A vital supply route for natural gas to the European Union is dominated by mysterious business interests who have made huge profits while keeping their identities mostly secret, according to a new report by Global Witness.
‘It’s a Gas. Funny Business in the Turkmen-Ukraine Gas Trade’ charts a trade linking the Central Asian dictatorship of Turkmenistan with Ukraine and Western Europe. The trade takes place against a backdrop of allegations about corruption and organised crime in the former Soviet Union, and European fears about access to safe and stable energy supplies.
‘It’s a Gas’ reveals detailed evidence showing that:
· Turkmenistan’s maniacal President Niyazov appears to keep his country’s entire gas revenues offshore and out of the state budget, via accounts at Germany’s Deutsche Bank;
· The gas trade has been dominated by mysterious intermediary companies which appear from nowhere, turn tiny sums in capital into billion-dollar deals and reveal little about their ultimate owners;
· Two top Ukrainian public officials held key positions at the latest intermediary company, RosUkrEnergo AG, half of which is ultimately owned by people who have refused to disclose their identities;
· A group of British businessmen who worked with RosUkrEnergo also played key roles at its equally mysterious predecessor, Eural Trans Gas;
· Gazprom, the giant Russian gas firm which owns the other half of RosUkrenergo, has given away lucrative chunks of business in recent years to mysterious third-party companies;
· Previously unpublished audits show a history of chronic mismanagement at Ukraine’s state oil and gas company.
Global Witness campaigner Tom Mayne said: “Lack of transparency makes it impossible for the people of Turkmenistan and Ukraine, or gas customers in Western Europe, to know who really controls this trade and where the profits go. In Turkmenistan, none of the gas money seems to even reach the national budget.”
The report calls for Ukraine to make RosUkrEnergo reveal its beneficial owners and carry out thorough audits of the country’s entire gas industry, in the public interest. The European Union, Ukraine and Russia should also work to promote transparency in the gas trade in line with benchmarks like the Extractive Industries Transparency Initiative (EITI), a global initiative of energy companies, government and citizen groups, and new IMF guidelines.
Mayne added: “The EU is forging a long-term strategy on how to source and use energy. But this strategy won’t be credible unless it promotes transparency and good governance in countries which supply Europe’s energy, because instability in these countries could ultimately threaten energy supplies. The EU should also scrap plans to reward Turkmenistan’s dictator with a trade deal, until he comes clean about his country’s gas revenues and shows respect for the basic rights of his people.”
The new report can be downloaded from www.globalwitness.org.
For more information contact Global Witness on +44 207 561 6361/6363/6364 or on cellphone +44 784 305 8756.
Notes for editors
(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) Information on the Extractive Industries Transparency Initiative, which brings together companies, governments and civil society around the world to improve the disclosure and tracking of revenues is available at: www.eitransparency.org. The IMF's Guide to Resource Revenue Transparency is available at http://www.imf.org/external/pubs/ft/grrt/eng/060705.htm.
Press Release / April 24, 2006