This week's cover depicts work in 2002 along the Chad-Cameroon oil pipeline. Oil flow began in July 2003. ExxonMobil Corp. is lead company in the consortium that built the pipeline, touted during construction as the largest private-sector industrial project in Africa.
It also was the focus for yet more controversy over oil and gas development in the world's poorer countries. This project, however, might—might, mind you—have turned a corner for such development. And if so, World Bank involvement would have been critical.
A June 2003 report by nongovernmental organization (NGO) Catholic Relief Services (CRS) said the bank was the "catalyzing force for this controversial project."
The report said that, for loans to both Chad and Cameroon governments and other arrangements, the World Bank "required revenue management law that mandates Chad funnel oil revenues into four areas: a Future Generations Fund; priority development projects such as health, education, water, etc.; a special fund to compensate the oil-producing Doba region in the south; and general government coffers.
"The law also establishes a Petroleum Revenue Oversight Committee made up of government and civil society members, who will oversee and approve the spending of these oil monies."
OGJ Editor Bob Tippee said that the bank's scheme "isn't perfect," but "any movement toward mandatory disclosure constitutes progress" (OGJ Online, Oct. 20, 2003).
Such disclosure is the goal of a growing list of NGOs and other groups in a campaign called "Publish What You Pay."
The call; the response
The campaign touts support from more than 130 "civil society" groups around the world and was launched in June 2002 by investor and financier George Soros. It insists that oil, gas, and mining companies publish "net taxes, fees, royalties, and other payments as a condition for being listed on international stock exchanges and financial markets."
Among its members are Amnesty International, Christian Aid, Friends of the Earth, Global Witness, Oxfam, Save the Children, Transparency International, and CRS.
Soros said, "Secrecy over state revenues encourages ruling elites to mismanage and misappropriate money rather than invest in long-term development." He urged that "transnational resource companies [be required to] disclose what they pay for the products of the individual countries in which they operate."
CRS's 2003 report said, "The campaign is not calling on companies to disclose commercially confidential information but rather to publish the same basic data on payments made to governments that they are required to disclose in many developed countries."
Sounds reasonable and straightforward. Here's consortium-leader ExxonMobil's statement:
"Agreements with sovereign host governments typically limit disclosure of financial information. Governments in developed countries, international financial institutions, and international petroleum companies consistently emphasize to host governments the importance of respecting the sanctity of contracts as a fundamental principle of good governance. Companies must practice what they preach. U ExxonMobil opposes corruption in any form, and we are firmly committed to honest and ethical behavior."
Behind this evasive and obfuscating language is the reality that no company is about to jump ahead of the pack and put itself at a competitive disadvantage or alienate a host government.
That's why the initiative to force companies to disclose what they pay these governments must come from outside, as Soros believes, from the world's securities exchanges.
Such a cast wouldn't drag in all companies; a few would escape the mandatory disclosure net. But the pressure on those companies—and on the closed and corrupt governments with which they must often do business—would be great, perhaps inexorable.
Initial results
The World Bank's Chadian model, agrees Ian Gary, one of the authors of the CRS report, is not perfect. But, he told OGJ, it is having an initially positive effect: The 2004 Chadian budget, just released—itself remarkable—showed $110 million in oil revenues.
It also showed, however, that early fears about how the country would spend the money may be borne out: Military spending was up significantly. It will be September, said Gary, before we can see if spending for roads and schools follows.