This is not simply an issue of corrupt national leadership. Global Witness’s investigations have uncovered all manner of murky deals in the oil world, from running slush funds through tax havens to illicit payments into dictators’ bank accounts, illegal arms deals via invisible oil-company subsidiaries and contracts of no benefit to the host country. A common thread: companies generally do not disclose tax payments to host governments, making it tough to hold governments accountable for public revenues.
It is in the interest of companies and consuming countries to reverse this situation. Oil companies need to operate for the long term, and social unrest could be catastrophic. That’s why Global Witness conceived and colaunched the Publish What You Pay (PWYP) campaign in 2002. That led to the U.K. government’s Extractive Industries Transparency Initiative (EITI), which aims to open the books on company payments to gov-ernments and government oil revenues. EITI is starting to show signs that it can deliver: Nigeria and Azerbaijan should soon meet its full criteria for disclosing information. Others are making progress, while a third group, including Equatorial Guinea and the Congo, is in our view backsliding.
Though many companies back this campaign in a meaningful way, others say one thing in public and do another in private. At a recent EITI gath-ering, this writer was browbeaten by senior officials of one American company who are unhappy about our description of the nonperformance of Equatorial Guinea. Another U.S. company has signed on to EITI but is lobbying a Southeast Asian country not to participate.
In the Congo, the government has pursued a vendetta against the civil-society participants in EITI, chasing them on trumped-up charges through the courts. This demonstrates a key weakness of the system: it can’t hold governments accountable if the watchdogs are subject to arrest. There must be pressure from the international community to thwart governments that abuse or dodge the process.
Take the supply of gas from top-10 producer Turkmeni-stan, where 75 percent of government spending is off budget, with the bulk of revenues deposited in a German bank, where Turkmenistan’s President Saparmurat Niyazov retains sole control. We think the EU regulators should move to open these accounts to scrutiny. At the same time, most of Europe’s gas supply comes from Russia via Ukraine, where there are no data about this business and the mysterious intermediary companies involved. Europe has a security interest in shedding light on these activities.
When we first proposed a global revenue-transparency initiative eight years ago, we were laughed at. Now we are at a crossroads. We need to see a stronger push by companies to promote revenue transparency, and by consuming nations to enforce the process of verifying which oil states are meeting the full criteria on transparency. We also need to extend the scope of the transparency initiative to contracts, which would expose deals that are loaded against host nations. The more light we bring to the oil market, the more likely it is to benefit all the players involved.
