Did King renew Kenny’s Grynberg contract?

The story so far: While bathing with his girlfriend in the sea at Dauphin one morning in 1999, a flu-fever-afflicted Earl Huntley discovered on his feet and hands some slimy goo that he quickly associated with imagined nearby oil deposits. A few months later, assisted by Saint Lucia’s Washington-based ambassador Sonia Johnny, Huntley located a made-to-order “small oil company” owned by Colorado billionaire Jack Grynberg, as it turned out, no stranger to the Caribbean. Already he had signed oil-exploration deals with Grenada (1996) and St Vincent (1999). Indeed, by the time Grynberg met his business partner in Saint Lucia his relationship with Grenada was already on the rocks, soured to the extent that he and that island’s government were well on their way to the International Center for Settlement of Investment Disputes, to say nothing of courts in London and New York.

By Huntley’s documented account, one look at the black cliffs of Dauphin and its similarly colored beach sand was all it had taken before Grynberg confirmed his hunch. But before drilling operations could get underway, the oil prospector would need official permission—normally a drawn-out frustrating process. Doubtless his experiences in Grenada, Africa and elsewhere would have taught Grynberg to appreciate the vital importance of well-connected friends such as Earl Huntley, who, notwithstanding his Mittyesque proclivities, was an influential permanent secretary at external affairs. For a foreign entrepreneur on the prowl for oil, the closest thing to a gusher!

Despite that by official account there is nothing in the records of Cabinet indicative of what transpired during Kenny Anthony’s meetings with Jack Grynberg, it appears they somehow avoided the retarding bureaucracy normally associated with government projects in Saint Lucia. By Huntley’s personal account, shortly after he introduced the two gentlemen, Grynberg submitted to the prime minister a draft agreement—referenced in correspondence from the office of attorney general Petrus Compton.

A letter signed by the AG and dated 1 February 2000, reads as follows: “I received the revised agreement on 28 January, 2000 and reviewed same with reference to the government of Grenada/RSM agreement and the original draft prepared for Saint Lucia. I am of the view that, having regard for the subject matter of this agreement, Saint Lucia would be better served by having a specialist petroleum lawyer review the same and advise. There are matters contained in the agreement which can only be properly appreciated by one familiar with the industry, its standards and practices.” (Did the AG know then that just two weeks after signing a 1996 contract with the Grenada government Jack Grynberg had promptly invoked its force majeure clause—on the basis of undetermined marine boundaries?)

More than a decade later, and strictly “in defense of [his] integrity and good name,” Kenny Anthony—now leader of the opposition in parliament—revealed on TV that at his AG’s urging Saint Lucia’s draft agreement with RSM was expertly assessed by the Commonwealth Secretariat in London. This was how he recalled the story on TV: “The basic and indisputable facts and considerations are as follows. As Mr Huntley has explained, when the draft agreement to allow the preliminary exploration [sic] the document was sent to the Commonwealth Secretariat to review and advise, since Saint Lucia had neither experience nor expertise in such matters. This can be confirmed with the former attorney general Petrus Compton.”

It is unclear whether the former prime minister was saying Petrus Compton stood ready at any time to confirm the unavailability in Saint Lucia of a particular expertise or that the AG would readily endorse the assertion that the draft agreement was in fact sent to the Commonwealth Secretariat for review and advice. As for Huntley, this is how he recalled “the indisputable facts and considerations”:

“Grynberg wanted to sign an agreement with the government of Saint Lucia for a license to explore for oil offshore Saint Lucia. I introduced him to Prime Minister Anthony and explained to him what had occurred. The prime minister agreed to grant the license and Grynberg subsequently submitted a draft agreement for signature. The then attorney general Petrus Compton suggested that the Commonwealth Secretariat vet the draft. After the Commonwealth Secretariat approved the draft, Prime Minister Anthony and Jack Grynberg signed the agreement on 28 March 2000, granting RSM Corporation, Grynberg’s company, the rights of exploration for oil and gas in Saint Lucian waters.”
Alas, there is nothing relating to Kenny Anthony and Earl Huntley’s assertion in the files of the Saint Lucia government or, for that matter, in the files of the secretariat’s Special Advisory Unit. Nevertheless, both gentlemen have repeatedly assured Saint Lucians it was only after the Commonwealth Secretariat approved the agreement that Kenny Anthony and Jack Grynberg affixed their signatures to it.

