Complaint to SEC and FBI about ReconAfrica's fraudulent ESG misrepresentations

From: 

Saving Okavango's Unique Life (SOUL)

The Economic and Social Justice Trust of Namibia 

Kapinga Kamwalye Conservancy

Ncaute Community Forest

For more information/enquiries: savingokavango@proton.me

ATTN:

BAFIN

The United States Justice Department Criminal Fraud Division

The Federal Bureau of Investigation White Collar Crime Division

The Court of the Eastern District of New York

The US Financial Crimes Reporting Network

The US Securities and Exchange Commission, Office of the Whistleblower

The Parliament of Namibia

Table of contents

1. Executive Summary

2. Argument 

3. ESG misrepresentations influenced trading  4

4. Fraudulent Environment Social Governance Assertions 7

5. Flawed consultations 9

6. The Company’s Carbon Neutral Claims 11

7. Danger to World Heritage Site 13

8. Endangered Wildlife in Peril 14

9. Toxic Pollution Risk 15

10. Drilling Illegally 16

11. Local leaders Intimidated 17

12. False statements about Regulations 20

13. Environmental Management Plan Legal Violations 21

14. Drilling Program 2022 23

15. Payments to the Namibian Government 24

16.   Conclusion

Executive Summary:

Reconnaissance Energy Africa Ltd is a Canadian-based junior oil and gas company with exploration licences in Namibia and Botswana. The company, known publicly as ReconAfrica, has an exploration licence of 6.3 million acres across the watershed of the Okavango Delta, covering subsistence farms, community wildlife reserves and a major part of the one of the world's largest protected areas, the Kavango Zambezi Conservation Area (KAZA Park). This complaint provides concrete evidence that the company is probably guilty of covering up serious violations of existing laws in Namibia as well as the US and other jurisdictions where the company's stock is currently traded. 

This submission is a multi-year collaborative investigation between individuals, media outlets and organisations. These assembled facts reveal that the company has bullied local and international critics, possibly paid off Namibian politicians, potentially polluted local fields and waterways, lied about having the necessary drilling permits to investors, illegally drilled inside of wildlife reserves, illegally cleared roads inside community owned land, lied about drilling into the shallow watershed of two World Heritage properties, and was illegally in possession of the electronic communications of local leaders publicly opposed to their project.  

Environmental, Social and Governance (ESG) has become an important component of any investment decision with growing public and regulator focus, and we believe the company has led people to invest in ReconAfrica through their misleading ESG statements. 

The company told investors that their ESG programs would ‘transform’ Namibia and lift people out of generational poverty, but they have actually oppressed and deceived the communities in their licence area. ReconAfrica, which boasts that it operates a "world class ESG program" claims they committed roughly US $9 million "to fund ESG projects in our areas of operations, something we do not believe has ever been done by an exploration stage company before".

These statements are typical of ReconAfrica’s ESG misrepresentations and make up a substantial portion of the company's publicly presented information. The company disseminates their ESG messaging via press releases, stock promoters, investors relations, company founders, corporate social media, and also with paid as well as unpaid media content. Further, ReconAfrica’s management team speak on ESG panels and are ‘nominated’ for ESG awards, all at events that they sponsor. 

The company only last year revealed to their shareholders that their major partner in another project they own in Mexico is Kremlin controlled Russian company Lukoil, who are on the US sanctions list. Vladimir Putin talked about the Lukoil investments in 2017, when the deal was set up, saying "as for Mexico, we have our interest there too, direct interests of our companies. Lukoil, for instance, is going to implement four projects in the Gulf of Mexico".

We believe the company knowingly carried out this malfeasance so the directors and 

their proxies would benefit financially from a drilling operation they knew, or ought to have known, was extremely unlikely to ever create value for their shareholders. 

ReconAfrica’s public misrepresentations about their legal compliance, adherence to environmental best practice, and support for local communities led many Americans and others to invest in the company under these materially false pretences. 

