The Dirty Dozen #3: Statoil ASA

Although, to our knowledge, the Norwegian energy giant, Statoil ASA, has ties to only one terrorist-sponsoring state, Iran, the dubious nature of those activities merits investor concern.  

Statoil’s operations in Iran are focused on the country’s $2.6 billion South Pars gas field.  In coordination with Iran’s Petropars, Statoil is developing offshore Phases 6-8 of the South Pars field and holds a 40 percent stake in those projects. February of 2006 Statoil announced it was going to write off Phases 6-8 of the gas field after investing over $1 billion in develpment, but still maintains a strong investment presence in the country.¹ In August of this year Statoil signed an agreement with the National Iranian Offshore Oil Company to harvest gas in the Kharg region of Iran.²

Of greater concern is Statoil’s agreement to pay Horton Investments, an Iranian investment firm, $15.2 million as part of an effort to advance its business interests in Iran.  In 2003, this agreement became the source of an intense government investigation that led to a raid on Statoil’s offices.  The basis for the controversy was Horton’s ties to Mehdi Hashemi, son of former Iranian President Ali Akbar Hashemi Rafsanjani, who works at the National Iranian Oil Company.  Statoil was investigated for potential bribery and corruption charges.  Although the contract was eventually canceled (after $5.2 million had already been transferred to Horton, however), the scandal led to the resignation of Statoil’s CEO and other senior officials. ³

Statoil’s activities place it on the "Dirty Dozen" list for the following reasons:

• Geopolitical Motives : Statoil describes its investment in Iran as "in line with Norwegian foreign policy, which encourages increased trade relations with Iran." 4  Not only was the company willing to ignore Iran’s position as the world’s leading state sponsor of terrorism, but the company views its operations as directly supporting a government position that undermines the U.S. war on terrorism.
• Revenues : Statoil is involved in projects totaling over $1 billion in Iran.  This translates into both increased revenue flows for an extremely dangerous, terrorist-sponsoring regime and serves as an engine for broader economic growth.
• Moral and Political Cover : When leading global companies such as Statoil partner with terrorist-sponsoring states, it sends a clear message to these governments: Sponsoring terrorism is fine as long as our company makes a profit.  This message undermines U.S. sanctions and international diplomatic efforts.  This message is reinforced when a firm allegedly seeks to bribe leading Iranian officials for contracts in that country.

In conclusion of an investigation into the business practices of Statoil, the U.S. Department of Justice received an acknowledgement from the company that it made bribe payments to an Iranian official to secure valuable oil and natural gas rights in Iran.

Statoil was found in violation of the Foreign Corrupt Practices Act (FCPA) by the D.O.J. and the Securities and Exchange Commission (SEC) for its corrupt payments, keeping false books and records, and keeping inadequate internal controls, as issued in a report by the Department of Justice 13 October 2006. ⁵

3. The Oil Daily, 9/29/03; The Oil Daily, 9/29/03; and International Oil Daily, 9/12/03.

4. Company press release, 10/28/02.

5. Department of Justice press release, 10/13/2006: https://www.usdoj.gov/opa/pr/2006/October/06_crm_700.html