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The Kenny Anthony-RSM arrangement first came before the public during the 2009 House budget debate. Yes, almost a decade after it was signed! The MP for Central Castries revealed during his presentation that the previous prime minister had signed a contentious agreement with an American investor that would for several years stand in the way of future explorations of Saint Lucia’s marine boundaries. There was no reaction at the time from Kenny Anthony. But just when it seemed the issue was forgotten, there it was again at the most recent budget debate grabbing center stage.
It turns out the matter had been permitted to sleep undisturbed in the interim only for lack of evidentiary details. As Earl Huntley has more than once stated, he had been under strict orders to keep the arrangement between Kenny Anthony and the Colorado oilman secret. Indeed, in a published account this was what Huntley asserted: “Prime Minister Kenny Anthony requested that I keep the matter absolutely confidential until such time as the exploration for oil actually began and yielded results. His reasoning was that he did not want to unduly excite the population . . . The prime minister also authorized me to keep all correspondence relating to the project. Consequently, after I left the ministry on a posting to New York as ambassador to the UN, I retained the files and have continued to date to be the contact between Grynberg Petroleum and the government of Saint Lucia and Saint Lucia’s coordinator of the project.”

By “to date” Huntley referred to 2009, three years after Kenny Anthony left office, more than three years after Huntley retired from the public service. The former has never commented publicly on Huntley’s alleged oath of secrecy.

As for his position as project coordinator, considering his lack of expertise in the field, how interesting that Huntley would by definition be given responsibility for the harmonious drilling for oil beneath Saint Lucia’s seabed. At the time of his engagement Huntley was still attached to external affairs, a ministry not normally connected with explorations, whether for geothermal energy or for snake oil.

I should point out that the earlier-quoted reference to Huntley’s vow of secrecy was taken from his 2009 account in the Voice, an account that received the highest validation during Kenny Anthony’s most recent televised address to the nation, when the former prime minister credited Huntley with not only explaining “the background” to the oil deal but also with exposing “Richard Frederick’s calculated effort to deceive the public and injure my reputation.”

Important details of the Grynberg arrangement remain largely secret, despite the current government’s continuing efforts at uncovering them. In a letter dated 3 December, 2007—barely a year after the Kenny Anthony administration left office—Earl Huntley hand-delivered a letter from RSM Production Corporation to the new prime minister Stephenson King, signed by its president Jack Grynberg and centered on a “proposed second amendment to the Petroleum Production License between Saint Lucia and RSM Production Company.”

The letter reads: “In further reference to my October 23, 2007 letter with regard to the above-indentified license and your conversation with our representative Mr. Earl Huntley on Monday, 5 November 2007, the following is to clarify our position:

“1) We have provided our seismic data to Saint Lucia in the past. We are enclosing another paper copy and a CD of our seismic data for your records.
“2) Pursuant the terms of the Proposed Second Amendment to the Petroleum Production License submitted on October 23, 2007, as stated in this proposal, our position is that we are still in a force majeure situation. The boundary between Saint Lucia, Martinique and Barbados are still in need of a resolution. This is a matter that requires negotiation and resolution between Saint Lucia, Martinique and Barbados. Until Saint Lucia’s boundary lines are firmly established between these countries we remain in a force majeure situation.
“3) It is our understanding that Saint Lucia is contemplating of having additional seismic work done by another company. We feel this not a benefit to Saint Lucia as this will take substantial time to shoot, process and interpret the seismic. We have already completed the seismic work, as you will see from the enclosed seismic data. I am having my trusted associate, Mr Earl Huntley, hand deliver this letter to you. We have reached a similar agreement with St. Vincent and the Grenadines.”

On 10 April 2008, the government of Saint Lucia, via a letter signed by the foreign affairs secretary Anthony Severin, forwarded to Jack Grynberg the following:
“I refer to your letters dated 3 December, 2007 and 14 March 2008. The government would appreciate clarifications from you on the issues below outlined. The government’s ability to assess the situation has been limited because your purported representative Mr. Earl Huntley appears to be in sole possession of its files concerning the agreement referred to in your letters. While the government has commenced proceedings to recover those documents, your assistance would be greatly appreciated in this regard.
“From the available documentation, it appears the agreement was set to expire in March 2004, although it may have been extended to March 2007. Your 3 December letter suggests extending the Initial Exploration Period for a further three years. The letter also states, however, that RSM has “already completed the seismic work,” which seems to indicate that RSM has performed the work envisaged in the Initial Exploration Period. In addition, your 14 March letter attaches a rental check for the Initial Exploration Period, although this period appears to have expired with no extension having been agreed to. Thus, on the one hand it appears the agreement’s term has expired and at the same time, if that were not the case, it is unclear what the rationale would be for a further extension of the Initial Exploration Period. Your clarification on this situation would be appreciated.