Argument 

1. ESG misrepresentations influenced trading 

The company has since tried to delete the 2021 fact sheet they published and sent to investors titled, ‘ESG Best Practices: Environment Social & Governance’, which contained the following statement on ESG:

“Defining who we are as a Company ReconAfrica’s Environmental, Social and Governance (ESG) approach provides a basis for measuring performance against international best practices wherever we operate. We developed and designed our approach to business to meet a set of criteria and standards that guide our operations, policies and practices. In short, ESG is our fundamental operating principle.”

The company must have seen the value in promoting this ESG program to their shareholders. Despite the absence of commercial hydrocarbons, the company still managed to inflate the company's market capitalization to almost one billion US$s in July of 2021. We believe these misrepresentations within the ESG program formed a crucial component of the marketing and public relations to drive this valuation. Further, we believe the company used these misrepresentations to placate regulators, undermine opponents and stonewell local and international organisations attempting to call the company to account.  

The ESG misrepresentations discussed in this report have directly led to people investing in the company, according to investor's public statements, like Warren Mann's below: 

The company’s deliberate and sustained effort to create a false belief about their drilling and ESG program helped ReconAfrica stand out from other oil producers and significantly altered information made available to the investing public. ReconAfrica investors meet on Discord, a social messaging app, in a group named  ‘Encore ReconAfrica’ to express themselves:

Others said they felt ‘comfortable’ staying in the stock because of the company’s ESG representations. 

ReconAfrica made ESG so central in their representations to investors that company promoter, Greg Martin, referred to ReconAfrica as a “charity”. 

The company’s supposed ESG spending was interpreted by many investors to mean the company had made a discovery. In fact ReconAfrica accounted for routine business activities like complying with regulations and hiring staff as "ESG". 

An investor in the company’s Discord group said he found the notion the company was hiding poor drilling results to be "highly unlikely" is because of the company's "great ESG".  Company promoter, Jim Rye, tweeted that the ESG spending means the company ‘must know’ something:

Although the company promised in July of 2021 to provide quarterly ESG updates, since the stock began to fall, quarterly reports have not been issued. 

A May 2021 National Geographic article noted that a whistleblower complaint to the US Securities and Exchange Commission filed that month stated that there "are more than 150 instances of misleading statements by ReconAfrica." The complaint also alleged "that the company raised millions of dollars by fraudulent means", and it illustrates how "several top executives sold their shares while ReconAfrica promoted the stock." 

1. Fraudulent ESG Assertions 

The company’s ESG misrepresentations are continuous and unambiguous. In an August 2021 interview, ReconAfrica’s then CEO, Scott Evans, said: "ReconAfrica is developing its ESG efforts into a fully diversified ESG platform with specific emphasis on higher education for the children, much better access to fresh drinking water, carbon neutrality and the protection of wildlife.” 

Grayson Anderson, investor relations manager for ReconAfrica also posted this  on Twitter:

The company claims on it's website that it has met a number of “ambitious” ESG and CSR objectives and commitments including “aquifer protection”. 

In December 2021, the company published a fact sheet on their website about their ESG program for the investing public listing all of the below as “Key Technical Indicators”. 

• Climate Change and Carbon Emissions

• Operational Performance

• Water and Air Quality

• Biodiversity

• Reforestation

• Waste Management 

• Regulatory Consultation, Stakeholder and Indigenous Engagement

• Issues & Concerns Management 

• Human Rights Standards 

• Labour Standards & Human Resource Processes 

• Data protection and privacy; management of information 

• Gender and Diversity 

• Community Outreach Projects

• Corporate Governance Processes 

In 2021, ReconAfrica’s Facebook page claimed it was nominated for an ESG award at the African Energy Awards. The company did not disclose that the Africa Energy Awards are operated by a promoter of ReconAfrica, NJ Ayuk, who has been convicted in the USA of impersonating a U.S congressman. 

A 2023 ReconAfrica press release titled, ‘AIEN 2023 Awards ceremony’ allegedly recognised “organizations that have demonstrated positive influence on surrounding communities.” ReconAfrica founder Jay Park's law firm, Park Energy Law, is listed as one of the sponsors for the event. This fact was not disclosed within the press release. 

