Transocean's Burma Problem

Todd Shriber
 
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Sometimes it is quite interesting what stories the mainstream financial media chooses to cover and which ones go ignored. Of course, there's limited airtime on television and limited physical space in daily newspapers, so some interesting tidbits are bound to fall through the cracks here and there. Such is the case with Transocean and its goings on in Myanmar (formerly known as Burma).

Alright, Burma is not China, Europe and the U.S. Viewed by Westerners as a third-world country, Burma does not get a lot of press, but at this point, anything remotely salacious involving Transocean, the world's largest provider of offshore drilling services, should catch the eye of intrepid financial journalists. After all, the Switzerland-based company is one of the chief villains in the Gulf of Mexico oil spill fiasco.

Last week, when the Justice Department announced it filed a civil suit against Transocean (RIG) for its role in the spill, the shares tumbled 4% on the news. Yet somehow, a recent SEC filing showing that Transocean has received a second subpoena related to its activities in Burma has gone relatively undiscovered. The subpoena came courtesy of the US Office of Foreign Assets Control (OFAC), the branch of the Treasury Department that oversees American trade and financial sanctions, according to Mizzima.com, a Web site that specializes in Burmese news.

Transocean received its first subpoena earlier this year after it was reported that Cnooc, China's largest offshore oil driller, commissioned a Transocean rig to operate in Burma. Thing is Cnooc (CEO) operates in Burma through a partnership and one of the partners is a company known as China Focus Development.

Here's where things get really interesting: China Focus Development is registered to Stephen Law and his wife. Law reportedly has his hands in some legitimate businesses, but those could easily just be fronts because he various U.S. law enforcement agencies contend he is one of largest launderers of drug money in Southeast Asia. It runs in the family. Law's Sino-Burmese father, Lao Sit Han, aka Lo Hsing Han, is believed by U.S. drug-trafficking analysts to have controlled one of Southeast Asia's best-armed narcotics militias during the 1970s, Mizzima reported.

Law and his wife control a dozen companies on the OFAC blacklist. Law, his wife and father are on OFAC's Specially Designated Nationals list and are banned from travel to the European Union. This is juicy stuff.

In the essence of full disclosure, I am not picking on Transocean. In fact, I am long the stock, and I must admit this story has not gone completely ignored as the New York Times reported on it back in July. That said, there is obviously some life left in the story and no one was talking about it today.

We have an exotic, far-off, war-torn location. A now-infamous company. A money launderer and drug connections. Hollywood couldn't write a better script.

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