Shadowing the Energy Charter Treaty: The Secretariat

With carefully-stacked scientific reports, bulging files and documents spilling over her desk, Yamina Saheb’s life is consumed by the climate crisis. Nervously circulating between the piles in her living room, she chats on the phone with one or another NGO, political party or MEP like a seasoned lobbyist. She never planned on becoming an activist. She has a PhD in energy engineering, and in 2018, she took a job with the Energy Charter Secretariat, the body that oversees the management of the Energy Charter Treaty (ECT). 

The ECT enables companies to claim billions in compensation from states before international arbitration tribunals if the investors feel unfairly treated by a member country’s energy or climate policies. As the then-head of the Energy Efficiency Unit, Saheb found herself working on the ongoing modernisation process to make the treaty compatible with the Paris Climate Agreement. 

At least, this is what she thought she was supposed to do.

A treaty overlooked for years

Nestled inside an anonymous building in a residential part of Brussels, this equally anonymous administrative body is mandated to work on behalf of member states, drafting amendments to modernise the treaty and negotiating with potential members. Headed by Secretary-General and Slovakian energy expert, Urban Rusnák, the Secretariat funded by contributions from its 55 contracting parties. It employs fewer than 30 staff and has a budget of about €4 million of public money, with the major part coming from EU member states and the EU.

Watch: our full interview with whistleblower Yamina Saheb about the Energy Charter Treaty

The ECS officials are experts on the treaty and their advice is sought all over the world as this 1990s agreement is highly technical and vaguely worded. Despite the opaque language, it has become the most-used international energy agreement — a popular recourse for investors, with the potential to make very big dents in governments’ budgets.

The treaty has been largely overlooked for years, even by its own members. A former employee at the French Ministry of Foreign affairs called it ‘le truc’ — which roughly translates as ‘the thing’ — jokingly saying that members were only reminded of the organisation when it comes time to pay the annual contribution.

Operating under the radar, some of the experts of the organisation have built their own networks with many representatives from the fossil industry. This is despite the ECT staff regulations requesting to avoid “real, perceived, or potential conflicts between our personal interest and those of the Organisation” and call for the ‘impartiality’ and ‘objectivity’ of staff. Conflicts of interest — by international definitions — do not need to include financial benefits.

All this while the EU is fighting for the modernisation of the treaty, calling for it to be aligned with its climate goals and the phasing out of fossil fuels.

The secret of success

A simple internet search would have revealed that some officials of the Secretariat have been spending their free time running networking events for the movers and shakers of the energy world.

In 2012, the ECT’s now-Head of Expansion, Marat Terterov, founded a not-for-profit association, the “Brussels Energy Club” (BREC).

The members of this “gentlemen’s club” meet to exchange views on issues related to energy news. Members include the European office of the Russian state gas company Gazprom EU, and Nordstream 2, ENI, Edison, Tusiad, Naftna Industrija Srbije, Gas Unie. Both Gazprom and Nordstream 2 have cases pending before an arbitration tribunal — cases launched under the Energy Charter Treaty: the Yukos case against Russia and the case against the European Union regarding the Nordstream 2 pipeline.

“The secret of success is to know something nobody else knows,” states the club’s website, quoting Aristotle Onassis. The membership fee of between €500 and €5000 per year allows members access to information “sourced first-hand from high-level energy leaders”. But, while members have the right to share everything “without taboo”, including details on “sensitive” subjects, they are subject to  Chatham House rules when it comes to revealing discussions or the names of other participants.

All friends together

This non-profit also appears to be a pool of talent for the Energy Charter Secretariat. Two other employees of the Brussels Energy Club were hired by the Secretariat, with several years’ overlap between their commitment to both organisations. One managed content for the Secretariat’s website while working as a consultant for BREC. The second, according to his LinkedIn profile, was the BREC’s energy industry relations advisor while employed in the office of the Secretary-General. When asked by Investigate Europe, ECS Secretary-General Urban Rusnák answered “that he recruited colleagues with experience in different sectors, languages and cultural backgrounds. They all form the human capital of this organisation. Because diversity is important.” 

