The world is watching Equatorial Guinea. Human rights groups see the tiny West African nation, like many other oil-producing countries in the region, as a test case for whether international financiers, oil companies, and civil society can work together to channel petrodollars away from corrupt institutions and toward sustainable development.
If there ever was a time for Equatorial Guinea to fully embrace international transparency initiatives, it's now. Recent publicity over a failed coup in March still keeps corporate antagonists awake at night; across the internet and in print there are conspiracy theories about what role "Big Oil" might have played in the debacle. More recently, a US Senate subcommittee released a report July 14 detailing its investigation of alleged money laundering between Equatorial Guinea officials and the prominent Washington, DC-based financial institution Riggs Bank NA. The ongoing scandal surrounding Riggs's conduct with Equatorial Guinea will likely mean US policymakers find themselves now more than ever having to study what new role oil firms could play to promote good governance in Africa and elsewhere.
Levin report
Sen. Carl Levin of Michigan, a Democrat on the Senate Government Affairs Committee and a former chairman of the committee's Permanent Subcommittee on Investigations, requested the report. The subcommittee previously investigated money laundering by US banks in 1999 and 2001. The latest report builds on earlier documents, but primarily focuses on how US banks are complying with antimoney-laundering provisions of the 2001 USA Patriot Act. Among the report's conclusions is an allegation that oil companies operating in Equatorial Guinea may have contributed to corrupt practices in that country "by making substantial payments to, or entering into business ventures with, individual Equatorial Guinea officials, their family members, or entities they control, with minimal public disclosure or their actions."
Amerada Hess Corp., ExxonMobil Corp., and Marathon Oil Co. testified at a July 15 hearing. All three companies said they diligently follow US laws and promote corporate cultures that embrace strong ethics. Marathon and Amerada Hess inherited their Equatorial Guinea holdings about 3 years ago from CMS Energy Corp. and Triton Energy Ltd., respectively. ExxonMobil has operated in the country for 10 years.
Company conduct
The companies defended their past conduct in Equatorial Guinea, saying payments to Riggs were made to government accounts under legal production-sharing contracts. Nevertheless, ExxonMobil acknowledged to lawmakers that the practical realities of doing business in developing countries can be challenging.
Andrew Swiger, ExxonMobil executive vice-president, said the country, like many developing nations, has a limited number of local businesses and a small population of educated citizens. That means it may be virtually impossible in some cases to do business in a country without also doing business with a government official or a close relative of a government official, he said.
But Swiger stressed that it is still possible—"indeed, it is expected,"—that business is done ethically and that company officials comply with all US and local laws.