“Another issue that arises from your 3 December 2007 letter is the boundary situation. As you will be aware, the boundary between Saint Lucia and Martinique has been demarcated. With respect to other neighboring territories (and in particular Barbados), there is no existing boundary dispute that would impede offshore petroleum operations. Accordingly, and in view of the fact that you have carried out offshore seismic work, it is unclear what basis there is (or was) for deeming the agreement to be in force majeure. Please clarify this issue as well.”

The letter ends on a particular note of concern: “Press reports have been circulating to the effect that RSM may have farmed out all or part of the agreement with Saint Lucia. Please advise whether this is so.”

Severin also invited Grynberg to “please clarify exactly what work has been carried out by RSM pursuant to Article 4.1 of the agreement and what expenditures on this work have been. Please provide an update on the status of matters referred to in Articles 5.1, 6, 17.4, 19.3 and 20, unless such information is already contained in the files to be provided by Mr. Huntley. I look forward to hearing form you as soon as possible. In the meantime, checks dated 22 October 2007 in the amount of US$26,089 and 13 March 2008, also in the amount of US$26,089 are hereby returned without prejudice.”

On 18 February 2009, RSM wrote to the Ministry of External Affairs the following: “Reference is made to your letter of 15 December 2008. We respectfully disagree that there is no boundary dispute.
“1) At the request of the former prime minister Stephenson King and your Minister of Finance the Honorable Kenny D. Anthony and His Excellency Dr. Ralph Gonsalves, prime minister of St Vincent and the Grenadines, I was charged to resolve the boundary dispute between Saint Lucia and St Vincent and the Grenadines. I did that and that dispute no longer exists. [Obviously, the “former prime minister” that Grynberg refers to is not Stephenson King. Certainly Kenny D Anthony never served in the King administration as Minister of Finance!]
“2) There is, however, a dispute between Saint Lucia and Martinique. For your information, attached please find a copy of the boundary dispute. That dispute is not resolved to date.
“3) There is a dispute between Saint Lucia and Venezuela as to the western boundary and that dispute has not been resolved because Venezuela is claiming an area west of Saint Lucia that is much greater than that to which you are entitled.
“4) The boundary between Saint Lucia and Barbados has not been established and it is very important for Saint Lucia’s geologic province.
“Your suggestion that it was RSM’s responsibility to ‘promptly notify the government’ that force majeure no longer prevented RSM from carrying out its obligations is not admitted but, even if true, the conditions of force majeure remain because of the many boundary disputes outlined above. RSM has never believed or alleged that the agreement itself is suspended. Force majeure suspends only the obligations of RSM under the agreement and, in order to show good faith, RSM has submitted rental payments and undertaken such work as was possible given the boundary disputes that existed and still exist. We urge the Saint Lucia government to resolve it.

“We regret that your government intends to initiate competitive bidding and respectfully remind you that under the agreement, Article 26, any dispute shall be resolved amicably, but if it cannot be resolved the dispute ‘shall be submitted for settlement by arbitration to the International Center for Settlement of Investment Disputes (ICSID) . . .’ We intend to rely on this clause of our agreement.”

Recently, both the former prime minister Kenny Anthony and his lawyer for all seasons Anthony Astaphan went on the public record with their apparently irreversible conviction that the King government has no obligations to RSM and can simply walk away from the contracts that Kenny Anthony signed and renewed when he was prime minister.

To quote him on the subject: “As in the other islands, Grynberg Petroleum was only granted a license to explore and determine if Saint Lucia had deposits of oil, at Grynberg’s own expense. After an initial four-year period, the license was renewed for a further two years and thereafter for an additional year ending in 2007. If the license ended in March 2007 and renewals had to be obtained from the government even for Grynberg to continue, how then can the UWP administration say the seabed of Saint Lucia was given away. In addition the agreement provided that consideration would be given to an extended license to extract oil only if oil were discovered in Saint Lucia. Furthermore, this was subject to many safeguards.” What “other islands” granted Grynberg a license?

As earlier noted, the billionaire Grynberg obviously sees the matter differently and is prepared to take it before the ICSID. Which brings us to the now famous fallout between the Colorado oilman and the government of Grenada, carefully referred to by Kenny Anthony in his most recent televised address to the nation: “In time certain disputes arose with the government of Grenada and Grynberg Petroleum. The government decided not to renew or extend an exploration license to Grynberg Petroleum. The company sued, argued on the same ground of force majeure raised in Saint Lucia. In fact, Grynberg lost. The same principle applies to the interpretation of the agreement with Saint Lucia. So it is disingenuous to say Saint Lucia is disadvantaged by any binding license extended for a period of years.”

