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Oil companies lobby for less transparency as Global Witness exposes the need for more

8th February 2012

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More transparency is needed in the oil, gas and mining industries to prevent the international scramble for Africa’s natural resources from fuelling still deeper corruption and instability, according to a new report from Global Witness published today.

Based on investigations in Angola and Nigeria, Rigged? highlights a risk that complex corporate deals for accessing natural resources could be used corruptly to benefit vested interests in these countries.  The report also points to major concerns over opaque sales of mining assets in the Democratic Republic of Congo to offshore companies.

“Many resource-rich countries in Africa have suffered deeply from corruption, conflict and unfair foreign exploitation,” said Gavin Hayman, Director of Campaigns at Global Witness. “Their citizens have a right to know how oil and mineral deals are being done, who is taking part in these deals and where the money is going.”

Recent years have seen a big increase in public disclosure of revenue payments to governments from the extractive industries. But that positive trend has been cast into doubt as international oil companies threaten legal action in the U.S to stop the Securities Exchange Commission implementing strong transparency rules.  Oil companies are also lobbying to water down plans for similar rules in the European Union.  Despite ‘big oil’ calling for a global ‘level playing field’, it appears to be fervently undermining efforts to create just that – a new global standard for transparency of revenue payments. 

The new report points to a corruption risk that small and obscure companies in Angola and Nigeria could act as fronts for government officials or their allies, in resource deals that often involve investments from major international companies. The report finds that:

  • In Angola, several small companies which have won access to the oil sector – sometimes as partners of Western oil firms – do not identify their ultimate owners or are owned by people with the same names as government officials.
  • In Nigeria, valuable stakes in oil blocks ended up with obscure companies, one apparently controlled by a senator and another by a businessman close to the country’s then-head of state.
  • Additionally, in the DRC:
  • The state mining company Gecamines sold stakes in four major mines to opaque offshore companies, at what appears to be a fraction of their value, according to most reported commercial estimates.

Global Witness is calling for:

  • The commissioners of the SEC in the United States to pass final rules that meet the intent of the Dodd Frank law, requiring companies to publish what they pay to governments for each project that they operate in the oil, gas and mining industries without exemptions.
  • Europe, China and other jurisdictions to pass strong laws requiring companies to publish what they pay to governments for each project that they operate in the oil, gas and mining industries.
  • International oil and mining companies to stop lobbying to undermine transparency laws while claiming to be in favor of transparency.
  • Full disclosure of the beneficial ownership of companies bidding for extractive rights to become an international norm via such mechanisms as the Extractive Industries Transparency Initiative and the domestic laws of resource-rich countries in Africa.

Contact:

UK:

Brendan O’Donnell bodonnell@globalwitness.org, +44 207 492 5898

Diarmid O’Sullivan on Nigeria dosullivan@globawitness.org + 44 207 492 5863

Andrea Pattison apattison@globalwitness.org +44 7970 103 083

US:

Corinna Gilfillan cgilfillan@globalwitness.org +1 202 725 8705 

Notes to editors:

The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. It is currently responsible for the formulation of rules for the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act, including provision 1504 relating to disclosure of payments made by listed extractives companies to governments.

The Extractive Industries Transparency Initiative (EITI) is a global association of governments, companies, investors and civil society groups (including Global Witness) with more than 30 countries implementing its rules of which 11 are Compliant.  It aims to strengthen governance by improving transparency in the natural resource sector by requiring disclosure of all material payments or revenues paid (in the case of companies) and received (in the case of countries).  The aim is that through this reporting, citizens and civil society are able to track that money and hold their governments to account for its management.

Global Witness investigates and campaigns to prevent natural resource-related conflict and corruption and associated environmental and human rights abuses