By Emad Mekay
WASHINGTON, Oct 3 2002 (IPS)

The World Bank is backing an international campaign to get oil and mining companies to open their books and reveal their payments to governments in developing nations.

The Bank’s private-sector arm, the International Finance Corporation (IFC), has called on major oil, gas, and mining companies to fully disclose their payments to governments – months after civil society groups made the same appeal.

"We would come a long way if all – and I emphasise all – natural resource companies would make their transfers of royalties, fee payments, and other revenues to host governments fully transparent," said Peter Woicke, executive vice president of the IFC.

Dozens of non-governmental organisations (NGOs) first joined with international financier George Soros in June to appeal to trans-national companies to publish what they pay to developing nations.

The ‘Publish What You Pay’ appeal was raised to meet growing concerns that multinational oil and mining companies were paying corrupt governments billions of dollars a year, some of which was financing illicit arms purchases in conflict areas.

The campaign gained momentum in September when UK Prime Minister Tony Blair called on oil companies to reveal such payments because people in developing countries often do not see the benefits of much of the money their governments receive.

Global Witness, the leading NGO fighting for these disclosures, argues that too often the institutions managing the revenues are unaccountable to ordinary citizens and become a vehicle for embezzlement and fraud.

The London-based group says that in war-torn Angola, for example, at least one billion dollars every year for the last five years – about one-third of state income – went missing from government coffers, which were filled mostly with oil money.

NGOs working with Global Witness say if companies like Chevron Texaco and TotalfinaElf do not reveal how much money they pay, then it is impossible for Angolan citizens to find out how much is missing.

But those companies, and others like ExxonMobil and British Petroleum (BP), say their hands are tied by "confidential agreements" with local authorities that bar them from revealing their payments.

Critics say the firms actually fear being undermined by competitors.

Leaders of developing countries say that they should decide the degree of disclosure of payments. Many of them also point out that they have taken measures to fight corruption and that rich nations must also act.

At last month’s Bank and IMF meetings, Timothy T. Thahane, Lesotho’s minister of finance said Africa expects the world to help.

”Africa, alone, cannot do it,” he said. ”We are committed to eliminating corruption because it’s in our development interests, but we need cooperation because it takes two to tango, and we can deal with one partner, but somebody has to deal with the other one.”

Acres International, a Canadian engineering consulting firm, was last month convicted in a Lesotho High Court of paying bribes to win contracts on a multi-billion-dollar dam project. Many other international firms face similar charges in the same court.

NGOs say that resource governance problems have been reported recently in Algeria, Angola, Azerbaijan, Chad, Congo-Brazzaville, Democratic Republic of Congo, Equatorial Guinea, Gabon, Kazakhstan, Nigeria, Sudan and Venezuela.

"The whole idea here is that we do not believe that this type of disclosure in itself will reduce corruption," said Frank Vogl, vice-chairman of Transparency International, one of the groups in the NGO coalition.

"However, it will add pressure (on the governments) to explain what they are doing with their payments."

Woicke says there is also a development rationale behind revealing payments.

Disclosing "would push governments to invest more wisely," he said, adding that the funds would then be channelled into health, education, and infrastructure.

"Hiding behind confidentiality agreements does not help anybody, and those with the most to gain financially from these projects – the poor people – are too often helped the least," he said.

Oil, gas and mining industries have become increasingly important to the economies of more than 50 developing countries, where many people live on less than two dollars a day.

Twelve of the world’s 25 most mineral-dependent states, and six of the world’s most oil-dependent states, are catalogued by the World Bank as highly indebted poor countries, with the world’s worst human development statistics.

Civil society groups charge that the industries are increasingly located in less developed countries, where civil society and government transparency are weaker.

Global Witness says rich nation should pass regulations insisting on disclosure, rather than making it voluntary.

Under their plan, stock market regulators would require the companies to report net payments to all governments and national authorities as a condition for being listed on the exchanges.

Vogl of Transparency International suggests that organisations like the IFC, the World Bank, the International Monetary Fund (IMF) and even the United Nations, should press governments to be more accountable for such funds.

The IFC is particularly proud that its parent agency, the World Bank Group, has a disclosure agreement in one of its projects, the controversial Chad-Cameroon pipeline, currently under construction.

In 1998, following discussions with the Bank, Chad’s parliament approved a law that sets out the government’s poverty reduction objectives and details how pipeline revenues will be spent.

Ten percent of royalties and revenues will be held in trust for future generations, 80 percent of the funds will be devoted to education, health and social services, rural development, infrastructure, and environmental and water resource management, and five percent will be earmarked for regional development in the oil-producing area.

The law also created an oversight committee to monitor the use of oil revenues. This committee, the IFC says, will include representatives of government, parliament, the judiciary, and civil society.

But such disclosure agreements are not mandatory and activists constantly find faults with the social and environmental worth of the Chad agreement.

Vogl agrees the deal has problems. "That’s not necessarily a model," he said. "It’s a very a complicated set of arrangements."

IFC finances private sector investments in the developing world, arranges investment from international financial markets, and provides advice to governments and businesses. The agency’s committed portfolio at the end of 2002 was 15.1 billion dollars.

