Bank, Fund fail the test over missing oil billions

Press Release – 19/09/2003

The World Bank and the IMF are failing to take much-needed steps to curb the misuse of billions of oil dollars by dishonest officials in some of the world’s poorest countries, according to the Nobel Prize-nominated campaign group, Global Witness.

The Bank and the Fund are meeting against a background of growing numbers of oil sleaze scandals worldwide. A forthcoming Global Witness report, compiled partly by undercover investigations, will show that billions of dollars of oil money have gone missing in countries like Angola, Kazakhstan, Congo-Brazzaville and Equatorial Guinea. Much of the money appears to have subsequently turned up in offshore bank accounts controlled by state officials or their families.

The citizens of these countries have little or no information about how much their governments are being paid for their oil or how the money is spent. The Bank and the IMF must now press governments in resource-rich-but-poor countries, and companies that do business there, to publish this information so their own citizens can better hold them to account.

“The World Bank and IMF play a central role in reforming the economies of many oil-rich countries. In some of these countries, top officials divert huge sums offshore while ordinary citizens remain destitute and their children die of preventable diseases,” said Global Witness campaigner Gavin Hayman. “The Bank and the Fund can and should deliver real change by making revenue transparency a condition of all their financial support around the world, whether to governments or to oil and mining companies.”

There have been scattered signs of progress. In the Chad-Cameroon oil pipeline project, the World Bank has insisted that all revenues and fees must be published and independently audited. The IMF has persuaded the Angolan government to publish a summary of a recent report on Angola’s oil income - though not the whole report - and suggested that oil companies in Congo Brazzaville should publish their payments to the government.

But these ad-hoc measures fall far short of what is needed. “There needs to be a comprehensive and determined approach to deal with this problem, which is discrediting the entire oil industry and causing massive human misery,” said Hayman.

Contact Gavin Hayman or Diarmid O’Sullivan on +44 (0)207 272 6731 or ++44(0)7973 415 189

Editor’s notes:

(1) Global Witness focuses on the links between the exploitation of natural resources and the funding of conflict and corruption. It is non-partisan in all its countries of operation. Global Witness has been co-nominated for the 2003 Nobel Peace Prize for its work in uncovering how diamonds have funded civil wars across Africa.

(2) The IMF and World Bank Annual Meeting is taking place in Dubai from 20-22 September 2003.

(3) The full Global Witness statement on the World Bank/IMF Meetings can be downloaded at www.globalwitness.org .

(4) Ongoing oil revenue scandals include the ‘Elf Affair’ in France; embezzlement, offshore banking and tax-fraud allegations in Nigeria, Angola and Equatorial Guinea and the Kazakhgate scandal involving alleged embezzlement of huge sums of oil money paid by major US companies in Kazakhstan. The latter case has now led to the largest-ever Foreign Corrupt Practices Act investigation in the US. These events will be the subject of forthcoming Global Witness reports.

(5) Global Witness is a member of the Publish What You Pay campaign, which was launched in June 2002 and now has more than 160 members (see www.publishwhatyoupay.org). The coalition calls for stock market and international accounting rules to require oil, gas and mining companies to disclose their net payments to governments for resource access on a country-by-country basis. The coalition believes that revenue transparency is an essential condition for alleviating poverty, promoting just and equitable development, improving corporate social responsibility, and reducing corruption in many resource-rich developing countries, such as Algeria, Angola, Azerbaijan, Cambodia, Chad, Colombia, Congo-Brazzaville, Democratic Republic of Congo, Equatorial Guinea, Gabon, Guinea Bissau, Indonesia, Iraq, Kazakhstan, Nigeria, Papua New Guinea, Sudan, Turkmenistan and Venezuela.