Saturday, May 22, 2010

Obama's Oil Spew Commission Chair on ConocoPhillips Board

President Obama named William K. Reilly and Bob Graham co-chairs of the Deepwater Horizon oil catastrophe commission. William Reilly was EPA Chief under President George H.W. Bush. He currently sits on the Board of ConocoPhillips, DuPont, Royal Caribbean, Evergreen Oil, Eden Springs Ltd., Enviance, AgraQuest and Energy Future Holdings.

Reilly is a Senior Advisor to TPG Capital, a private equity underwriter (PEU). He is President and CEO of Aqua International Partners, an investment firm owned by TPG and funded by U.S. Overseas Private Investment Corporation (taxpayer sponsored).


Ironically BP and ConocoPhillips were fined in 2007 for oil spills. ConocoPhillips marred 21 miles of Puget Sound shoreline near Tacoma.

ConocoPhillips is currently helping BP with the Deepwater Horizon debacle. WSJ reported:

In Houston, the hub of BP's crisis response, the company's campaign has become an industrywide effort. Drilling and well-control experts from rivals like Exxon Mobil Corp. and ConocoPhillips are in BP's offices.

ConocoPhillips wants oil exploration to stay on track. It is ready to drill in the Arctic and has a joint venture with BP in the Gulf of Mexico's Tiber field.

London-based BP PLC said Wednesday it identified a "giant" prospect called Tiber more than six miles beneath the surface of the Gulf. BP, whose partners at Tiber include Houston-based ConocoPhillips, said its discovery could hold between 4 billion and 6 billion barrels of crude and natural gas.

gave an update in light of the oil catastrophe:

The chief executive office of U.S. oil company ConocoPhillips, Jim Mulva, told reporters on Wednesday the spill will likely hinder development of the giant Tiber discovery in the Gulf.

BP Plc is the operator of Tiber, Brazil's Petrobras owns 20 percent and Conoco has an 18 percent interest.

Surely, William K. Reilly is aware of CP's joint ventures with BP, including their Alaskan natural gas pipeline. Might his report do everything possible to keep ConocoPhillip's plans on track? Might he not want to offend on a business partner? Other BP investigations found conflicted chairs pulling punches.

Board Pay & Stock Holdings

Reilly's 2009 Board compensation is as follows:

ConocoPhillips - $246,515
DuPont - $279,526
Royal Caribbean - $154,400
Energy Future Holdings- private
Eden Springs - private
Enviance - private
Evergreen Oil - private
AgraQuest - private

Total - $680, 441
His stock holdings are:

ConocoPhillips-6,767 beneficially owned shares & 36,356 restricted stock units or $2.2 million

DuPont - 8,021 in outstanding stock awards, 20,000 in outstanding option awards, right to acquire 60,399 beneficially owned shares or $2.1 million

Royal Caribbean - 61,580 beneficially owned shares or $1.7 million

Energy Future Holdings - private
Eden Springs - private
Enviance - private
Evergreen Oil - private
AgraQuest - private

Total - $6 million

Royal Caribbean, Aqua International & OPIC/USAID

Reilly's Royal Caribbean (RC) worked closely with President Bill Clinton to bring private business to Haiti. RC's Labadee facilities received no damage in Haiti's horrific earthquake.

Haiti received $15 million in USAID funding to train Haitians in hospitality for employers like Royal Caribbean. Reilly's Aqua International Partners received taxpayer money via U.S. Overseas Private Investment Corporation funding. Foreign Policy in Focus states:

In the mid-1980s, OPIC began to establish private funds that purchase shares of ownership in overseas investments. By 1998, OPIC had launched almost 30 of these funds, such as the Poland Partners Fund and Aqua International Partners, to provide capital for investments in low-income countries and former nonmarket economies. OPIC selects the fund managers and provides long-term loans and loan guarantees that supplement a fund’s privately raised equity.
OPIC selected Reilly and TPG for Aqua International Partners.

William Reilly is a founding partner of Aqua International Partners, a private equity fund dedicated to investing in companies engaged in water and renewable energy.
Who knew "private oriented" Bill Clinton pioneered public capitalization of PEU's in the 90's? Slick Bill also marketed Aqua International during his 1998 Mission to Africa. Later, President George W. Bush supported Aqua International's expansion.

In October 2002, Overseas Private Investment Company's board of directors approved up to $245 million in OPIC financing to help establish three new investment funds, with a combined capitalization of more than $1.5 billion. One of the three beneficiaries was Aqua International. The board approved an OPIC guarantee of up to $70 million for the second fund, Aqua International Partners II, which will invest in companies involved in the treatment, supply, distribution, or protection of water in emerging markets. The fund has a total capitalization target of $220 million for investment in emerging markets, as part of a global water fund with target capitalization of $400 million.

The fund is a successor to Aqua International Partners I, formed in 1997 with $235 million in commitments, including an OPIC investment guarantee of $150 million.

The fund will target investments in projects involving products and equipment; desalination; bottled water and beverages; and infrastructure, with an eye to improving quality and safety, resource maximization, convenience of delivery, and competitive pricing. One report indicated that Aqua is supplying bottled water to U.S. troops in Afghanistan.

Conflicts of Interest

Reilly is co-chairman of the National Commission on Energy Policy, formed in 2002 and housed at the Bipartisan Policy Center. Seven Commission members are PEU affiliated, with three part of The Carlyle Group family. SemGroup and Booz Allen Hamilton are Carlyle affiliates.

One Energy Policy Commission member, Errol B. Davis, Jr., has been on the board of BP since 1998. Davis provided governance during BP's various fiascoes. How might Errol influence Bill, especially in light of their joint ventures and corporate common interests?

This isn't President Obama's first slippery appointee. How many conflicts of interest does this PEU co-chair have? Does William Reilly beat conflicted Erskine Bowles, co-chair of Obama's Deficit Commission? Maybe, maybe not.

Obama continues his PEU love. Will private equity's luck continue? They got a free pass under financial reform. How many of the five remaining slots can they land on Obama's Oil Spew Commission?

Update: The Maddow Blog linked to this piece on June 1. On June 4, William Reilly announced he would take a temporary leave of absence from the ConocoPhillips board. He did so to Rachel Maddow.