On October 26, 2009, I sat in the N’Djamena airport in Chad looking over my notes from a field visit I took to study the development effects of the oil pipeline in southern Chad. A gentleman, also a foreigner to Chad who was on my flight to Paris, struck up a conversation with me.
He told me he was a key executive from Griffiths Energy International, a Canadian oil company. He happily informed me that he had just signed a deal with the Ministry of Energy to develop oil in Chad.
While waiting for our flight in Paris we drank coffee and I asked him about his business in Chad. But when I asked for specifics on Chad’s take of the oil revenue from the main oil consortium operating the pipeline, he suddenly became nervous and told me that he had to leave.
Little did I know at the time that Griffiths’ oil deal in Chad included substantial bribe payments made to Chadian diplomats. In particular, Griffiths allegedly agreed to pay Mahamoud Adam Bechir, Chad’s ambassador to the United States and Canada, $2 million cash and $34 million in company shares in exchange for Bechir using his official influence to award the company oil development rights in Chad. Griffiths also allegedly paid Bechir’s wife and other key executives.
In January 2013, a judge in Canada ordered Griffiths to pay a fine of about $10 million for bribing Bechir’s wife.
In the U.S., the DOJ is now seeking forfeiture of $34 million in money and other assets linked to these corrupt payments.
Corruption in Chad is hardly surprising, given its political and economic history as well as the general trajectory of the resource curse — which predicts a negative correlation between resource extraction and economic growth.
Unfortunately, in places like Chad the FCPA may not serve as a sufficient deterrent to corruption where the demand for bribes is high and the potential profits from obtaining business are great. Even the World Bank was ineffective at preventing corruption there. It rushed the pipeline project, ignored important information about the empirical nature of the resource curse, and divorced its economic analysis from Chad’s political and economic context.
Chad reminds us that corruption and development failure have an all too real face, and we in the anticorruption community should not take that lightly.
My paper, “Aligning Incentives for Development: The World Bank and the Chad Cameroon Oil Pipeline,” appeared in the Yale Journal of International Law in 2011 and can be downloaded here. It was awarded the Yale Law School Edward D. Robbins Memorial Prize later that year, given to the best third-year student publication.
Annalisa Leibold is a litigator who previously clerked for the Honorable Judge David Campbell, District Court, Phoenix, Arizona. She also formerly worked on FCPA matters and international arbitration at Hughes, Hubbard, & Reed in Washington, D.C. Annalisa is a graduate of Yale Law School (2011) and received her Bachelors with highest honors in economics and political science from the University of Michigan (2008).