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Tuesday, February 2, 2016
A new investigation into Cobalt International Energy’s (CIE) business practices in regards to Angola is underway. Shareholder and consumer rights law firm Schubert Jonckheer & Kolbe LLP launched an investigation into whether certain officers and directors of CIE breached their fiduciary duties to the company and its shareholders by failing to disclose the corrupt nature of its oil business in Angola as well as the true value of the company’s oil wells in that country.
On January 19 the US District Court for the Southern District of Texas upheld securities class action claims against Cobalt and certain of its officers and directors. The class action alleges that during the period March 1, 2011 through November 3, 2014, the defendants misrepresented the company’s relationship with two Angolan entities, Nazaki and Alper, as being its “partners” in developing oil wells, when in fact they were actually sham entities, being used to funnel funds to the head of Angola’s state-owned oil company Sonangol and two top Angolan government officials.
In addition to the above the suit also alleges that the defendants misrepresented that Cobalt had several “large, oil focused high impact wells” in Angola, including its Lontra and Loenga wells, when in fact, the Lontra well was primarily gas based, rather than oil based, and its Loenga well actually contained neither oil nor gas.
The Schubert Law Firm’s investigation concerns when and how much certain of Cobalt’s officers and directors knew or should have known that Nazaki and Alper were sham partners in Angola, used as fronts by Angolan officials to personally enrich themselves, and that its Lontra and Loenga wells in Angola were not, as had been claimed, “large, oil focused high impact wells” after all.
While the law firm says the company misrepresented the Lontra well, statements issued by the company clearly stated that the well flowed condensate and gas during testing and other than the report of drilling intersecting an oil interval no mention of oil flows was mentioned.
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