
been a successful prosecution for corruption here, it is 
apparent that Belize's political elite has a serious and 
growing problem when it comes to ethics and accountability. 
The lack of any sort of campaign finance law leaves the door 
wide open for abuse.  End Comment. 
 
DIETER