C Flawed Consultations 

Namibia’s Environmental Management Act (EMA) mandates that the Environmental Impact Assessment (“EIA”) inquiry for high-impact developments on communal and conservation land must include voices of local and indigenous communities, experts, scientists and all organisations working in the region.

Further, the EMA stipulates the company is responsible for "ensuring that there are opportunities for timeous participation of interested and affected parties throughout the assessment process".

A December 2022, ESG document on the company’s website states that ReconAfrica  "held more than 600 community and stakeholder engagement sessions with communities and impacted stakeholders in local languages, to carefully track concerns and address them in follow-up sessions."  It is unclear who or what the company included in these sessions.

The company’s public statements insist that all stakeholders have been consulted as per the requirements of the EMA stating those requirements have been exceeded. However, ReconAfrica's 2019 EIA lacked a legally required Interested and Affected Parties List (IAPs). Failing to include a list of Interested and Affected Parties contravenes Namibia's Environmental Management Act 7 of 2007. Environmental Impact Assessment Regulations made in terms of the EMA state that the applicant must "open and maintain a register of all interested and affected parties." 

Community members currently adversely affected by the drilling went on the record at the time saying they were "unaware" that they had been excluded from the EIA process. Nevertheless, the company received a permit, called an Environmental Clearance Certificate (ECC 2019), for drilling to begin in 2019. The company’s ECC was awarded on August 26, a Namibian holiday, Heroes Day.

The first drill site, in December 2020, was near the remote village of Kawe in the Kavango East region. Community members state that no consultations were done prior to drilling and when ReconAfrica started drilling on 21 December, 2020 near the village in a local farmer’s crop field, the farmer stated that it was done without his permission. 

At the second drill site of Mbambi, another remote community in the Kavango Region, members gathered at the request of the company on the 25th of January 2021, but ReconAfrica representatives did not show up, and later claimed they had another commitment. No further meeting was ever held, again in contravention of Namibian law.

The Kalenga family who are the residents and landholders of the Mbambi drill site, sued the company in the Namibian High Court, alleging that ReconAfrica took their land without consulting or compensating them.       

Family representative Andreas Sinonge stated in court documents that “I have no other land to occupy with my family. My natural resources and the forest are decimated, and the first respondent (ReconAfrica) has dug out our crop field and removed the topsoil to a place unknown to me and intends to drill further despite its activities being unlawful.”  The family's legal representatives, Namibian Legal Assistance Center, called it an ‘’unlawful occupation’’ in documents still before the Namibian High Court. 

In early 2021, the company told the investing public in the USA that they had held all legally required consultations, something the affected communities say never happened.

In a separate incident on January 22, 2020 the company was accused of bullying community members at a public information session 10 hours drive from the drilling sites. The company made presentations that were in English only and refused to answer questions, according to both attendee accounts and available film footage.  

At this meeting the company's environmental consultant, Sindila Mwiya, was openly hostile to community members. This one-meeting outreach, far from the drilling sites, did not meet the legal requirements of the EMA in order to obtain a permit to drill, despite the fact that drilling had already commenced two months prior. Something investors were never made aware of.

Max Muyemburuko, then Chairperson of the Kavango East and West Conservancy Association, expressed concern that the consequences of new roads also weren’t adequately included in the company's EIA. Mwiya, ReconAfrica’s consultant, called this concern "utter blindly stupidity and nonsense of the highest level"

Canada’s Globe and Mail reported in February 2021 that parties who registered for comment on the company's EIA were also abused by Mwiya in emails. Mwiya bragged in writing to National Geographic that he harassed activists online and had not included the legally required list of IAPs in the EIA. 

As of the date of this submission the company continues to employ Sindile Mwiya. 

D. The Company’s Carbon Neutral Claims

Company representatives claimed ReconAfrica adopted a "carbon neutral policy" to its investors on numerous occasions. The company also told The United Nations Environmental, Scientific and Cultural Organisation, (UNESCO) in a public January 2022 response that their ESG plans included implementing "a carbon-neutral program to support the Net Zero goals of Namibia and Botswana.” This was in response to the organisation’s criticisms of their drilling impacts on World Heritage Sites in the drilling area.

