A meeting last month on corruption provided a reminder that it's easier to espouse righteousness on this subject than it is to be right. Everyone knows corruption is bad. In growing numbers, representatives of companies and governments, from large countries and small, vow to resist it. Governments outlaw it. International organizations address it in various ways. Companies declaim against it in policy statements. Still, corruption happens.
Where legal systems are weak and people are desperate, corruption thrives. Yet even strong systems and general prosperity can't annul the temptation of easy money. An institutional movement against corruption during the past several decades has repudiated the old excuse that corruption is just the way the world works. But as long as there are individuals motivated more by easy money than institutional propriety, the potential for corruption will endure. Miscreants work in companies and governments alike.
Continuing progress
Meetings like the one in London June 17 on the UK government's Extractive Industries Transparency Initiative demonstrate continuing progress in the institutional part of the struggle (OGJ, July 7, 2003, p. 7). Proposed by UK Prime Minister Tony Blair at the World Summit on Sustainable Development in Johannesburg last September, the initiative seeks to improve disclosure of financial dealings between international companies and governments with which they do business.
It's a worthy goal—but difficult to achieve. Oil companies at the London meeting readily saluted the principle but voiced practical concerns. Some of them worried about the sanctity of contracts, about having to reveal proprietary secrets, and about sovereignty of host-country laws. Some wanted whatever comes of the initiative to apply consistently to all international enterprises. Some wanted it to be voluntary.
The complex practicalities of international business thus strain righteous intention. What to do?
Clarification of the meaning and purpose of transparency as an anticorruption tactic would help. Companies naturally fear pressure to disclose everything about their work. But transparency needn't include technical secrets and information about bids and negotiations for contracts and licenses.
What the fight against corruption needs is an approximation of money available to specific governments from payments by international investors and from profit-sharing in related projects. The information doesn't have to be specific to individual companies. Totals should do. Where international ventures generate more cash than shows up in national accounts, either the accounting system needs work or corruption is siphoning funds. That's the revelation that matters.
Disclosure of this kind of discrepancy is a powerful but coarse tool. If a sovereign government chooses not to address suspicion raised this way, and if the local population is too distracted or politically weak to provoke action, what can outsiders do?
Directly, not much. But international lenders can exert strong pressure on balky governments unable to account for the dispensation of incoming cash. And international companies can adapt themselves to newly aroused suspicions that some of the payments they've made or might have to make amount to bribes disguised as official fees or local benevolences. It's not a comfortable prospect. It shouldn't be. It might encourage companies, especially those from countries with antibribery laws, to look elsewhere for opportunities. It also might encourage them to ask their governments to pressure other governments to pass antibribery laws.
The right fight
Resistance to corruption is uneven and messy. But it's the right fight. Oil and gas companies, because so many of them work in countries not their own, and because they introduce so much potential wealth wherever they work, march at the vanguard. They need to be willing to take first steps. To justify the intrusion inherent in resource development by outsiders, benefits must flow not just to owners of the companies that perform the work and the relatively few officials with whom they deal but also to citizens of the countries where the work occurs—all citizens. In far too many places, corruption keeps that from happening. Corporate anticorruption policies are laudable and essential. They're just not enough.
At its most basic level, the power of disclosure is the power to embarrass, which makes transparency less about legality than pressure. Unsettling? Yes. And it's an essential tactic in an institutional fight in which human welfare and the legitimacy of international oil and gas investment must share victory.