This story was co-published with Foreign Policy.

Last July, five months before she accepted the Nobel Peace Prize, Liberian president Ellen Johnson Sirleaf welcomed Chevron CEO John Watson into the executive mansion to herald one of the largest investments in her country since the end of its devastating civil war in 2003: Chevron's purchase of the rights to explore for oil off the coast of the West African nation.

Sirleaf told the CEO, "We hope that you will work with us to ensure the fullest of integrity in everything that you do." Watson reciprocated, telling the president, "The hallmark of your administration has been anti-corruption, transparency, rule of law. We look forward, at Chevron, to helping you establish that high integrity method of doing business in this country."

But in the judgment of one of the Liberian government's own anti-corruption watchdogs, Chevron's investment had been tainted even before the multinational oil giant paid its first dollar. According to a report of the Auditor General of the Liberian General Auditing Commission (GAC), a series of bribes -- less than $120,000 when added altogether -- was allegedly paid in 2006 and 2007 so that the legislature would grant two small firms the rights to four oil concessions off Liberia's coast. One of those companies, which purchased rights to three offshore properties, sold its concessions to Chevron.

No one has been prosecuted or charged with wrongdoing for the alleged bribes. According to a cache of U.S. diplomatic cables obtained by ProPublica under the Freedom of Information Act, both Sirleaf and the U.S. State Department pushed for the three allegedly tainted concessions to be sold to Chevron even after the allegations became public. ExxonMobil is now zeroing in on the fourth concession. These transactions give U.S. companies potentially rich new oil reserves, and the Chevron deal alone marks the largest concession in Liberia's history, according to one of the diplomatic cables.

What happened after the alleged bribes became public is a tale of compromise and competing priorities that shows how hard it is to root out alleged corruption even when a Nobel-laureate president has made that one of her main goals, and even when the United States has poured more than $84 million since 2007 into good governance and anti-corruption programs.

Chevron declined to discuss its investment in detail but provided a statement saying that the company's "engagement with the Liberian Government in relation to our blocks has been made in accordance with all applicable legal and regulatory requirements." ExxonMobil declined to comment in detail but said its agreement is subject to due diligence.

The Money Trail

Liberia's miniature resource boom dates back to the 1997-2003 presidency of Charles Taylor, currently on trial for war crimes at The Hague, when a survey conducted by a private company suggested oil lay off the Liberian coast. So in early 2004, not even a year after the nation's 14-year period of civil war ended, the government began marketing offshore properties for oil exploration.

Four properties, or blocks, each extending about 20 miles offshore, lie between the capital Monrovia and Buchanan, the nation's second largest port city. Two oil companies, Oranto Petroleum Limited and Broadway Consolidated PLC, negotiated production-sharing contracts with the National Oil Company of Liberia (NOCAL). Essentially, Oranto and Broadway acted as middlemen; their contracts allowed them to sell oil exploration rights to international oil giants for millions of dollars — but first those contracts had to be ratified by the Liberian legislature. They were submitted to lawmakers for approval in 2006, and that's when money allegedly started changing hands.

The long and winding money trail, detailed here, boils down to NOCAL paying money, sometimes on behalf of Oranto, to legislators and legislative staff, according to the report by Liberia's GAC.

NOCAL made two payments in the second half of 2006, totaling $76,900, to its own chief accountant, Timothy G. Wiaplah, who, in turn, "allegedly disbursed [the money] to the Legislators," according to the GAC.

Referring to most of that money, the then chairman of the NOCAL board, Clemenceau B. Urey, told GAC auditors that the contracts languished in the legislature for

about eight months. During this period, we continued to engage the Legislators and explained to them what benefits the discovery of oil would mean for Liberia. They, however, continued to stick to their demands. After consultation with the authorities we gave in to their demands, reluctantly. The first amount was $50,000.00 [and] was approved by the Board.

Urey added:

We were quite aware that making payments to the legislators was wrong. These payments were made after much discussion, consultations and reflection. We decided to comply with the request because we believed that ratification of these contracts could lead the discovery of oil and this could bring huge economic and social relief to our people. The amounts were not paid to induce the Legislators to ratify faulty contracts. I trust what we have done will be vindicated when oil is discovered and the lives of our people are transformed.

When ProPublica contacted Urey, he referred comment to Christopher Z. Neyor, who until this month was president and CEO of NOCAL. Neyor denied wrongdoing by his company.

NOCAL made a second set of payments, according to the GAC report, in April 2007: $40,000 to Alomiza Ennos Barr, at that time a member of the Liberian House of Representatives, and $1,500 to James R. Kaba, then the House's chief clerk. It is not known whether Barr voted to ratify the contracts, because the House of Representatives did not at that time publish how its members voted. As clerk, Kaba did not have a vote.

Barr told auditors that she provided some of that payment to the Joint Committee of the House and Senate on Investment, but the chairman of that committee denied receiving it, and the trail went cold. Kaba "refused to indicate the purpose for which he received the funds," the GAC report says.

Barr declined to comment to ProPublica, and Kaba has died. As for the companies, Oranto, a Nigerian firm with deals in several West African countries, couldn't be reached for comment. No evidence links Broadway Consolidated, which has since renamed itself Peppercoast Petroleum, to the alleged bribes. The company declined to comment on the GAC findings but said, "Our Board is committed to high standards of corporate governance and transparency permitted by law, consistent with a well-run company." Based in Isle of Man, the company says on its website that its "main asset" is the Liberian concession.

NOCAL's Neyor denied in an interview that any of the payments constituted bribery. "That's ridiculous," he said noting that the total alleged amount — less than $120,000 — "is so minute." He described the payments as legitimate funds provided to the legislature so it could purchase "computers, stationary, to make copies." He explained, "In 2006, the allocation for their budget was very small for their staff, they didn't have computers – nothing — to analyze anything." "It was all transparent" and "in the books," he said, and suggested that only "an error at the time by the financial people" left the purpose of the funds unclear.

The GAC, however, determined that the payments, totaling $118,400, were "intended to influence the Legislature, thus undermining Liberia's democracy" and concluded that they "constituted bribery." The legislature ratified the contracts on Aug. 23, 2009.

The Scramble

On March 30, 2010, the GAC report leaked out and Monrovia newspapers trumpeted the details of the alleged bribes. "Within hours of the media reports, Chevron officials contacted [the U.S. embassy] seeking further information and expressing concerns about the implications for Chevron's compliance with the U.S. Foreign Corrupt Practices Act," according to another U.S. diplomatic cable obtained by ProPublica.

That cable — dated April 28, 2010, and sent to the Secretary of State, the Department of Justice, the National Security Council, and other agencies in Washington — describes a scramble of closed-door meetings. "Chevron's grave concerns prompted the president of Chevron Africa and Latin America" — Ali Moshiri — "to fly to Liberia for a private discussion with President Sirleaf on April 20," the cable says. Moshiri also met with the U.S. chargé d'affaires in Monrovia, according to the cable, while U.S. Under Secretary for Political Affairs William Burns arrived and met with Sirleaf together and the U.S. ambassador to Liberia, Linda Thomas-Greenfield.

In the GAC report, Auditor General John S. Morlu II recommended that the Oranto and Broadway contracts be nullified — meaning that those companies would have lost the rights to sell the concessions to Chevron, ExxonMobil, or any other company. In that case, the government would likely have had to reopen bidding on the offshore properties — a major worry for Chevron. According to the April 28 U.S. cable, Chevron feared that "the allegations alone would cast doubt on the concessions' legitimacy and open the door for a future GOL [Government of Liberia] decision to nullify the contracts."

According to the cable, Chevron had another worry: that the U.S. "Department of Justice might find Chevron 'guilty by association' if it could not establish a sufficient firewall between itself" and a partner company that might have been involved in corrupt practices.

The cable also contained a warning about U.S. energy security interests. The United States has been pursuing oil exploration around the globe, including in West Africa, in order to be less reliant on oil producing nations in the volatile Middle East. In the cable, a source, whose name was redacted, cautioned that if Chevron backed out of the Liberia deal because of Department of Justice scrutiny, then "top-tier oil majors likely would arrive at similar conclusions. That would leave the field open to Russian and Chinese firms ... that place less emphasis on good governance."

As for Sirleaf, she "assured Moshiri of her eagerness to do business with Chevron," the cable says. Another cable, dated April 26, 2010, states, "Sirleaf stressed that she will not nullify the existing contracts, despite a recommendation by the General Auditing Commission to do so."

A later U.S. cable, also obtained under FOIA, sheds light on Sirleaf's thinking. The Liberian president wanted "Chevron in the country because it must abide by U.S. [anti-corruption legislation], which might induce improvements in Liberia's investment climate," according to the cable, dated May 4, 2010.

Nullifying the contracts, as the auditor general had recommended, would also take precious time. Sirleaf, the cable reports, said that "'going back to the drawing board' and rebidding the blocks would take years and delay Liberian oil extraction gains."

In Liberia, delaying a major economic investment has real consequences. One of the poorest nations on the planet, Liberia ranked 182 out of 187 countries and territories on the United Nations human development index last year. More than 80 percent of the population survives on less than $1.25 a day. It also has one of the highest levels of income inequality in the world, with a few very wealthy individuals.

The cables show that the U.S. government, Chevron, and Sirleaf all voiced concerns about the alleged corruption, each for their own stated reasons. The U.S. government has invested more than $84 million over the last five years in a variety of anti-corruption and good governance programs in Liberia, according to USAID. Chevron wanted no legal liability. And Sirleaf, who was then heading into the campaign for her second term, had made fighting corruption a major part of her election pitch.

But each of these players also had other interests. Chevron wanted the lucrative oil reserves that might lie in the offshore blocks. The United States wanted a U.S. company to have access to this strategically important potential energy source. Sirleaf wanted the economic development that would come of the deal, and she wanted that development spearheaded by a company subject to America's strict anti-corruption laws.

The Deal Goes Through

In the end, Sirleaf effectively addressed one of Chevron's concerns — that the government of Liberia might come back later and nullify the contracts. The cables report her telling the U.S. ambassador that "she is willing to give Chevron what it needs in terms of legislative approval for 'comfort'."

For Chevron, the only remaining question was its exposure to U.S. legal action under the Foreign Corrupt Practices Act (FCPA). "Chevron doesn't have any liability for its pre-acquisition conduct," Philip Urofsky, a former federal prosecutor who pursued FCPA cases at the Department of Justice, said in an interview. As for Oranto, Broadway and NOCAL, they are not American companies and were not subject to FCPA at the time of the payments. So the primary risk to Chevron, said Urofsky, was these companies' current and future actions: "If there's any ongoing conduct then that could very much become an ongoing problem." Chevron declined to comment on any possible FCPA exposure.

Chevron acquired 70 percent of Oranto's stake in the offshore properties; the terms of that deal are not known. But in August 2010 Chevron was added to the allegedly bribe-tainted contract between Oranto and NOCAL that the legislature had ratified back in 2009. Chevron gained the rights to develop the three offshore blocks, and it agreed to pay almost $10 million to the government of Liberia and disburse $10.5 million in tax-deductible community development funds over five years. Chevron has also paid the Liberian government $15 million in withholding taxes for 2010. In a cable, the U.S. Embassy in Monrovia estimated the potential value of the investment at $10.7 billion.

The embassy declined to make Ambassador Thomas-Greenfield available for an interview, but she celebrated the deal in a Jan. 25, 2011, cable with the subject "Outreach and Commercial Success." Thomas-Greenfield wrote that "Embassy intervention and advocacy ensured a level, open 'playing field' ... that resulted in Chevron signing a 10.7 billion [sic] contract...this constitutes the largest concession in Liberian history."

Last November, ExxonMobil announced its intent to acquire rights to develop the last of the four blocks. In a complicated deal, the company plans to take a 70 percent interest in the block from a small, Calgary-based company, Canadian Overseas Petroleum Limited, which, in turn, is in the process of purchasing the block from Broadway (now renamed Peppercoast Petroleum). ExxonMobil's offer would provide Canadian Overseas Petroleum with $55 million up front, according to a press release by the Canadian company, and up to $42 million to cover exploration and "venture" costs.

Arthur Millholland, Canadian Petroleum's president and CEO, did not respond to request for comment. A spokesman for ExxonMobil would not comment beyond saying, "The agreement is subject to due diligence and government approval."

The Aftermath

More than a year after the ratification of the Chevron deal, and just as the company prepares to drill its first well off the Liberian coast, none of the individuals involved in the alleged bribery has been prosecuted in connection with the payments. The $118,400 in alleged bribes were never returned. And the contracts have not been canceled, as the auditor general recommended, but remain in place.

Morlu, the auditor general, was not re-nominated to his position by Sirleaf, who won re-election in November. Morlu had often clashed publicly with Sirleaf and the Ministry of Justice, which has pursued only two cases out of more than two dozen GAC audits that recommended criminal investigations, according to Morlu and Minister of Justice and Attorney General Christiana Tah. At one point, a couple of months after the audit into the alleged bribes leaked, state security personnel stormed the GAC offices, for reasons that remain unclear. That incident prompted Sirleaf to publicly reprimand her stepson, Fombah, who oversees the agency responsible for the raid.

The revenues flowing into and out of NOCAL are tracked by Liberia's Extractive Industries Transparency Initiative, but the group's reporting has experienced delays. NOCAL has not been audited since the original GAC report, which covered the company's actions through June of 2008.

In December, Transparency International released its 2011 Corruption Perceptions Index; Liberia had dropped four spots from last year. This month, Robert Sirleaf, the president's son, was named chairman of the board of NOCAL.

This week, NOCAL announced that an exploratory well struck "a potentially large accumulation of oil deposits" in an offshore block very near to those Chevron is now exploring -- a positive omen for all the blocks in that field.

The high-level meetings in Monrovia and the attempts to follow the money seem a world apart from Marshall City, a warren of woven thatch huts that sits on Liberia's Atlantic coast at the terminus of a crimson mud road. African-American settlers named the town for U.S. Supreme Court Justice John Marshall, who passed away in 1835, the year that this area was homesteaded. Today, the 13,000 residents live without running water or electricity, save for the few who can afford generators.

Each day at dawn, men set out from the shore in worn, wooden skiffs casting their nets for a catch of cassava fish, bonny, grouper and sardines, which the women set out to dry before selling at market. According to the United Nations, almost two-thirds of Liberia's gross domestic product is generated from fishing, agriculture and forestry, much of it at the subsistence level. But there are concerns for the future. "The ocean is not producing," said Aci Johnson, a 30-year-old market vendor and mother of four children, who has noted a drop in the local catch over the last year.

Marshall's future — like that of hundreds of rural towns that line the coast near the oil concessions — may depend on the deal Chevron has struck, specifically the $10.5 million in community-development funds intended to go directly to the Liberian people. Government officials have held meetings with the Marshall community, promising improvements in education and health care.

When a Chevron corporate responsibility team visited Liberia, Sirleaf "emphasized to Chevron that no CSR [corporate social responsibility] funds should come through the GOL [government of Liberia] budget," an October 2010 U.S. diplomatic cable noted. The president hoped "to avoid many of the governance issues" that had emerged when previous corporate development money was funneled through local government offices, according to the cable.

But when ProPublica asked for a detailed accounting of these social development funds, to see what entities received money, both Chevron and NOCAL offered only general background on the spending.

In Marshall, Mayor J. Konah McCauley said, "This is one of the oldest cities in the republic and, should I say, we are a little bit behind developed." Speaking of Liberia's oil exploration he said, "We hope development comes out of it."

The writer is a reporter and the author of American Warlord, a forthcoming book about Charles Taylor, his American son Chucky Taylor and the first U.S. prosecution under the federal anti-torture statute, to be published by Knopf / Random House.