ReconAfrica’s Investor Relations (IR) manager, Grayson Anderson amplified this in June 2021 when he tweeted:

Ndapewoshali Shapwanale, the company’s Director of Communications and Stakeholder Relations told an industry publication in 2021 that "ReconAfrica’s ESG program is guided, in part, by Namibia’s sustainable development initiatives." And added that the company "has established a carbon neutral strategy, under which we have initiated analysis of greenhouse gas technology containment approaches, and reforestation of not only our operations area but for the broader area.” 

The company’s representatives pledge "reforestation" and "offsets", per legislative requirements as well as the company’s self-declared ESG priorities, yet nothing substantive has been done on the ground. 

E. Danger to World Heritage Sites

The company’s EIA, public announcement and other documents insist that they are not drilling in the catchment area of the Okavango Delta, which is a UNESCO World Heritage Site. The Okavango Delta system is also protected under the Ramsar Convention on Wetlands of International Importance.  

Geohydrologist Dr. Surina Esterhuyse challenges this claim in her latest paper, published in the journal Physics and Chemistry of Earth which concludes the company is drilling inside the watershed of the Okavango World Heritage site and runs a significant risk of polluting it. 

She and co-author Rory Sheldon conclude in the study that the company’s EIA was seriously flawed, because it claims "there was not enough available data to assess ground-water depth and flow accurately."  Yet the two scientists found plenty of available data to base their work upon, which suggests the company was not being factual to investors. 

The company's statements continually downplay the risk of very serious repercussions on the water system that tens of thousands of people living downstream from their operations depend upon for their survival.  

Esterhuyse and Sheldon's 2023 paper makes it very clear that the company's activities pose a real and clear pollution danger to the Okavango Delta. The fact that the company continues to misinform shareholders about this risk is, we believe, a material omission of fact. 

F. Endangered Wildlife In Peril  

Local community leaders who run established wildlife conservation areas say there are endangered elephants in areas where the company is active. This fact is backed up by a scientific study published in the journal Nature. 

In 2021, The company's spokesperson, Ndapewoshali Shapwanale, told The Namibian Sun in a video interview that there were "no elephants" in the licence area. She said:  “Let us employ a wildlife specialist..and let us…also do studies about the wildlife in the area…why is it that…there is no..elephants or there is no other wildlife there. (sic)”  

The Nature article, refuting the company’s own spokesperson, was oddly tweeted by the company's IR manager in August of 2021.

It is highly likely that such statements are being made for the benefit of an investing audience rather than the Namibian public, who are well aware that there are elephants in the Kavango regions where ReconAfrica is drilling. 

G. Toxic Pollution Risk

The company told National Geographic in October 2020 that they would line their drill mud pits with a plastic liner, yet they did not.  

When it was reported in the press that ReconAfrica had failed to line their outflow and drilling mud pits the company began saying that there was no need to line the pits, since they used an “expensive”, “100 percent organic” drilling fluid. 

The company’s CEO Craig Steinke reiterated this publicly in an interview with oilprice.com website owner and company shareholder, James Stafford, in May 2021. The article, which may have been paid for by the company, is titled Is This The World’s Most Exciting Oil Discovery?:

*(emphasis in original)

There is no such thing as organic drilling fluid. ReconAfrica says it uses a water-based mud, which conventionally contains pollutants like viscosifiers, fluid loss control agents, weighting agents, lubricants, emulsifiers, corrosion inhibitors, salts, and pH control agents.  

According to Geologist Jan Ackert who was interviewed by National Geographic in 2021, the company may have dumped a "brew that will be a cocktail of toxic liquid waste, fit only for disposal in a hazardous landfill site” into the ground near the villages of Kawe and Mbambi.  In response to this accusation, the company's 2021 ESG timeline stated that "water-based drilling fluid system is implemented as best practice". 

We assume that company insiders knew, some from previously experience, that it is international best practice to line their drill mud pit. The company knew, or should have known, to protect the extremely shallow aquifer, where local communities often dig wells by hand to access groundwater. 

ReconAfrica’s website page claims that the company lives up to the "highest global standards", and has a hydrogeologist on its team to fulfil these requirements. But the company's own EIA shows there was no hydrologist to carry out hydrological studies or pollution management.

