Niko Resources has curtailed spending in Bangladesh in recent years because of the dispute over its well blowout in 2005 that resulted in the government withholding $27 million in payments.
CALGARY — Bribes made by Niko Resources Ltd. have cast a "dark stain," a judge said Friday afternoon, while accepting a $9.5-million negotiated penalty against the company.
"It is an embarrassment to all Canadians," said Justice Scott Brooker after Niko pleaded guilty in Court of Queen's Bench to bribing a Bangladeshi minister with the use of a vehicle and a trip to Calgary and New York in 2005.
Niko was also placed on probation for three years under an agreement between Niko and the Crown prosecutor. It agreed to pay a fine of $8.26 million plus a 15 per cent victim surcharge.
The Calgary-based company pleaded guilty to one charge under Canada's Corruption of Foreign Public Officials Act, laid after a six-year RCMP probe.
An agreed statement of facts shows the bribes were paid to junior energy minister A.K.M. Mosharraf Hossain following explosions at a Niko drilling site in 2005, at a time when Hossain was to determine what compensation should be paid to villagers.
According to the statement, a new Toyota Land Cruiser, purchased by Niko, was delivered to Hossain's house.
Hossain and his family also travelled to Calgary to taken in the 2005 Gas and Oil Expo event and to New York to visit family at the expense of Niko, the statement says.
Hossain was fired when the transactions were revealed in Bangladesh a short time later.
Niko stock traded as low as $61.55 on the Toronto Stock Exchange Friday before recovering to close at $62.85, off $2.07. The company's shares have fallen about 40 per cent this year after posting a 52-week high of $114.71 last August.
Niko's shares have been hit by uncertainty over its operating partner's plans for the prolific offshore Indian gas field that provides most of its production, about 177 million cubic feet per day. Since 2002, it has held a 10 per cent working interest in a joint venture with India-based Reliance Industries in the D6 block off the east coast of India.
In 2009, the company announced the RCMP was investigating allegations that Niko or one of its subsidiaries "may have made improper payments" to government officials in Bangladesh.
That same year, anti-corruption watchdog Transparency International called Canada a "laggard" in enforcing an international anti-bribery convention devised in 1997 under the Organization for Economic Co-operation and Development.
To that point, only one Canadian firm, Hydro Kleen of Red Deer, Alta., had been convicted. It was fined $25,000 for bribing a U.S. customs agent.
In a morning note to investors, Raymond James analyst Rafi Khouri said he is maintaining his "underperform" rating for Niko and lowering his 12-month price target to $55 per share from $63.
He recommended shareholders switch to other international stocks with better prospects.
"While we do not expect that issues such as bribing foreign officials to have any impact on the potential presence (or non-presence) of oil and/or gas in any of the company's lands, we do view this as another negative data point on the company's credibility following the recent 24 per cent reduction in reserves," he said.
"As such, we expect that capital markets will further move Niko into that famous 'show me' category, especially given current market sentiment . . .
"We are thus opting to increase our risking of the company's exploration lands to reflect our expected further negative market sentiment on the back of this guilty plea, with a goal to revisit our risking as the company gets closer to spudding its high impact Indonesia wells later this year."
Khouri is the only analyst in a Bloomberg survey of 14 to advocate selling the stock — 10 suggest buying, three have it as a hold and the consensus target price of 13 analysts is $104.69.
Niko listed production from Bangladesh in the quarter ended Dec. 31, its fiscal third quarter, at 71 million cubic feet of natural gas equivalent per day.
It has curtailed spending in the country in recent years because of the dispute over its well blowout in 2005 that resulted in the government withholding $27 million in payments.
According to its third-quarter report, the dispute remains in legal limbo.
Niko also has oil and gas exploration operations in Pakistan, Kurdistan, Indonesia, Madagascar and Trinidad and Tobago.
rpenty@calgaryherald.com
"It is an embarrassment to all Canadians," said Justice Scott Brooker after Niko pleaded guilty in Court of Queen's Bench to bribing a Bangladeshi minister with the use of a vehicle and a trip to Calgary and New York in 2005.
Niko was also placed on probation for three years under an agreement between Niko and the Crown prosecutor. It agreed to pay a fine of $8.26 million plus a 15 per cent victim surcharge.
The Calgary-based company pleaded guilty to one charge under Canada's Corruption of Foreign Public Officials Act, laid after a six-year RCMP probe.
An agreed statement of facts shows the bribes were paid to junior energy minister A.K.M. Mosharraf Hossain following explosions at a Niko drilling site in 2005, at a time when Hossain was to determine what compensation should be paid to villagers.
According to the statement, a new Toyota Land Cruiser, purchased by Niko, was delivered to Hossain's house.
Hossain and his family also travelled to Calgary to taken in the 2005 Gas and Oil Expo event and to New York to visit family at the expense of Niko, the statement says.
Hossain was fired when the transactions were revealed in Bangladesh a short time later.
Niko stock traded as low as $61.55 on the Toronto Stock Exchange Friday before recovering to close at $62.85, off $2.07. The company's shares have fallen about 40 per cent this year after posting a 52-week high of $114.71 last August.
Niko's shares have been hit by uncertainty over its operating partner's plans for the prolific offshore Indian gas field that provides most of its production, about 177 million cubic feet per day. Since 2002, it has held a 10 per cent working interest in a joint venture with India-based Reliance Industries in the D6 block off the east coast of India.
In 2009, the company announced the RCMP was investigating allegations that Niko or one of its subsidiaries "may have made improper payments" to government officials in Bangladesh.
That same year, anti-corruption watchdog Transparency International called Canada a "laggard" in enforcing an international anti-bribery convention devised in 1997 under the Organization for Economic Co-operation and Development.
To that point, only one Canadian firm, Hydro Kleen of Red Deer, Alta., had been convicted. It was fined $25,000 for bribing a U.S. customs agent.
In a morning note to investors, Raymond James analyst Rafi Khouri said he is maintaining his "underperform" rating for Niko and lowering his 12-month price target to $55 per share from $63.
He recommended shareholders switch to other international stocks with better prospects.
"While we do not expect that issues such as bribing foreign officials to have any impact on the potential presence (or non-presence) of oil and/or gas in any of the company's lands, we do view this as another negative data point on the company's credibility following the recent 24 per cent reduction in reserves," he said.
"As such, we expect that capital markets will further move Niko into that famous 'show me' category, especially given current market sentiment . . .
"We are thus opting to increase our risking of the company's exploration lands to reflect our expected further negative market sentiment on the back of this guilty plea, with a goal to revisit our risking as the company gets closer to spudding its high impact Indonesia wells later this year."
Khouri is the only analyst in a Bloomberg survey of 14 to advocate selling the stock — 10 suggest buying, three have it as a hold and the consensus target price of 13 analysts is $104.69.
Niko listed production from Bangladesh in the quarter ended Dec. 31, its fiscal third quarter, at 71 million cubic feet of natural gas equivalent per day.
It has curtailed spending in the country in recent years because of the dispute over its well blowout in 2005 that resulted in the government withholding $27 million in payments.
According to its third-quarter report, the dispute remains in legal limbo.
Niko also has oil and gas exploration operations in Pakistan, Kurdistan, Indonesia, Madagascar and Trinidad and Tobago.
rpenty@calgaryherald.com
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