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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" [], 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.


Visit for news, analysis, advocacy Find recent book recommendations at Powell's, a unionized on-line bookstore:

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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

"Will the French Indict Cheney?", Doug Ireland
The Nation online, December 29, 2003

"Foreign Debt and Loot Recovery", editorial
Daily Champion, Lagos, Nigeria, January 7, 2004

Nigeria: Oil and Violence

Sudan: Oil and Rights Abuses

Africa: Bottom of the Barrel
Catholic Relief, June, 2003
[for excerpts, summary, and additional references see]

"West Africa Poised to Be Key US Natural Gas Supplier"
Washington File, US Department of State, January 13, 2004

"Bush-Cheney Energy Strategy:
Procuring the Rest of the World's Oil," Michael Klare
Foreign Policy in Focus-PetroPolitics Special Report

"The Global Record" Terry Lynn Karl and Ian Gary
Foreign Policy in Focus-PetroPolitics Special Report

Letter to World Bank
from Publish What You Pay Coalition
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

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]

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.

AfricaFocus Bulletin is a free independent electronic publication providing reposted commentary and analysis on African issues, with a particular focus on U.S. and international policies. AfricaFocus Bulletin is edited by William Minter.

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