The company has never acknowledged that their deep drilling for hydrocarbons produces toxic flowback from the buried layers of rock, irrespective of what is in the drilling fluid. A 2018 U.S. Fish and Wildlife Service report outlines very clearly how these toxins, present in any oil bearing formation, can and do contaminate farms, streams, and clean drinking water sources.

H. Drilling Illegally

The company did not possess a legal right to the land where they are drilling, despite it saying publicly that it did.

ReconAfrica’s Occupational Land Rights application in the New Era newspaper on May 14, 2021 confirmed that the company only applied for communal land rights for the two drill sites six months after the drilling had commenced, in violation of Namibia’s Communal Land Reform Act: 

According to Namibia's Minister of Agriculture, Water Affairs and Land Reform the company also failed to get the required water use and disposal permits to use local water sources for their drilling project in a letter to National Geographic on March 10, 2021.

Minister Calle Schlettwein also told The Namibian newspaper in December 16, 2022 that the company had used water "illegally". He noted, "we had called them in. We reiterated that the rule is they should not drill for water without any permit. We threatened not to issue a permit anymore if they carried on like that.”  

ReconAfrica continues to cover up serious environmental transgressions behind their public ESG facade, appearing to have intentionally withheld these material facts to investors or potential investors in the company.

I. Local Leaders Intimidated 

An August 2021 press release said ReconAfrica was ‘working with conservancies and other wildlife specialists to counter the effects of poaching and promote wildlife repopulation in the Kavango region’.  

The company's second drill site near Mbambi is located illegally inside the Kapinga Kamwalye community wildlife conservancy despite its 2019 EIA representing the drill site as outside the conservancy area. Once the EIA was approved, the company drilled inside of the conservancy without permission.- 

This was done in direct contravention of the company's own EMA. ReconAfrica is now being sued by community-based conservancies in Namibia who have a legal right to the land where ReconAfrica is working. 

Completely at odds with this fact, on the 9th of August 2021, the company tweeted to their investors about their close relationship with the Kapinga Kamwalye conservancy, quoting conservancy chairman Thomas Muronga as if he supported the project. 

Conservancy leaders say that no such partnership exists, no report was ever produced,  and that and this photo was taken at a simple meeting where they did not grant the company access to their land.. 

Muronga is a well known local community leader, critic of the company, and represents the Kapinga Kamwalye conservancy where the company drilled illegally. He told National Geographic in 2021 that the company tried, and failed, to bribe him and other conservancy leaders. 

After turning down the bribe, the company allegedly resorted to hacking his communications, as outlined in a 2022 article in The Namibian newspaper, which noted "Kapinga Kamwalye Community Conservancy chairperson Thomas Muronga alleged that on 18 June, at a Farmers Union meeting, ReconAfrica's spokesperson Ndapewoshali Shapwanale showed him that she had access to his private WhatsApp messages." In the article, Muronga said he reported the incident at the Rundu Police Station on 28 June.

The company’s representatives at the same 18 June meeting in 2022 attempted to prevent conservancy management leader Max Muyemburuko and chair of the Namibian Editors forum, Frank Steffen, from attending a public meeting with ReconAfrica. 

In March 2022, Conservancy leader Max Muyemburuko was detained after hosting a meeting where ReconAfrica officials were criticised by community members. Muyemburuko and a pair of human rights activists were detained for six hours at the Rundu Police Station. The police accused Muyemburuko and the activists of misinforming the public and polarising communities through their activism against the Canadian company.

Julian Comalie, Muyemburuko’s lawyer, sent a letter to the Namibian Police stating: "The Namibian Police Force conducted itself in violation of a number of our client's rights as ascribed to him by the Constitution and other laws including but not limited to: 

1. our client's right to assemble peaceable with others and without arms; 

2. our client's right to freedom of association; 

3. our client's right not to be arbitrarily detained 

4. our client's right to freedom of movement;

5. our client's right to privacy; 

6. our client's right not to be subjected to unlawful interrogation." 