And what does the signed agreement say on the question of force majeure and its relationship with the contract itself? Consider this clause: “Failure on the part of the company to fulfill any of the terms and conditions of this agreement shall not be treated as breach of this agreement in so far as the failure arises from force majeure and if, as a result of force majeure, the fulfilment by the company of any terms or conditions of this agreement is delayed beyond the period fixed or allowed for is fulfillment, the period of the delay shall be added to the duration of this agreement and to the period so fixed or allowed.”

Moreover: “Where a force majeure situation continues for more than 30 consecutive days the parties shall meet forthwith in order to review the situation and to agree to the measures to be taken for the removal of the cause of force majeure and for the resumption, in accordance with the provisions of this agreement, of the performance of the obligations hereunder.” As for the actual definition of force majeure in relation to the agreement: “Any event beyond the reasonable control of the party claiming to be affected by such event which has not been brought about by its instance and which has caused such non-performance or delay in performance.”

How sound, then, is Kenny Anthony’s stated opinion that the King government can simply walk away, without even the need for legal advice?

Consider the official March 2009 account from the Global Arbitration Review: “An oil investor who intervened in Grenada’s sea boundary negotiations without authority and then prosecuted the state at the ICSID has lost its case and been strongly criticized by the tribunal. Jack Grynberg, CEO of the family-owned RSM Petroleum Corporation, started the proceedings after Grenada refused to grant his company a license to explore for oil and gas in the sea between the three countries, including some contested waters. He asked that the tribunal order Grenada to grant the license or pay RSM damages estimated at US$500 million.”

So much for Kenny Anthony’s recollection. Contrary to his statement on TV, the Grenada case never centered on a decision by the government “not to renew or extend an exploration license to Grynberg Petroleum.”

The Global Arbitration Review underscores the point: “Unusually for an ICISD claim, Grynberg relied on a contract, not an investment treaty. He said a 1996 agreement with Grenada entitled RSM to the license. The tribunal said that, even allowing for a seven-and-a-half-year period when the contract was suspended for force majeure, RSM had missed a 90-day deadline for submitting the license application.”

In black and white, the tribunal’s record supplies indisputable proof that Grynberg never had a license to explore for oil in Grenada—contrary to Kenny Anthony’s assertion and unlike the oilman’s situation in Saint Lucia where, according to Kenny Anthony himself, Grynberg was handed a license soon after Earl Huntley discovered oil on his feet and hands. In any event, a large part of the ICISD’s decision focused on Grynberg himself after Grenada countered that his behavior amounted to a breach of contract.
Still from the Global Arbitration Review: “RSM invoked force majeure two weeks after signing the agreement with Grenada, arguing that the state’s unsettled maritime boundaries prevented exploration. It eventually applied for the license in 2004, saying that although the boundaries remained unresolved, it believed it could proceed. During the seven-and-a-half years when the contract was suspended, Grenada initially asked Grynberg to participate in boundary negotiations with Venezuela as a special envoy. However the US investor lost his place on the team after just one meeting, following objections from Venezuela.

The tribunal found that Grynberg later started unilateral talks with Venezuela’s state-run oil company PDVSA and the Trinidadian government, in an attempt to resolve the boundary disputes, despite Grenada’s request that he stay away.

“The tribunal accepted expert advice from former Shell employee Paul Tauecchio, appointed by Grenada, that it is highly unusual for a private company to intervene in negotiations over international boundaries. The expert said this can only lead to a conflict of interest because the operator’s commercial interests will almost invariably differ from the host government’s political and diplomatic interests. Under its contract with Grenada, RSM had a duty to act responsibly to remove any cause of force majeure. However, the tribunal said Grynberg’s approach was ‘secretive, unilateral, unauthorized and crude.’ ”

According to Global Arbitration Review: “The tribunal found the US investor incorrectly told Grenadian authorities that PDVSA agreed to the boundary being drawn along the median line between the countries—which the tribunal called wishful thinking at best—and without any consent, Grynberg had named Grenada as a co-claimant in ICSID and UNCLOS proceedings he had launched against Trinidad & Tobago. Neither of the cases went ahead. The tribunal noted that one of Grynberg’s interventions was adverse to Grenada’s interests when he commissioned technical maps that favored Trinidad & Tobago to assist in the negotiations, because he said he wanted ‘a speedy resolution to the boundary demarcation.’

