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Major probe into oil production-sharing agreements

Publish date: 22 May 2017
Issue Number: 726
Diary: IBA Legalbrief Africa
Category: Malawi

Malawi’s Anti-Corruption Bureau has launched an investigation into whether money irregularly changed hands during the rushed signing of production-sharing agreements on three of Malawi’s petroleum blocks just eight days before the 2014 elections. The probe was requested by a range of Malawian civil society organisations and international NGO Oxfam. In a Daily Maverick analysis, Collins Mtika (for the Centre for Investigative Journalism in Malawi in association with amaBhungane) notes the entire process was fraught with controversy. He points out that shortly before the hotly contested poll in May 2014, Banda’s government entered production-sharing agreements with RAK Gas MB 45 – a subsidiary of the UAE’s state-owned RAK Gas registered in the secrecy jurisdiction of the Cayman Islands. ‘The deal was reached before any proven oil discoveries. According to the records of the Reserve Bank of Malawi, RAK Gas made an unexplained payment of $235 700 to the Reserve Bank’s account for the government’s mines department before the exploration licences were handed out. The unusual wire transfer was picked up and queried by independent consultants LBN Strategies of Cologne, Germany, and Lilongwe-based Resources M&E while examining the Reserve Bank’s accounts as part of a scoping exercise for government.’ Collins notes that the government divided Lake Malawi into six segments for oil and gas exploration. The licences for blocks 4 and 5 were held by RAK Gas MB45, a Cayman Island subsidiary of the state oil company of the Ras Al Khaima Emirate in the UAE. ‘A leaked legal opinion from the Attorney General, Kalekeni Kaphale, in 2015, suggested that some of the licences should be revoked. This was because three of the concessionaires, RAK Gas, Pacific Oil and Hamra oil, were connected by “a thin corporate veil” apparently intended to circumvent the rule that one company could not hold two contiguous blocks.’

Full Daily Maverick analysis

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