Nadezda Kokotovic, a former employee of a Gazprom subsidiary and director of the BREC since 2018 told us “that many meetings focus on renewable energy as much as any other topic”. 

Investigate Europe asked Marat Terterov for comment, but he refused to answer our questions directly. Instead, he forwarded an earlier-written statement in which he said that he had founded BREC as “a platform for energy debates” but had never “collected a penny”.

And finally, there is the founding member and BREC Club Representative, Mehmet Ogutcu. In April 2013, this Turkish energy expert was working for the Secretariat as “Special Treaty Envoy for the MENA Region” (Middle East-North Africa). He held this mandate till October 2019, when, as he told IE, his “two-year term as an honorary special envoy of the Charter expired”.

Forums, clubs and partnerships

But Ogutcu and Terterov had even more activities in common: there is also their involvement in the European Geopolitical Forum (EGP). According to the company’s registration documents, it was co-founded in 2010 by Marat Terterov before his arrival at the Secretariat, and he continued to be involved until recently. The purpose of the company, listed in the registration document, includes  “consulting, lobbying in the field of energy”. Amongst the Forum’s affiliated experts is Ogutcu, cited as an “expert on global energy and security issues”. Ogutcu also set-up the Bosphorus Energy Club in 2013, along the lines of the BREC. It is described as an “exclusive members-only gathering” place. Until 2018, he was also a non-executive director of an oil company with exploration and production operations in Iraqi Kurdistan, a position he’d held for over six years.

Then there is Global Resources Partnership (GRP), “champion of strategic consulting for finance, energy and natural resources” that has the following clients listed on their website: Eni, BP, Total, State Oil, Tusiad, Ege Gaz, the European Bank for Reconstruction and Development and the European Commission.  Ogutcu is founder and CEO, and Terterov was listed as Senior Consultant for Russia, Ukraine and the Trans-Caucasus. His portfolio page has since been deleted.

Everybody knew?

How could people working for a publicly-funded international organisation, which is subject to annual audits, have been able to carry out these activities, that can be seen as conflicts of interest? 

Questioned by us, Secretary-General Urban Rusnák admitted that he is aware of his employee’s activities within the Brussels Energy Club and the European Geopolitical Forum. “I do not perceive these activities as a conflict of interest,” he explains. As for EGP, he claims that it is a simple “geopolitical site and blog in which Terterov has no formal role”. He says he has no evidence or information that Terterov works for Global Resources Partnership.

Two confidential documents lead us to believe that some in the EU — the Secretariat’s main contributor — have been at least partially informed about these questionable activities.

The first is the summary of a meeting of the ECS Strategy Group held in August 2019 during which the European Union pushed for an international audit. This was in response to the release of a report by the former number two employee at the Secretariat, the Japanese professor, Masami Nakata, who had written about the dysfunction of the organisation and her concerns about conflict of interest.

In correspondence with IE, the EU Commission does not deny knowledge of the issues, and announces actions without providing further details. “The EU takes the matters of good governance and sound financial management very seriously”.  “The Review conclusions and International Public Audit recommendations covering a range of governance and organisational matters are now being implemented.”

In a ‘joint declaration’ dated December 2019, by five states (France, Germany, Norway, Luxembourg and the Netherlands) urged the Secretariat to implement the recommendations of the audit and to protect whistleblowers or run the risk of not voting on the budget and agenda for 2021. They, however, did not act upon this and kept paying the budget contribution.

Peder Qvale, communications adviser in Norway’s Ministry of Petroleum and Energy told us that Norway “has, in meetings on working group level, expressed the importance of adhering to good HR principles. We do not engage in individual personnel cases.”

These documents outline the importance of transparency, particularly during the modernisation process. They raise concerns that links between ECS officials and the fossil fuel industry could lead to questions as to how the treaty can meet the needs of the green transition.

Both Masami Nakata and Yamina Saheb left the Secretariat under a shadow. Nakata returned to Japan, while Saheb has become one of the treaty’s fiercest critics.

A French version of this text was published by our media partner Basta!