The following is the text of letter sent on my personal letterhead. - Richard Knight
April 26, 2002
Luke R. Corbett
Chairman and Chief Executive Officer
P.O. Box 25861
Oklahoma City, OK 73125
Dear Mr. Corbett
I am deeply concerned about Kerr-McGee’s activities in and off the coast of Western Sahara. I urge you to end all activity in Western Sahara until the people have been able to exercise their right to self-determination and that you correct errors of fact in your filings with the Securities and Exchange Commission.
The people of Western Sahara have long been denied the right to self-determination. Neither the United Nations nor the United States recognize Morocco’s claim to Western Sahara. The World Court has ruled that the people of Western Sahara have the right to self-determination. They have not been able to recognize this right because Morocco has refused at allow a referendum to take place and has rejected the voter lists produced by the United Nations. The discovery of exploitable oil or gas will only make Morocco more determined to block a free and fair referendum.
As you know, the granting of reconnaissance rights by Morocco in October 2001 to Kerr-McGee has been the subject of debate, including a legal opinion by the United Nations. In February 2002 United Nations Legal Counsel Hans Corell determined that Kerr-McGee’s contract, and a similar one signed by TotalFinaElf, were legal. But the opinion also stated:
“If, however, further exploration and exploitation activities were to proceed without respect to the interests and wishes of the people of Western Sahara, the contracts would be in violation of international legal principles dealing with non-self-governing territories.”
I am also concerned about the material misstatement of fact on this topic on your Form 10-K. You list your activities as being off the coast of Morocco, not of Western Sahara. Further, Kerr-McGee must have known when it signed the agreement that the territory concerned was in dispute and Morocco’s legal right to grant reconnaissance, exploration and exploitation rights was in dispute. The subsequent UN opinion confirms that Morocco does not have the legal right to grant exploration and exploitation rights. If Kerr-McGee undertook such activities it would be violating international law. Not knowing the block is in Western Sahara and the legal obstacles to further exploration and exploitation, investor might overvalue Kerr-McGee stock. Investors should know the political and legal risks of operating in Western Sahara.
Kerr-McGee should withdraw from Western Sahara until such time as the people of that territory have been able to exercise their right to self-determination and a proper legal authority exists to grant exploration and exploitation rights. Kerr-McGee should correct its Form 10-K. In subsequent filings Kerr-McGee should explain the legal issues and limitations on future activities.
This letter is part of the web site richardknight.com