Prime Minister's Address to the Nation on the Grynberg Affair
Address to the Nation
Prime Minister Stephenson King
21st July 2011
My fellow Saint Lucians, ladies and gentlemen:
Since the 2011 Budget debate, understandably, incensed Saint Lucians at home and abroad have been imploring me to address the confusion surrounding the issue that has become known as The Grynberg Affair, more than a few misconstruing my relative silence on this very disturbing matter.
Let me say now, that it had been my earnest hope that others closely associated with the details would have seen the need to volunteer such information in a united, bipartisan, national effort, at undoing whatever harm that may already have been done to our good name regionally and elsewhere.
Sadly, my hopes were recently dashed when, instead of the volunteered information I anticipated, an injunction was sought, that if allowed by the courts will serve only to further conceal the truth, possibly at great cost to our island nation.
You will no doubt recall that news of a contractual arrangement between the previous Prime Minister and a Mr. Jack Grynberg, the CEO of RSM Production Corporation, was first brought to public attention by one of my ministers during his 2009 Budget presentation.
Little did any of us realize at the time that what we had accidentally discovered about the Denver, Colorado Company’s relationship with Saint Lucia was only the tip of the iceberg.
Since then, and thanks to much investigative work by Government officials, further details of the Grynberg arrangement have come to light, that are as unprecedented as they are alarming.
Not least of these was the calculated determination to keep the RSM transaction secret, on the expressed basis that should things not work out as envisaged by the principals, the people of this country, to whom we have sworn to maintain transparency and accountability in all aspects of governance, would be none the wiser. Indeed, it would appear that not even the Cabinet Ministers of the period were aware of the arrangements.
Of course, bearing in mind the genesis of this particular misadventure, some of us may be excused, if we should speculate that the real purpose of the shroud of secrecy was to spare certain individuals possible embarrassment, at the very least.
All the same, a somewhat convenient personal account published in one local newspaper by a former Permanent Secretary in the External Affairs ministry served as the inadvertent starting point for an official search for the truth that had remained concealed for almost ten years.
From reading the account, we discerned that some time before 1999 the then Permanent Secretary had; in his private capacity, contacted a Washington-based representative of the Government of Saint Lucia for assistance in locating a small operator in the oil-drilling business.
He evidently convinced the official that he had good reason to believe there were deposits of oil at Dauphin. Following a sea bath in the area, he said, he and his female companion had discovered on their feet, hands and swimsuits what they determined on the spot to be oil.
From all we have been able to establish, Mr. Jack Grynberg, who in 1996 had entered into an agreement with the government of Grenada—and had already engaged that Government in a breach of contract dispute by the time of his first visit to Saint Lucia—quickly confirmed the Permanent Secretary’s hunch after viewing the black beach sand at Dauphin.
After several more visits to Saint Lucia for private discussions with the man he was soon to refer to as “my trusted associate,” the Colorado oil man was introduced to the then Prime Minister of Saint Lucia.
Not long afterward he was granted a license to explore for oil beneath the Saint Lucia seabed.
My government, despite an exhaustive search through the files of Cabinet and the various Ministries, was unable to find any documents relating to the arrangements hinted at, in the earlier mentioned newspaper account. Finally, we had little choice but to solicit Mr. Grynberg’s assistance in persuading the former Permanent Secretary to hand over the official documents in his possession.
It turned out that even when he moved to New York to take up the position of UN Ambassador, he had taken with him everything pertaining to the oil-exploration project.
Not until December 2008 did my Government receive, from the former PS and UN Ambassador, a partial copy of the official file relating to the agreement between the Government of Saint Lucia and RSM Production Corporation.
The repository of the secret information was by then two years retired from the public service and, curiously, was being referred to in RSM’s correspondence as a “trusted associate.”
Meanwhile, there were the cheques from RSM made out to the Government, that were supposed to be agreed payments for the annual rent of the Saint Lucia seabed, all of which were returned to RSM. My Government had already decided not to pursue the arrangements between the Colorado oil company and our predecessors.
Correspondence in 2009 between the External Affairs Ministry and RSM had made my Government’s position abundantly clear: among other things, we did not accept as reasonable RSM’s convenient invoking, just six months after signing its agreement with the previous Government of Saint Lucia, a force majeure clause—on the basis that border disputes prevented the company from fulfilling its end of the contract. RSM insisted with inflexible adamancy that it would honor its obligations only after the Saint Lucia Government had fulfilled its responsibility for removing the stated obstacles.
RSM went on to say in correspondence with the External Affairs Ministry that the company had “never believed or alleged that the agreement itself is suspended.” The company further insisted that, and I quote: “Force majeure suspends only the obligations of RSM under the agreement and so, in order to show good faith, RSM has submitted rental payments and undertaken such work as was possible given the boundaries disputes that existed and still exist.”
We have not been able to confirm any work undertaken by RSM in relation to the agreement. In any case, and as earlier mentioned, RSM’s cheques were returned to the company.
In the same letter of 18 February, 2009 there was this ominous note and I quote, “RSM tendered a subsequent amendment to the basic agreement in 2007 in order to clarify its position concerning force majeure and to request that the Government acknowledge that reality. We regret your Government intends to initiate a 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 by arbitration to the International Center for Settlement of Investment Disputes.”
