WATCHING THE WORLD: Corruption feeds on oil

Dec. 10, 2007
These days, it is very fashionable to unmask corruption in the oil and gas industry.

These days, it is very fashionable to unmask corruption in the oil and gas industry. Consider a recent conference in South Africa where international experts argued that oil has all too often proved a curse to Africa, greasing the palms of foreign firms as well as corrupt national leaders.

“Oil wealth is a mild toxin, much like alcohol. If you don’t have a strong constitution, it tends to make you unstable,” said Diarmid O’Sullivan of London-based Global Witness at the conference held by the South African Institute of International Affairs.

According to Alex Vines, head of the Africa program at Britain’s Royal Institute for International Affairs, Angola is the world’s leading importer of luxury vehicles even though some 70% of the population earn less than a dollar a day.

Mortality rate high

“Angola’s budget is estimated to be $31 billion, yet its under-five mortality rate is the second worst in the world today,” said Vines.

It’s certainly not for the lack of available money, though, since millions of dollars in Angolan public funds lie frozen in Swiss banks, according to international NGOs Aktionfinanzplatz (AFP), Bern Declaration, and Global Witness.

In September, the three groups expressed serious concern over delays in returning $21 million in frozen public funds from Switzerland to Angola, and they called for more transparency to ensure that Angolan citizens have oversight over their use.

Of course, Angola is hardly the only country to be criticized for corruption in connection with oil and gas revenues. Look at the news about Turkmenistan, where former President Saparmurat Niyazov’s opacity and 21-year misrule are said to have turned his gas-rich country into Central Asia’s version of North Korea.

In April 2006, Global Witness published a report entitled “It’s a Gas,” which revealed Turkmen bank accounts at Deutsche Bank in Frankfurt, thought to contain a staggering $3 billion or more in oil, gas, and cotton revenues.

Accountability low

In theory these were state accounts, according to Global Witness. But in practice they were controlled by Niyazov himself, and none of this money was recorded in Turkmenistan’s budget.

As Turkmenistan opens up its vast gas reserves to international investment, Global Witness wants the European Union to help the new government dismantle Niyazov’s opaque system of Swiss bank accounts.

But that may be hard to do. While the EU might be interested in seeing such accounts dismantled, it also wants gas from Turkmenistan as a means of freeing it from dependence on Russia for energy.

Is it likely that the EU would insist on the return of Niyazov’s ill-gotten gains? The $3 billion in past oil, gas, and cotton income means nothing to the EU—especially if inquiries about it were to embarrass the current Turkmen government into withholding supplies of its gas in the future.

Few of us care for corruption. But sometimes there are limits as to how far it can be unmasked.