/ 19 December 1997

`His main occupation was stealing’

US court documents show how Emanuel Shaw II privatised Liberia’s oil industry to benefit himself, report Mungo Soggot and James Butty

The man charged with reshaping South Africa’s oil industry was accused in a United States court of masterminding a fraudulent scheme to pocket the profits from Liberia’s petrol sales while serving as the country’s finance minister.

Court papers in the possession of the Mail & Guardian offer an astonishing expos of one of the most ambitious money-making schemes pulled off by Emanuel Shaw II while in power under the Liberian dictator Samuel Doe.

The papers also include several blanket indictments of Shaw such as: “It was common knowledge in Liberia, and internationally as well, that his [Shaw’s] main occupation while holding the office of Minister of Finance was to steal as much money as possible from the government and people of Liberia.”

Shaw is now earning at least R3-million a year advising South Africa’s state oil company on its restructuring and privatisation. His controversial appointment by state oil chief Don Mkhwanazi was the subject of a three-day commission of inquiry this week at the Department of Minerals and Energy. The findings are expected to be released next week.

Shaw has also worked for listed fuel company Engen whose chief, Rob Angel, was quoted last week saying Shaw was a “very,very bright man”.

Shaw, one of Doe’s closest confidants, fled Liberia ahead of the dictator’s downfall in 1990, but before he did so he allegedly masterminded an elaborate ploy to rob the impoverished country of about $27-million – in effect the remaining assets the country had abroad.

The court papers establish that Shaw set up a new national oil company in which he was a major shareholder, resigned as finance minister, and then wrote a letter as if he were still finance minister obligating the government to pay his oil company millions of dollars.

The plaintiff in the case – which was heard in New York in 1991 – was the Liberian National Petroleum Company (LNPC), which was set up by Shaw in January 1989 as the “sole and exclusive supplier of petroleum products” to the Liberian market. Shaw had a 60% stake in the company. The US court was told that, after resigning before Doe’s downfall, Shaw wrote a letter to the LNPC as if he were still finance minister, in which he confessed that the government owed the millions to the LNPC.

“In effect Mr Shaw, acting as finance minister, negotiated and signed the two guarantee agreements relied on by plaintiff in order to assure his own company payment of

$20-million,” the US court was told by a representative of the interim government of Liberia, which took over after Doe was executed. The interim government was the defendant in the case.

Shaw’s letter persuaded the British High Court – presumably unaware that Shaw and his accomplices were actually the plaintiffs – to order the government of Liberia to pay up about $8,4-million in August 1990. With Liberia crumbling, no defence was mounted by the country’s government. The British court attached a Liberian Boeing 707 parked at Stansted airport as security and issued an injunction over other Liberian assets.

Shaw obtained an injunction on more Liberian assets in a New York court in 1990 and then tried to pull off the same trick by suing for $19-million in a US district court in New York.

But by then the interim Liberian government was ready to defend itself and Judge David Edelstein of the US District Court of Southern New York dismissed the case. The lifting of the injunction allowed the Liberian interim government to tap about $16-million that had been frozen.

One of the interim government’s key weapons was a detailed affidavit by Liberian justice minister Philip Banks III, which guided the court through Shaw’s ingenious scheme.

Banks, who ran the government’s case, said that in 1986 Shaw, Liberia’s justice minister Jenkins Scott and several other private individuals started plotting to acquire control over the sale of all petroleum products in Liberia. Their plan came to fruition in January 1989 with the creation of the LNPC, which immediately triggered a fuel price rise.

“Although the monopoly power exercised by LNPC inured directly to the benefit of Minister Shaw, who held a substantial ownership interest in LNPC, it came at the direct expense of the Liberian government and people. As soon as LNPC obtained control over the supply of petroleum products to Liberia, the price of those products increased sharply.”

Banks said that the exclusive contract between LNPC and Liberia’s existing national petrol company – the Liberian Petroleum Refining Company – was condemned by the judiciary committee of Liberia’s House of Representatives, which said the agreement “brings in no new investment and will only raise the cost of products for LPRC”. The house declared the contract null and void, Banks said.

Banks explained how Shaw secured himself a 60% stake in the new oil company through a company called Synergy Resources and also siphoned off all the lease payments LNPC was supposed to make to LRPC under the January 1989 agreement. Those payments were made to a company called Global Enterprises, which was owned and managed by Shaw.

Shaw was the LNPC’s chief executive and later appointed as president his trusted associate Mark Wolman. Wolman, a South African, ran a private oil company called Tiger Oil, which was a key sanctions- buster. Shaw acted as a “consultant” for Tiger when he arranged for it an exclusive contract to supply petroleum products to the LPRC in 1987 in a similar scheme to the one he pulled off with the LNPC.

Wolman was brutally murdered in Cape Town last year in what appeared to be an execution by a drug gang. Shaw’s passport was found in Wolman’s briefcase.

The papers, which suggest Doe was in on the scam, explain in detail how Shaw fraudulently wrote a letter in his capacity as finance minister to help LNPC obtain its money. “In short, with the country burning around them, Shaw and Scott decided to plunder the government treasury one more time.”

Banks said Shaw signed two guarantees obligating the government to pay at least $20-million, while Scott wrote a letter waiving the government’s immunity from legal attack abroad. He said Shaw wrote his letter as if he were still finance minister on July 18 1990 even though he had resigned in June 1989.

Scott was fired by Doe on June 27 1990, but wrote his letter waiving sovereign immunity on July 8 1990. “Their letters are nothing more than a flagrant effort to commit fraud on the courts of the United Kingdom and on this court, before the new government in Monrovia could move to block their continuing theft of government assets.”

The Liberian government’s founding affidavit said the English court was obviously hoodwinked. “Of course, the English court had no idea that the authors of these letters were the principals of LNPC, and that they were acting in their own self-interests, contrary to those of the government, because these facts were deliberately kept hidden.”

The US court was also presented with a now famous letter from Shaw to Gus Kouwenhoven, a man known as “the Godfather of Liberia”, in which Shaw documents the various corrupt schemes in which he and Kouwenhoven engaged.

Shaw told the M&G he did not write the letter, saying the Liberian interim government had probably forged it in desperation for money he was holding “in trust for a democratically elected government”. But the bundle of papers includes a handwritten note by Kouwenhoven acknowledging receipt of the letter.

* A leading Dutch newspaper, Parool, carried a prominent news story last Friday linking Shaw and Liberia’s current leader, Charles Taylor, to a notorious drug syndicate. The article claimed that in return for protecting the syndicate, the two politicians received a cut of its profits. Shaw is Liberia’s ambassador extraordinaire, economic adviser to President Taylor, and was recently appointed head of the country’s banking commission.