Corruption associated with the international oil business is an issue that is "now on the table" according to Heinz Rothermund, Royal Dutch/Shell Group's regional business director for Latin America and Sub-Saharan Africa. He was a speaker, panelist, and lonely oil company representative at the 10th International Anti-Corruption Conference in Prague last October. He was there to describe Shell's tough anticorruption business practices and policies.
However, his presentation was shortened when the panel moderator at a plenary session asked him to respond to a number of pointed remarks and draconian proposals offered by other delegates.
He told this editor later that the issue of corruption is following the same evolutionary path that safety and the environment did, from departmental to corporate to national and international concerns.
Corruption everywhere
Corruption was, of course, also on the table for all of the some 1,300 delegates from 120 countries. It should be noted, though, that the conference was not just about oil and corruption (there were only a handful of registrants from the oil industry) but about corruption in practically all facets of human social activity. To name a few: medical care, accounting and banking (as in money laundering), forestry, sports (as in the Olympics), and, of course, government from city hall to the national capitals.
The primary organizer and administrator of the conference was Transparency International (TI) and its Czech chapter. TI is a Berlin-based, nongovernmental organization (NGO), whose international board is chaired by Peter Eigen, a lawyer with some 25 years experience as a program manager for World Bank programs, mostly in Africa and Latin America.
TI, which has chapters in 80 countries, is known for its worldwide Corruption Perceptions Index, which ranks countries on the basis of 1-10 (with 1 being the worst) according to the degree of corruption perceived there. Countries rich in mineral and oil resources, such as Nigeria, Cameroon and Venezuela, are at the top of the list. Finland and Singapore, which have no oil, are among the cleanest.
Eleodoro Mayorga Alba, lead petroleum economist at the World Bank, looked at this in another way at a workshop on cutting corruption in the oil, gas, and mining sectors. His comparison showed a striking lack of governance in many countries with rich natural resources. He also noted that corruption is not just an aspect of mining or oil production in these countries. In petroleum, it also extends into the downstream sector, where some governments support cozy fuel supply and distribution monopolies.
Draconian proposal
Corruption destroys democracy, debilitates social structures, and creates poverty. And many NGOs and delegates at the conference believe the oil industry is an agent of corruption.
The fact that they don't appear to know the international industry's current structure does not dampen these voices. For them, the remnants of what were once the "Seven Sisters" are the oil world, which in their view apparently doesn't include major state-owned producers not listed on any stock exchange, such as Saudi Aramco and Petroleos de Venezuela SA.
Angola is seen as a major test case for anticorruption efforts by the London-based NGO Global Witness. This war-torn, poverty-stricken country is receiving huge royalties for its oil production, but there is little evdence of where that money is going, according to Patrick Alley of Global Witness.
He wants the oil industry to unite in a code of business practices to combat corruption. Shell International's code, as detailed in the oil and mining workshop by the company's external relations and policy advisor, Jane Hansell, might be a good start.
But Alley primarily wants companies producing in Angola to publicly disclose the amount of royalties and license payments going to the government-not just lump in Angola with all its other foreign operations. This would allow a good estimate, he thinks, of how much of the money is spent in the country and how much is going outside of it or to purchase weapons, as "blood diamonds" do in other parts of Africa. Any company that doesn't participate should not be allowed a listing on the US Securities and Exchange Commission, he proposes.
Rothermund pointed out later that such disclosures would violate contracts with the host country, break its laws, and cause a loss of concession. Other global industries with SEC listings would be in the same boat.
In all this, it appears that the only "white knight" on the horizon is an anticorruption convention being drafted by the Organization of Economic Cooperation and Development for signing by member countries. It could prove a boon for both the industrialized and developing worlds.