Excerpt:

By Emad Mekay
WASHINGTON, Oct 3 2002 (IPS)

The World Bank is backing an international campaign to get oil and mining companies to open their books and reveal their payments to governments in developing nations.

The Bank’s private-sector arm, the International Finance Corporation (IFC), has called on major oil, gas, and mining companies to fully disclose their payments to governments – months after civil society groups made the same appeal.

“We would come a long way if all – and I emphasise all – natural resource companies would make their transfers of royalties, fee payments, and other revenues to host governments fully transparent,” said Peter Woicke, executive vice president of the IFC.

Dozens of non-governmental organisations (NGOs) first joined with international financier George Soros in June to appeal to trans-national companies to publish what they pay to developing nations.

The ‘Publish What You Pay’ appeal was raised to meet growing concerns that multinational oil and mining companies were paying corrupt governments billions of dollars a year, some of which was financing illicit arms purchases in conflict areas.

The campaign gained momentum in September when UK Prime Minister Tony Blair called on oil companies to reveal such payments because people in developing countries often do not see the benefits of much of the money their governments receive.

Global Witness, the leading NGO fighting for these disclosures, argues that too often the institutions managing the revenues are unaccountable to ordinary citizens and become a vehicle for embezzlement and fraud.

The London-based group says that in war-torn Angola, for example, at least one billion dollars every year for the last five years – about one-third of state income – went missing from government coffers, which were filled mostly with oil money.

NGOs working with Global Witness say if companies like Chevron Texaco and TotalfinaElf do not reveal how much money they pay, then it is impossible for Angolan citizens to find out how much is missing.

But those companies, and others like ExxonMobil and British Petroleum (BP), say their hands are tied by “confidential agreements” with local authorities that bar them from revealing their payments.

Critics say the firms actually fear being undermined by competitors.

Leaders of developing countries say that they should decide the degree of disclosure of payments. Many of them also point out that they have taken measures to fight corruption and that rich nations must also act.

At last month’s Bank and IMF meetings, Timothy T. Thahane, Lesotho’s minister of finance said Africa expects the world to help.

“Africa, alone, cannot do it,” he said. “We are committed to eliminating corruption because it’s in our development interests, but we need cooperation because it takes two to tango, and we can deal with one partner, but somebody has to deal with the other one.”

Acres International, a Canadian engineering consulting firm, was last month convicted in a Lesotho High Court of paying bribes to win contracts on a multi-billion-dollar dam project. Many other international firms face similar charges in the same court.

NGOs say that resource governance problems have been reported recently in Algeria, Angola, Azerbaijan, Chad, Congo-Brazzaville, Democratic Republic of Congo, Equatorial Guinea, Gabon, Kazakhstan, Nigeria, Sudan and Venezuela.

“The whole idea here is that we do not believe that this type of disclosure in itself will reduce corruption,” said Frank Vogl, vice-chairman of Transparency International, one of the groups in the NGO coalition.

“However, it will add pressure (on the governments) to explain what they are doing with their payments.”

Woicke says there is also a development rationale behind revealing payments.

Disclosing “would push governments to invest more wisely,” he said, adding that the funds would then be channelled into health, education, and infrastructure.

“Hiding behind confidentiality agreements does not help anybody, and those with the most to gain financially from these projects – the poor people – are too often helped the least,” he said.

Oil, gas and mining industries have become increasingly important to the economies of more than 50 developing countries, where many people live on less than two dollars a day.

Twelve of the world’s 25 most mineral-dependent states, and six of the world’s most oil-dependent states, are catalogued by the World Bank as highly indebted poor countries, with the world’s worst human development statistics.

Civil society groups charge that the industries are increasingly located in less developed countries, where civil society and government transparency are weaker.

Global Witness says rich nation should pass regulations insisting on disclosure, rather than making it voluntary.

Under their plan, stock market regulators would require the companies to report net payments to all governments and national authorities as a condition for being listed on the exchanges.

Vogl of Transparency International suggests that organisations like the IFC, the World Bank, the International Monetary Fund (IMF) and even the United Nations, should press governments to be more accountable for such funds.

The IFC is particularly proud that its parent agency, the World Bank Group, has a disclosure agreement in one of its projects, the controversial Chad-Cameroon pipeline, currently under construction.

In 1998, following discussions with the Bank, Chad’s parliament approved a law that sets out the government’s poverty reduction objectives and details how pipeline revenues will be spent.

Ten percent of royalties and revenues will be held in trust for future generations, 80 percent of the funds will be devoted to education, health and social services, rural development, infrastructure, and environmental and water resource management, and five percent will be earmarked for regional development in the oil-producing area.

The law also created an oversight committee to monitor the use of oil revenues. This committee, the IFC says, will include representatives of government, parliament, the judiciary, and civil society.

But such disclosure agreements are not mandatory and activists constantly find faults with the social and environmental worth of the Chad agreement.

Vogl agrees the deal has problems. “That’s not necessarily a model,” he said. “It’s a very a complicated set of arrangements.”

IFC finances private sector investments in the developing world, arranges investment from international financial markets, and provides advice to governments and businesses. The agency’s committed portfolio at the end of 2002 was 15.1 billion dollars.

Excerpt: