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Africa: Oil and Transparency
AfricaFocus Bulletin
Jan 16, 2004 (040116)
(Reposted from sources cited below)
Editor's Note
From Houston to Luanda, London to Lagos, Washington to Baghdad, or
wherever else oil is found or sold, the nexus of oil, cash, and
politics poses a fundamental challenge to democratic
accountability. Campaigns for greater openness, including the
global Publish What You Pay campaign, are making some headway.
Still, resistance to transparency is the most common note. In the
US, Vice President Dick Cheney continues to refuse to release even
the names of the industry executives who advised him on the Bush
Administration's energy plan.
In Angola, in response to a new Human Rights Watch report detailing a
long record of refusal to publish reports on financial discrepancies on oil revenue, the Angolan
president's office replied defensively, asserting that "no
independent audit has ever been done to prove the accusations
against the government."
Accountability, including substantive policy changes or repayment
of diverted funds, is even more difficult than transparency. In
December, after years of effort by Nigeria's Economic and Financial
Crimes Commission, Britain repaid to Nigeria a little over $5
million (3 million pounds), less than 1 percent of the total of
$1.3 billion estimated to have been processed by British banks for
former Nigerian dictator Sani Abacha and his associates. Earlier
this month, In early January, a coalition of US organizations
hosted a national summit on "Petropolitics"
[
http://www.petropolitics.org/pp.htm], highlighting the weight of
oil interests in US global policy.
This issue of AfricaFocus Bulletin contains excerpts and links to
these and other recent reports on the oil/cash/politics nexus.
Another issue of AfricaFocus Bulletin sent out today contains
excerpts from the report just released by Human Rights Watch on oil
revenue in Angola.
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Visit http://www.africafocus.org for news, analysis, advocacy
Find recent book recommendations at Powell's, a unionized
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Recent links on Oil, Transparency, & Accountability in Africa
"A Nigerian Contract at the Heart of a Corruption Affair",
Eric Decouty, Le Figaro, December 20, 2003
http://www.truthout.org/docs_03/122203G.shtml
"Will the French Indict Cheney?", Doug Ireland
The Nation online, December 29, 2003
http://www.thenation.com/doc.mhtml?i=20040112&s=ireland
"Foreign Debt and Loot Recovery", editorial
Daily Champion, Lagos, Nigeria, January 7, 2004
http://allafrica.com/stories/200401080184.html
Nigeria: Oil and Violence
http://www.africafocus.org/docs03/nig0312.php
Sudan: Oil and Rights Abuses
http://www.africafocus.org/docs03/sud0311.php
Africa: Bottom of the Barrel
Catholic Relief, June, 2003
http://www.catholicrelief.org/africanoil.cfm
[for excerpts, summary, and additional references see
http://www.africaaction.org/docs03/oil0306.htm]
"West Africa Poised to Be Key US Natural Gas Supplier"
Washington File, US Department of State, January 13, 2004
http://allafrica.com/stories/200401140087.html
"Bush-Cheney Energy Strategy:
Procuring the Rest of the World's Oil," Michael Klare
Foreign Policy in Focus-PetroPolitics Special Report
http://www.fpif.org/papers/03petropol/politics.html
"The Global Record" Terry Lynn Karl and Ian Gary
Foreign Policy in Focus-PetroPolitics Special Report
http://www.fpif.org/papers/03petropol/development.html
Letter to World Bank
from Publish What You Pay Coalition
http://www.publishwhatyoupay.org
December 17, 2003
Henry Parham
Publish What You Pay Co-ordinator
Open Society Institute - London
2nd Floor, Tower Building
11 York Road, London SE1 7NX
United Kingdom
Telephone: +44 20 7981 0315
Facsimile +44 20 7981 0319
E-mail: [email protected]
Mr. James Wolfensohn
President of the World Bank
The World Bank
1818 H Street, N.W.
Washington, DC 20433
United States of America
17th December 2003
Re: News Release on 9/12/2003: "WBG Endorses Extractive Industries
Transparency Initiative"
Dear Mr. Wolfensohn,
The Publish What You Pay coalition, which includes more than 170
NGOs, welcomes the World Bank Group's growing commitment to
bringing about revenue transparency in the extractive industries.
The WBG's recent endorsement of the Extractive Industries
Transparency Initiative (EITI) on 9th December 2003 is a positive
step in this direction.
However, we feel the WBG will need to go beyond merely endorsing
the EITI if it is to fulfil its leadership role in implementing
revenue transparency in all countries where this is essential for
development, growth and poverty alleviation. As an institution with
very significant leverage over governments of resource-rich
countries and over many extractive industry investments, the WBG
could contribute significantly to meaningful and rapid progress on
transparency. Whilst we welcome the WBG's collaboration with the
EITI, discussions within the latter currently focus on a voluntary,
'pilot country' approach, which is unlikely to bring about real
change in all countries where revenue transparency is critical. We
feel the WBG can play a vital role within the EITI in promoting a
more vigorous model of transparency, which would in turn support
the development objectives of the WBG.
The PWYP coalition strongly believes that the WBG should mainstream
transparency into its activities by requiring that governments
mandate the disclosure of all payments to the state by extractive
companies and all receipts of such payments by state agencies or
representatives. This should be a core condition for all structural
adjustment lending to the oil, gas and mining sectors and for
macroeconomic purposes, as well as for all technical assistance and
other activities.
Companies that benefit from any form of WBG support, such as IFC
funding or MIGA guarantees, should be required to publish what they
pay governments for the right to access and exploit oil, gas and
mining resources. Required disclosure should include taxes, fees,
royalties and other payments, including signature bonuses.
Production-sharing agreements and other contracts vital to the
tracking of revenue should also be disclosed.
This type of conditionality is necessary for the alleviation of
poverty through sustainable development. We also believe that
transparency is in the best interests of business, as was made
clear by numerous statements to the EITI meeting in June.
We strongly believe the WBG should support the publication of
payments to governments by each individual company, rather than on
an aggregated basis between companies. Companies individually
disclose such data in developed countries and to apply an
aggregated approach in the developing world would risk accusations
of double standards. If companies are concerned that individual
disclosure could violate confidentiality clauses in their
contracts, then the appropriate solution is for the WBG to work
with these governments to ensure that confidentiality clauses are
waived.
We note, for example, that the Government of Nigeria has recently
committed to requiring oil and gas companies in Nigeria to
individually publish what they pay the Government, as well as the
government publishing what it receives. We would be concerned
therefore if the Bank were to be advocating a lower standard of
transparency than that agreed by one of the major oil producing
countries that has been most deeply affected by corruption and bad
governance.
We look forward to a continuing dialogue on these issues,
especially as the WBG considers its response to the Extractive
Industries Review. We note that the EIR has recommended the
vigorous pursuit of revenue transparency by the WBG at country and
company level and we strongly endorse this recommendation.
Yours sincerely,
Henry Parham, Publish What You Pay Co-ordinator (on behalf of the
coalition members)
Heidi Feldt, World Economy, Ecology & Development
George Gelber, CAFOD
Ian Gary, Catholic Relief Services
Arvind Ganesan, Human Rights Watch
Gavin Hayman, Global Witness
Vanessa Herringshaw, Save the Children UK
Micha Hollestelle, Pax Christi Netherlands
Karin Lissakers, Open Society Institute
Geraldine McDonald, CIDSE
David Murray, Transparency International UK
Michel Roy, Secours Catholique/CARITAS France
Keith Slack, Oxfam America
cc. World Bank Board of Directors
EITI Team Department for International Development
Summary of International Initiatives on Oil Transparency
[from Human Rights Watch report on the use of oil revenue in
Angola. For full report see
http://www.hrw.org/doc?t=africa&c=angola]
The Extractive Industries Transparency Initiative (EITI)
The Extractive Industries Transparency Initiative (EITI) was
launched by U.K. Prime Minister Tony Blair at the World Summit on
Sustainable Development in Johannesburg, South Africa on September
2, 2002. It is a voluntary initiative that aims to increase the
transparency of natural resource revenues by developing
standardized reporting requirements for companies and governments.
The initiative has broad support from multinational and national
companies, industry organizations, governments, NGOs, and
multilateral institutions. Human Rights Watch has participated in
this effort. At this writing, the reporting guidelines are still
being revised.
[The companies and industry organizations in the initiative
include: the American Petroleum Institute, Anglo-American plc.,
Areva, BG Group, BHP Billiton, BP, Chevron Texaco, ConocoPhillips,
De Beers, ExxonMobil, the International Association of Oil and Gas
Producers, the International Council on Mining and Metals, ISIS
Asset Management on behalf of a coalition of investment funds,
Marathon, Newmont, NNPC, Repsol YPF, RioTinto, Shell, South Africa
Chamber of Mines, SOCAR, Sonangol, Statoil, Total. The governments
include, Angola, Azerbaijan, Belgium, Botswana, Cameroon, Canada,
China, Democratic Republic of Congo, Equatorial Guinea, France,
Germany, Ghana, Indonesia, Italy, Japan, Kazakhstan, Mozambique,
Netherlands, Nigeria, Norway, Sierra Leone, South Africa,
Timor-Leste, Trinidad and Tobago, and the United States. The
participating NGOs include: the African Network for Environmental
and Economic Justice, Angolan Civil Society, CAFOD, CARE
International, Global Witness, Human Rights Watch, Open Society
Institute, the Publish What You Pay Coalition, Save the Children
Fund, Transparency International, Transparency Kazakhstan, and the
Trend Information Analytical Agency of Azerbaijan. The multilateral
organizations include: the International Monetary Fund, NEPAD, the
Organisation for Economic Co-operation and Development, the United
Nations Development Programme, and the World Bank.
Since it is a voluntary initiative, host governments and companies
must agree to adopt the initiative before data can be published.
Companies have generally refused to publish their payments to
governments without approval of the host government. This stance is
partly in response to BP's experience in Angola as well as
excessive caution towards contractual agreements. It is also not
clear whether sponsoring governments, such as the U.K., U.S., or
Norway, will forcefully press governments and companies to
implement the guidelines.
As of June 17, 2003 when a large formal meeting to endorse the
process took place, only Timor-Leste, Azerbaijan, Ghana, Trinidad
and Tobago, Indonesia and Nigeria have said that they would
implement and pilot the initiative. The Angolan government has
refused to implement the initiative, even though Sonangol expressed
a willingness to publish data.
The Publish What You Pay Campaign (PWYP)
The Publish What You Pay Campaign is an NGO-led initiative that is
pressing governments to require publicly traded natural resource
extraction to disclose net payments, including taxes, royalties,
fees and other transactions with governments and/or public sector
entities for every country in which they operate. Global Witness,
George Soros and the Open Society Institute originally started it.
Human Rights Watch is a member of this coalition and the campaign
is supported by more than one hundred NGOs throughout the world.
The PYWP campaign addresses one of the main problems with voluntary
initiatives: the real or perceived competitive advantage some
companies may gain if they do not adopt standards. Governments may
shun such companies in favor of companies that do not want to be
more transparent. A regulatory approach would apply equally to all
companies, thereby negating this problem. However, even if all
publicly listed companies were required to publish payments to
governments, it would not necessarily shed light on all extractive
industry payments to governments. Private companies would not be
covered by the same requirements as public companies, nor would
state-owned companies.
Because state-owned companies, in particular, would not be covered,
a substantial amount of revenue would still be opaque. For example,
the Inception Report of the Oil Diagnostic showed that in 2000,
foreign companies paid approximately U.S.$1.65 billion to the
Angolan central bank as required by law. Sonangol, however,
underpaid the central bank by approximately U.S.$2.127 billion.
Nevertheless, a regulatory requirement that applied to publicly
listed companies would help to determine how much those companies
paid governments. It would not be a solution in itself, but would
contribute to a broader solution to the problem of revenue
opaqueness.
The G-8 Statement
On June 2, 2003, the G-8 issued a declaration on "Fighting
Corruption and Improving Transparency." It noted that:
Transparency inhibits corruption and promotes good governance.
Increased transparency of government revenue and expenditure flows,
as well as strengthened enforcement efforts against bribery and
corruption, will contribute to achieving these goals and to
increasing integrity in government decision-making - thereby
ensuring that resources, including development assistance, achieve
their intended purposes.
The G-8 member states committed themselves to press countries be
more transparent; guide bilateral aid to governments that are
committed to improve transparency, good governance, and rule of
law; encourage publication of IMF Article IV Staff Reports;
participate in reviews under the IMF Code of Good Practices for
Fiscal Transparency; and incorporate anti-corruption plans into
Poverty Reduction Strategy Papers (PRSPs). The G-8 member states
also pledged to increase law enforcement by strengthening their own
anti-bribery laws; accelerating peer reviews under the Organization
for Economic Cooperation and Development (OECD) Convention on
Combating Bribery of Foreign Public Officials; encouraging the
private sector to develop and implement anti-bribery compliance
programs; completing the U.N. Convention Against Corruption;
denying "safe haven" to corrupt officials and allowing for their
extradition; encouraging wider accession and ratification of the
U.N. Convention on Transnational Organized Crime; requiring
financial institutions to conduct greater "due diligence" in
regards to suspicious activities by government officials;
implementing the recommendations of the Financial Action Task Force
(FATF); and considering whether to include provisions that would
require transparency in government procurement as part of bilateral
and regional trade agreements.
Based on this declaration, the G-8 committed to "commence
negotiations aimed at achieving an inclusive multilateral agreement
on transparency in government procurement." In its provisions
addressing corruption and transparency in revenue dependent
countries, the prescriptions of the G-8 were similar to those of
the EITI. The G-8 said that it would encourage governments and
companies to provide aggregated data on revenue flows to a
third-party such as the IMF or World Bank; provide technical
assistance to governments; and encourage the World Bank and IMF to
provide technical assistance to governments. However, the G-8 only
committed to do this with governments that voluntarily agree to
participate and it did not specify which governments would be
involved in this effort or when it should begin. While a positive
step forward, the declaration does not set up a new program to
identify specific countries in need of improvement, imposed
deadlines, or provide penalties for noncompliance. Instead, it
complements the activities of governments and institutions.
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