In March 2023, Namibian civil society organisation The Economic and Social Justice Trust (ESJT) along with conservancy leaders and impacted community members sent a letter to the Canadian High Commissioner that detailed the detention of activists, illegal search, surveillance, harassment and other human rights violations, which was done, allegedly, at the request of the company. 

No response was received from the Namibian police. 

J. False statements about regulations

Evidence showing that ReconAfrica was permitted to ignore national laws and regulations has raised questions about why the company seems to have received such special treatment. company statements to investors give the impression that the company is well regulated.

In 2021 company spokesperson Ndapewoshali Shapwanale told the Namibian Sun "our operations is (sic) subject to constant regulatory inspections, familiarisation visits not only from our line ministries, but also other stakeholders such as the ones from the regions which is OKACOM, as you know they are responsible for development projects in the entire basin for the three nations, that is Namibia, Angola, Botswana.”

The problem with this statement is that OKACOM is a water basin commission and has no jurisdiction over the company. ReconAfrica’s spokesperson knew or should have known that OKACOM has no regulatory powers and no responsibility for development whatsoever in the region. We believe statements like these enticed investors to erroneously believe that ReconAfrica was heavily regulated and adhered to best practices.

The company seems to be hardly supervised at all, and has denied drill site access to two separate Namibian ministries with apparent oversight functions.  On one occasion, a Namibian labour inspector was denied access to the Canadian company’s premises. The company’s lawyer sent a letter to the labour Ministry dated February 2021 threatening a lawsuit, claiming the inspector had an "agenda". 

The Canadian company also refused access to the drill site to the Namibian Ministry of Water, Agriculture and Land Reform claiming ‘high risk’ operations at the sites.  

An investigative journalist reported in December 2022 that ‘’officials from the Mines and Energy Ministry, Environmental Ministry, Namcor, Agricultural and Water Ministry admitted last year before a parliamentary committee that they rely on information from ReconAfrica" and had not actually inspected the drill sites themselves.

K. Environmental Management Plan Violations 

ReconAfrica told investors their Environmental Management Plan (EMP) guides their behaviour and ensures their adherence to Namibian law, but they presented a set of facts to their investors and regulators, while their actions on the ground appear the opposite.

The company's EIA and their EMP for their seismic program, required by law, stated that “no new cutlines (roads) shall be made, and all survey lines must follow the existing roads, tracks or paths or already disturbed areas that will require minimum vegetation clearing.” 

Nevertheless the company has been seen carrying out seismic surveys through community forests, farmer's fields, and so close to homes that they were seriously damaged. The company apparently started deviating from their EMP once they were granted their licence to drill.. 

“Our operations continue to be guided by our Environmental Management Plan (EMP), a compass to environmental compliance.” read a statement from ReconAfrica spokesperson, Ndapewoshali Shapwanale in November of 2021.  

Yet in October 2021 residents reported "that the thumping has already caused cracks and permanent structural damage to homes. The company's Environmental Management Plan (EMP) says a buffer zone of five hundred meters to one kilometre should be established along the survey lines away from schools, clinics or sensitive infrastructure. The company has violated their own EMP by thumping with seismic testing within 30 meters of peoples’ homes and fields and cutting new roads without free, prior and informed consent." 

Affected community members also say that they were made to sign documents without any explanation and no copies were provided to them. These documents were signed after ReconAfrica’s work was already completed. 

The company has also opened up new, illegal, roads without a permit inside of legally-protected wildlife conservancies, reported a March 2023 National Geographic article. Further, the Ncumcara Community Forest Association accuses the company of ‘illegal operations’ including road building and seismic testing within the community forest they hold a legal rights over:  

L.  2022 Drilling program

In June 2022, the company applied for an amendment to the ECC 2019 which included a new 12-well drilling program in contravention of Namibia's Environmental Management Act, which states that activities that require an Environmental Clearance Certificate include:

‘’any of the following areas - (a) land use and transformation; (b) water use and disposal; (c) resource removal, including natural living resources; (d) resource renewal; (e) agricultural processes; (f) industrial processes; (g) transportation; (h) energy generation and distribution’’

This distinction means that no public hearing is required as would be during a procedural EIA process. The company’s consultant Sindile Mwiya also used the amendment process as a pretence to exclude Interested and Affected Parties from commenting on the 12 well drilling program, in contravention of the EMA. In May 2022 Mwiya sent a mail to Julian Comalie, the Economic and Social Justice Trust’s lawyer, refusing ESJT’s right to participate in the process: “Your client is not a registered stakeholder with respect to the public consultation process that was conducted during the months of March and May 2019 for the drilling ECC No: ECC0091”   

There was no list of IAPs for ECC 2019 (the company's drilling permit) and the company did not provide one until later litigants requested it in 2021. 

