Tuesday, October 7, 2008

2 StatoilHydro executives resign in Libya case

International Herald Tribune

Tuesday, October 7, 2008

OSLO, Norway: Executive vice presidents Tore Torvund and Morten Ruud resigned from Norwegian state-controlled oil company StatoilHydro ASA's top management Tuesday as a result of a probe into possible corruption in Libyan oil contracts.

Concern about the contracts arose a year ago, when Statoil ASA took over the oil and gas unit of Norwegian rival Norsk Hydro ASA to form StatoilHydro. Both companies ordered separate investigations into millions of dollars worth of questionable payments.

Each company turned over its own report to the Norwegian economic crime police on Tuesday, and said it was up to them to determine whether further measures were needed. They both concluded that ethical standards had been breached.

"We have to admit that misjudgments were made in the handling of Hydro's former Libyan portfolio," said Eivind Reiten, president and chief executive of Norsk Hydro. "We need to accept this criticism and use it as a basis for further improvement."

Last October, Reitan resigned after a few days as board chairman of the newly formed StatoilHydro because of the scandal.

The contracts were orginally signed by small Norwegian oil company Saga Petroleum AS, which was taken over by Norsk Hydro in 2000. According to a summary of StatoilHydro's investigation, Norsk Hydro learned of the contracts in late 1999, shortly before completing the takeover.

The agreements covered more thanUS$7 million (€5.13 million) in fees to Libyan consultants as part of a bid to win oil exploration licenses from the Libyan National Oil Corporation, the probe said.

Norsk Hydro was offered two exploration licenses in Libya, but, fearing the contracts were tainted, refused and resolved to withdraw completely from Libya. However, it hired the same consultants who had been behind the questionable contracts to handle the sale of assets in Libya.

"Although Hydro acted correctly and rejected two attractive licenses, we should not have entered into a new agreement with the same consultant to assist the sale," said Norsk Hydro board chairman Terje Vareberg.

Torvund, who was StatoilHydro's vice president for Norwegian exploration and production, and Ruud, who was vice president for projects, both came from Norsk Hydro. The reports did not detail their involvement in the contracts.

They were being assigned other jobs in StatoilHydro, a news release said.

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