Académique Documents
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RG: 148
Box: 00007 Folder: 0002 Document: 39
Series: Team 1 Files
Copies: 1 Pages: 9
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Withdrawn: 04-09-2008 by:
November 6, 2003
RE: Unocal
Best regards,
COS/ir
Enclosure
The main allegation regarding Unocal in Mr. Lindh's motion is that Unocal
"conducted business" with the Taliban, or otherwise supported the Taliban, both before
O'MELVENY & MYERS LLP
Randy I. Bellows, Esq., John S. Davis, Esq., & David N. Kelly, Esq. November 5,2003 - Page 2
and after Federal Regulations barring such conduct took effect on July 6, 1999. See Mot.
at 6-7; 31 C.F.R. §§ 545.101 et seq. (the "Anti-Taliban Regulations"), see id. § 545.302
("Effective date."). Mr. Lindh also suggests that Unocal has future plans to do business
with the Taliban despite the Anti-Taliban Regulations and despite our country's recent
military efforts in Afghanistan against the Taliban and al Qaeda.
Both of Mr. Lindh's assertions are untrue, misleading, and wholly unsupported by
the alleged "evidence" he cites in his moving papers. As is shown below, Unocal never
signed a contract with the Taliban, nor gave the regime any money. Unocal had no
involvement in Afghanistan by the end of 1998—six months before the Anti-Taliban
Regulations took effect. And Unocal not only has no plans of conducting business in
Afghanistan or with the Taliban, it is contractually barred from conducting business in
Afghanistan until 2005.
Unocal's involvement in CentGas and any investment that Unocal might make in
the construction of the pipeline were conditioned on the occurrence of certain events.
Unocal never negotiated or entered into any agreements with the Taliban or other
competing factions for power. Indeed, Unocal made clear that it refused to enter into any
such deals with the factions in Afghanistan's ongoing civil war, and instead, insisted that
the project would not proceed until (a) peace and stability were achieved in the country;
and (b) a government formed in Afghanistan that was secure, internationally recognized,
and fairly represented all of its people.
O'MELVENY & MYERS UP
Randy I. Bellows, Esq., John S. Davis, Esq., & David N. Kelly, Esq. November 5,2003 - Page 3
The assertion in Mr. Lindh's motion and in the "Pop + Politics" article he submits
as evidence that, "[i]n 1996, Unocal signed an agreement with the Taliban and the
Afghan Northern Alliance, giving Unocal the go-ahead to build a south-bound pipeline
through Afghanistan" is completely false. West Decl. Exh. 10. Unsurprisingly, the
author of the "Pop + Politics" article - whose thesis is that United States military is
presently in Afghanistan, fighting the Taliban and al Qaeda, to serve the President's and
Vice President's pecuniary interests in the defense, oil, and construction industries - cites
no source or other evidence for her unsubstantiated assertions.
would also require that the region and government evince a likelihood and tendency to
remain stable, so that a return on investment would be possible.
Afghanistan was anything but stable or secure in the second half of the 1990s. As
a result, in the Spring and Summer of 1998, the pipeline project became less feasible
from Unocal's perspective. Although the Taliban was achieving military victories in its
war against the Northern Alliance, the war showed no signs of abating, much less ending
once and for all. Furthermore, the Taliban was coming under increasingly harsh criticism
from the international community for its involvement in the international opium trade and
its persistent human rights abuses. The prospects that the Taliban would control all of
Afghanistan (in particular its northern border with Turkmenistan), or that it would be
recognized as a legitimate government by the world community, was extremely unlikely.
Moreover, it is important to note, the two major markets for Turkmenistan's
natural gas appeared jeopardized. Pakistan - initially, the primary market for the natural
gas - was suffering from its own political and economic turmoil. In addition, Pakistan
was engaged (and to this day is still engaged) in an intensifying border dispute with India.
India, like Pakistan was a principal potential consumer of natural gas from Turkmenistan.
In light of these market developments, and the distinct possibility that civil war and
political turmoil in Afghanistan would not cease any time soon, Unocal's involvement in
the pipeline project was imperiled.
That same day, August 20, 1998, Unocal was contacted by news agencies, such as
Dow Jones and Knight-Ridder, asking for comment. Unocal orally responded to such
inquiries stating that, "[i]n light of the U.S. government actions against terrorist facilities
in Afghanistan, Unocal, as the development manager for the CentGas consortium, feels it
is appropriate to suspend all activities involving the proposed pipeline project in
Afghanistan." Exh. A.
The next day, August 21, 1998, Unocal posted the following on its website:
Since the pipeline project was first proposed, there have been
a number of complex issues that Unocal has taken very seriously.
Unocal recognizes the legitimate concerns regarding the treatment of
women in Afghanistan. Consistent with our core values and business
O'MELVENY & MYERS LLP
Randy I. Bellows, Esq., John S. Davis, Esq., &. David N. Kelly, Esq. November 5, 2003 - Page 6
Exh.B.
Over the next two months, all reports indicated that the instability in Afghanistan
would only intensify. The Taliban retrenched its positions and refused to extradite or
otherwise turn over Osama bin Laden to international authorities. During these tense
months, Unocal continued to observe its suspension of all activities in Afghanistan.
On November 4, 1998, at a shareholders management committee meeting of
CentGas (in Istanbul, Turkey), Unocal announced its withdrawal from CentGas, giving
its 30-day notice of withdrawal as a shareholder in the consortium, and its 60-day notice
of withdrawal as the consortium's Development Manager. (Two November 4, 1998
letters from Unocal Central Asia, Ltd. to the members of the CentGas consortium
documenting these withdrawals are attached as Exhibits C and D.) After "withdrawing"
from CentGas, Unocal was bound by the CentGas Shareholder Agreement "not to
participate, directly or indirectly, in any project relating to the transportation of Gas from
Turkmenistan through Afghanistan to Pakistan and/or India" until 2005 or until CentGas
disbanded completely. See Exhibit E ("Non-Competition Clause").