Fellow Saint Lucians, little did we know, when first we learned of RSM’s relationship with the previous Prime Minister, that the company’s CEO habitually invoked force majeure clauses soon after signing agreements with mainly under-developed, under-informed poor nations.
For example, just two weeks after inking the 1996 agreement with the then Government of Grenada, Jack Grynberg had claimed border disputes prevented him from fulfilling his contractual obligations. There are other instances of this tactic and it seems passing strange that due diligence on the part of the previous Government did not uncover them.
He later took the Grenada Government before the ICSID, claiming breach of contract, on the basis the Government had finally refused to grant him a promised exploration license.
In actual fact RSM had applied for the license some four years after signing the Grenada agreement, when the stipulated time was “not later than 90 days after the effective date.”
The ICSID directed, for a multiplicity of reasons, that both parties meet their own legal expenses and share costs. Control of the Grenada seabed was returned to the island’s Government but at a cost of over ten million dollars to the people of Grenada, who received nothing in return.
Now, there has been much idle talk in sections of the local media about the agreements between Grenada and Saint Lucia being the same, and therefore it would be a walkover, should my Government decide to engage another company in the exploration of the Saint Lucia seabed. Surprisingly, this totally misleading information has been repeated by individuals best placed to know the contrary truth.
Meanwhile, my Government has been advised as to our legal options. Some people have also suggested, that RSM no longer maintains an interest in the contract it signed with the Government of Saint Lucia eleven years ago and which was twice extended by the then Prime Minister, despite that RSM invoked its force majeure clause six months after signing.
The indisputable truth is that the company has by letter underscored its continuing interest in maintaining the status quo, to the extent that it has actually threatened my Government with legal action.
Only last month lawyers representing RSM threatened to sue; for “heavy damages,” members of the former Grenada Government that they claimed were assisting us in our on-going efforts at off-loading Jack Grynberg and his RSM Production Corporation. As for the similarity in the contracts with Grenada and Saint Lucia, therein lies a particularly interesting tale.
It appears that a draft agreement was drawn up by Jack Grynberg in 1999 and presented to the then Prime Minister. This particular document coincides in all respects with RSM’s agreements with St Vincent and the Grenadines, and Grenada, both of which required Mr. Grynberg, within 90 days following his signing, to secure from the appropriate ministry an exploration license.
In the case of Saint Lucia, the proper authority for issuing an exploration license is the Governor-General. For reasons so far unexplained, the 1999 draft agreement bears only one signature: Mr Grynberg’s.
Intriguingly, a second agreement dated 29 March 2000, and bearing the signatures of both the then Prime Minister of Saint Lucia and Jack Grynberg, required no special application for an exploration license. Indeed, the license is inherent in the agreement. We are at the moment discussing this curious anomaly with the Government’s legal advisors.
Should it turn out that the former Prime Minister usurped the Governor-General’s authority, will that regrettable and possibly illegal situation prove the silver lining in the near-impenetrable dark cloud that; for more than ten years, has surrounded the so-called Grynberg affair? Will it render the previous Government’s arrangements with RSM null and void? Only time can tell?
It has been brought to our attention that RSM may have farmed out the Saint Lucia seabed to a Chinese company in 2005. We are unaware of the status of this arrangement that was widely reported in the overseas press. There is no mention of this transaction in the files so far available to my Government.
Meanwhile, this is what Article 25 of the Grynberg agreement says: “The company may not assign to any person, firm, company or corporation not a party hereto, in whole or in part, any of its rights, privileges, duties or obligations under this agreement without the prior written consent of the Government, which consent shall not be unreasonably withheld. However, the company shall be free to assign, by instrument in writing, its rights, privileges, duties, or obligations under this agreement to an affiliate, provided that no such assignment shall in any way relieve the assignor of any of its obligations hereunder.”
There is also the important matter of the former Prime Minister’s advisors. We have on record, a letter dated 1st February 2000 from former Attorney-General Petrus Compton, wherein he advises his Prime Minister to seek out a specialist petroleum lawyer to review and advise on the draft Grynberg agreement. Indeed, the former Prime Minister has himself publicly stated that he signed the 2000 agreement/license only after a draft had been approved by the Commonwealth Secretariat in London.
We have so far been unable to locate any related correspondence in our files. Perhaps the former Prime Minister is in a position to advise us further.
It would be most regrettable if, for whatever reasons, the Secretariat directed the former Prime Minister to disregard the law dealing with oil exploration in Saint Lucia, as contained in the Minerals (Vesting) Act, wherein it is written at subsection 1:
“A person shall not prospect for or mine minerals except by the authority of a license granted by the Governor-General and in accordance with the terms and conditions specified in the license. Any person who contravenes the provisions of subsection (1) of this section commits an offence and is liable on summary conviction to a fine not exceeding $1,000 and to a further fine not exceeding $50 for each day during which the contravention continues.”
Bearing in mind Jack Grynberg’s stubborn belief that the law is on his side, it would appear that Saint Lucia faces an extremely expensive litigation process up ahead. Already our efforts at attracting other oil companies have come to naught, simply because no other company is willing to risk crossing swords with the notoriously litigious Jack Grynberg. His court record is easily accessible on the Internet, including details of the Grenada case.
Fellow Saint Lucians, one way or another, I promise you, this matter will be resolved, with or without the assistance of the former Prime Minister.
Thank you, and goodnight.
© 2012 Government Information Service. All rights reserved.
Read our privacy guidelines.