“Despite the findings, the tribunal declined to award Grenada damages, noting that Grynberg’s conduct did not cause the failure of the boundary negotiations. The tribunal said these stalled mainly because of Venezuela and Trinidad & Tobago’s entrenched views that their sea boundaries should fall at the natural limit of their continental shelves.”
In his earlier cited TV address, Kenny Anthony, perhaps not surprisingly, touched on “allegations of corruption made by Grynberg against a minister in the then Grenada government.” For some of his supporters, this apparent low blow is far more important to Saint Lucia than whether there is truth in what has been spoken and written about Kenny Anthony and Jack Grynberg.

This is how The Global Arbitration Review referred to the bribery allegation: “In a lawsuit filed in 1996 relating to the agreement, Grynberg and RSM made allegations of bribe solicitation against a then government official before a US court, also claiming that the official had accepted bribes from a Russian-backed oil company to break Grenada’s contract with RSM. Last month the court rejected Grynberg’s lawsuit. In the award the tribunal said it had not been asked to rule on a bribery allegation but it did not accept RSM’s personal criticisms of the government official in arbitration.”

Moreover, it turns out that a New York court dismissed RSM’s bribery allegations, on the grounds that RSM failed to tender “the material elements necessary to sustain recovery under any of the claims asserted. In particular, the court held there was not enough evidence to make out the allegations of bribery.” In his 19 February, 2009 judgment, this is what Judge Evan Wallach wrote: “There are no facts alleged with respect to when and where the bribe took place, how bribe monies were ultimately furnished or, most importantly, whether payment of the bribe even predated Grenada’s decision to deny RSM’s license application.”

Grenada officially terminated its agreement with RSM in 2005. Its maritime borders with Venezuela and Trinidad & Tobago remain unsettled. The former deputy prime minister of Grenada recently revealed his country’s legal fees in the Grynberg matter amounted to over ten million dollars, three million dollars of which remains outstanding.
At the time of the Grenada dispute RSM was also pursuing a claim against the Central African Republic that concerns the company’s attempts to revive an oil exploration agreement after suspending it because of force majeure. Did none of that matter to Kenny Anthony in 2000 when, acting on Huntley’s hunch alone, he granted Grynberg a license to explore for oil beneath Saint Lucia’s seabed?

How correct was the former prime minister when he stated on TV that legal advice sought by the King government in relation to Grynberg’s claims amounted to “a colossal waste of money?” Is Kenny Anthony also correct when he says, contrary to the expressed opinions of Grynberg’s lawyers, that “the Grenada precedent” makes walking away from the Saint Lucia-RSM arrangements a piece of cake? What about 24.3 of the agreement, which states—and to which Kenny Anthony affixed his signature—“where a force majeure situation continues for more than 30 days, the parties shall meet forthwith in order to review the situation and agree on the measures to be taken for the removal of the cause of force majeure and for the resumption of the performance of the obligations thereunder?” In the nation’s best interests, did our then prime minister meet with Grynberg when he sought cover for his inactivity behind force majeure? Does any of this apparent lack of due diligence remind of another costly fiasco involving foreign investors and a local hotel that went bust soon after it opened? For how much longer will Grynberg maintain his strangle hold on this country’s maritime boundaries?

Then there is the matter of Grynberg’s “trusted associate Mr Earl Huntley.” What did he mean when he stated in 2009: “I retained the files and have continued to date to be the contact between Grynberg Petroleum and the government of Saint Lucia, and Saint Lucia’s coordinator for the project?” Did the vow of secrecy also extended to Cabinet ministers?

Shouldn’t the people of Saint Lucia know the details of early discussions between Grynberg and Huntley, before he introduced the American oilman to our then prime minister’s embrace? Did Huntley strike a deal with Grynberg before taking him to first meet with Kenny Anthony? Why was Huntley receiving checks made out to the government of Saint Lucia in 2007, when already he had retired from the public service? On whose authority did he pass on Grynberg checks to the accountant general? Was Huntley representing both the King government and RSM when he corresponded with the accountant general on 22 March 2009? What precisely is his current relationship with RSM? Why has Kenny Anthony chosen to dwell on the role of the finance minister in all of this when in fact his agreement with Grynberg required royal checks—if and when oil from the Saint Lucia seabed went on the market—be made out to the Minister of Planning?

If I may be permitted a (teeny) mischievous note: Considering who is the current Minister of Planning, shouldn’t Richard Frederick be saying thank-you to Kenny Anthony—instead of beating him over the head on the royalties issue? Or is the royalty-checks brouhaha based on the fact that St Lucia has never sold anything on the oil
market that might have earned royalty checks, neither for Kenny nor for his pit-bull successor at the planning ministry (LOL)?