One month after noticing its withdrawal from CentGas, Unocal, on December 9,
1998, notified the University of Nebraska at Omaha - which had been providing skills
training and women's teacher training in Afghanistan - and CARE - a U.S.-based relief
foundation providing humanitarian aid in Afghanistan —that Unocal could no longer fund
the university's or the foundation's efforts. Unocal expressed its understanding that any
monies it had advanced in the past to university and the foundation would be exhausted
by the end of the year and by the end of the first quarter of 1999, respectively. (Copies of
these letters are attached as Exhibits F and G.)
The two Internet sources and declaration that suggest that Unocal remained
involved in Afghanistan after the Anti-Taliban Regulations took effect in July 1999 are
specious. One Internet report relies on unidentified "sources" and surmise about the
irresistible allure of the pipeline's potential profits to assert falsely that Unocal was trying
to "re-enter" the CentGas consortium and the "Turkmen gas pipeline project in March
2000." WestDecl. Exh. 17. Nothing could be further from the truth. At the time,
Unocal and CentGas were resolving differences regarding Unocal's withdrawal from
CentGas in the aftermath of the aborted deal. These differences were resolved in a July
2000 Mutual Release and Settlement Agreement, in which both sides abandoned their
claims, and CentGas insisted that Unocal continue to honor the Non-Competition Clause,
barring Unocal from participating "in any project relating to the transportation of Gas
from Turkmenistan through Afghanistan to Pakistan and/or India" until 2005.
The second Internet posting - which weaves together a grand conspiracy involving
"the Bush Administration, Unocal, the CIA, the Taliban, Enron, Saudi Arabia, Pakistan,
and the Bush Oil team" - theorizes that, "[although Unocal claims it abandoned the
pipeline project in December 1998, [a] series of meetings held between U.S., Pakistani,
and Taliban officials after 1998, indicates the project was never off the table." West
Decl. Exh. 21. Such theory and conjecture about the inner-workings of the government
are not fact. And the theories postulated are demonstrably untrue.
Lastly, the Declaration of Gary Breshinsky states that, "when I was in Afghanistan
in September 1999,1 saw trucks and Land Cruisers that said 'Unocal' on them. I believe
O'MELVENY & MYERS LLP
Randy I. Bellows, Esq., John S. Davis, Esq., & David N. Kelly, Esq. November 5, 2003 - Page 8
I was in Kandahar when I saw these vehicles. I did not know what Unocal was doing in
Afghanistan then, but I definitely saw their trucks and Land Cruisers there, and I believe
that the sanctions had already been imposed." West Decl. Exh. 9. Unocal had none of its
vehicles in Afghanistan in 1999, and never did prior. As it does in many markets where
it is trying to build brand recognition, Unocal broadly disseminates free decals and other
marketing materials. These marketing materials appear in regions where they were
distributed even though Unocal never did business in there or long-since left the region.
Indeed, recent news reports about Afghanistan center on how popular the decal trend is in
Afghanistan. See, e.g., Exh. G Charles Recknagel, Afghanistan: In Kabul, Drivers Wear
Their Hearts On Their Cars, Not Their Sleeves, Radio Free Europe (Jan. 4, 2002) (In
Kabul, the capital of Afghanistan, "there are the cars with brand names for products of
every sort - products usually unavailable in Kabul — emblazoned on their doors. .. . The
trademarks give the cabs a prestigious air of carrying paid-for ads in a city with no
advertising industry . . . . 'The decal passion existed before and during [the Taliban] and
even the Taliban were, if not a lot, at least a little interested in them. They especially
loved trademarks, though usually they didn't know what they meant.'").
Finally, Mr. Lindh cites a handful of other sources that he alleges support his
assertion that Unocal remained in Afghanistan after July 1999 or intends to return there in
the future. However, the sources he cites for this proposition:
• Predate the Anti-Taliban Regulations by several months, see West Decl. Exh.
18 (April 1999 statements made by U.S. Congressman Dana Rohrbacher);
• The sources refer to pipeline projects contemplated by other oil companies, not
in Turkmenistan, Afghanistan, and Pakistan where CentGas was operating, but
in neighboring parts of Central Asia where the CentGas project was not even
taking place. See, e.g., Exh. 11 (Nightline broadcast discussing Chevron's and
Texaco's explorations in Kyrgyzstan).
In sum, Mr. Lindh's allegations about Unocal bear much resemblance to the
Internet sources on which he is forced to rely. They are long on theory and speculation,
and totally devoid of substance or fact.
O'MELVENY & MYERS UP
Randy I. Bellows, Esq., John S. Davis, Esq., & David N. Kelly, Esq. November 5, 2003 - Page 9
The reality is that Unocal lost a great deal of money in the CentGas project.
Unocal abandoned the project, and left Turkmenistan, Pakistan, and Afghanistan soon
after Afghanistan was bombed in August 1998. Unocal never signed contracts with the
Taliban, nor gave the regime any money. Unocal had no contacts with the faction - and
certainly did not support the regime - after the Anti-Taliban regulations took effect.
Unocal has no intention to return to Afghanistan. And even if it wanted to do so, it is
currently barred by contract from doing so.
Very truly yours,
Daniel M. Petrocelli
of O'Melveny & Myers LLP
DMP:mtk
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