The list that the company later claimed represented a list of IAPs, which they have already publicly admitted never existed, is actually a slightly amended list of people who allegedly attended ReconAfrica’s 2019 meetings, but with one major problem. It included regional leader Queen Angeline Ribebe, who passed away in 2015.

 M. Payments to the Namibian Government

How the oversight mechanisms built into Namibia's environmental laws were not implemented by the relevant authorities in order to call ReconAfrica to account for their unlawful activities is unknown. But there was at least one known payment to the Namibian government by the company that is completely unaccounted for.

The company paid 15 Namibian million dollars (1 million USD at the time) to the Office of the Namibian Prime Minister who has also faced allegations of impropriety. The payment was made, says the company,  "toward government vaccination efforts" to the Prime Minister’s Office (OPM) on June 21, 2021 according to a press release from the OPM. It is unclear why the company paid money to the Office of the Prime Minister instead of the Namibian Ministry of Health and Social Services, who are responsible for procuring vaccines. To our knowledge no formal record of accounting of how the funds were spent has been produced by the company. 

The company’s ESG progress timeline told investors that they complied with Canadian  Canada’s Extractive Sector Transparency Measures Act (ESTMA) which requires disclosure of all funds paid to foreign officials over 100,000 Canadian dollars. But the company failed to report this "contribution" to the Namibian Prime Minister's Office. The company lists failure to comply with ESTMA as an operating risk in their latest fiscal report. 

A  Namibian Sun story in February 2022 details how after a ‘donation’ of 50,000 Namibian dollars in office equipment, the chairperson of the Traditional Authority chief’s council told the Namibian Sun that Recon Africa should be free to do ‘whatever they want’ in the license area.

Namibian businessman, Knowledge Katti, who works with ReconAfrica, is controversially known for making hundreds of millions of dollars in commissions from state resources, as well as his close relationship with Namibian politicians. Katti is so close to some politicians that his former business partners claim he bragged to them, saying he has Namibian Ministers "in his pockets". Katti’s relationship with the president of Namibia is well documented, including footing the president’s medical bills. 

To many Namibians, Katti’s name is synonymous with corruption which may explain why ReconAfrica founder Jay Park originally denied that the company retained Katti. Katti’s employment was later confirmed by a company spokesperson, drawing into question the possibility of potential serious fraud on the part of the company.

The Namibian Parliamentary Standing Committee on Natural Resources, in its 2021 public hearings with relevant government stakeholders regarding the company’s malfeasance, also published their own concerns about possible bribes paid to government officials by ReconAfrica. 

Conclusion

The company used misrepresentations about their drilling and their ESG to manipulate the investing public into buying shares and to protect the company's share price against critics. The company’s directors and insiders knew, or should have known, that they broke Namibian and US  law, and that they didn't follow global best practice for any of their ESG programs. 

It appears that the company used their ESG as a means to market a company which they knew never had a realistic chance of producing commercial oil or gas. The company, who told investors their mission was to pull residents of the Kavango Region out of poverty, was actually oppressing and intimidating communities in service of what we believe was a stock scheme.  

The company misrepresented to investors that their ‘world-class’ ESG program meant that they were not guilty of stealing land or threatening world heritage sites.  

Through these explicit actions outlined in this document we believe the company has violated the law in multiple countries. We also believe ReconAfrica used the false statements outlined herein to deceive investors in order to artificially elevate share prices and silence their critics around the world. We respectfully request that authorities halt all commercial trading in the company's stock while a full and complete international investigation is carried out into these potentially very serious crimes.  

Thank you for your time.