How Corruption Holds Back Africa’s Oil Industry

Corruption is costing Africa’s oil industry billions of dollars annually, says Peter Eigen, founder and chairperson of Transparency International (TI) — a non-governmental group based in Berlin that monitors and fights graft.

He made the comment to journalists on Friday at a gathering organised by TI South Africa in Johannesburg. Eigen was in the country to attend the 18th World Petroleum Congress, a five-day meeting held in Johannesburg that attracted more than 4 000 delegates.

Oil-rich Angola, Chad, Libya, Nigeria and Sudan all fared poorly on TI’s corruption perceptions index for last year. This annual rating ranks various states according on the extent to which graft is viewed as having taken hold there.

In these countries, public contracting in the oil sector is plagued by revenues vanishing into the pockets of local officials, middlemen and foreign oil executives, says TI.

“The sector is rife with corruption, non-transparency and maladministration, especially in countries in transition and post-war economies,” the group noted in a statement issued this week.

Added Eigen: “Oil-producing countries are some of the most corrupt and most miserable in the world.”

Equatorial Guinea ‘should be the richest’

He singled out Equatorial Guinea, which began exporting oil in 1991, for particular criticism.

“Equatorial Guinea, with a population of about 521 000, should be the richest, with everybody driving a Mercedes,” noted Eigen.

But officials in this West African country — with oil reserves estimated at 1,28-billion barrels — are corrupt, he said.

Similar allegations of graft plague Nigeria, where late dictator Sani Abacha is reported to have stolen $2,2-billion between 1993 and 1998. Some of this money was banked in Switzerland, which has returned $290-million of the looted funds to Nigeria. Another $168-million is expected to be transferred in the coming months.

Swiss authorities had wanted the World Bank to monitor the repatriated funds, to ensure that they did not get siphoned off yet again by corrupt officials — even suggesting that the money should go directly to education, health and infrastructure projects.

While the bank declined to do this, it is clear that oil money has not trickled down to the ordinary citizens of Nigeria. As Eigen pointed out, the Ogoni people in the Niger delta, where the bulk of Nigeria’s oil is produced, live in abject poverty.

To combat corruption, Nigeria plans to open its oil industry to greater scrutiny. The country’s Petroleum and Energy Minister, Edmund Doukoru, told the World Petroleum Congress that his country will make oil-related information available to the public.

Protests in Sudan

In Sudan, parallels are emerging between the country’s Nuers, who inhabit the vast oil fields in the south, and the Ogoni. Calls have been made for Nuer officials to resign from the government of national unity that has been set up to rule Sudan, to protest the fact that they have not been given any ministerial posts.

“It’s an undisputed fact that 80% of Sudanese oil is located in Nuerland. The marginalisation of the Nuer is a deliberate act to preclude the Nuer politicians from participating in decisions that are connected to oil wealth-sharing,” said the Union of Nuer Community in North America in a statement on September 24.

“Kiir and Bashir are now bent [on treating] the Nuer like the Ogoni of Nigeria, whose oil is looted while they live in extreme poverty,” the statement added, in reference to Deputy President Salva Kiir (formerly a rebel leader) and President Omar al Bashir.

Sudan’s government, which signed a peace deal with southern rebels in January, has taken control of the all-important ministries of energy and finance.

Secrecy in Angola

As with Nigeria, Angola’s oil revenues are also shrouded in secrecy.

“The government could do anything with the money: buy arms, hire mercenaries or steal it,” Eigen said.

However, Francisco da Cruz of the British Petroleum company told the Johannesburg gathering that change is afoot in Angola.

“In the past, the government had not been transparent because of security reasons. But since last year, the Budget is slowly becoming transparent. We think this is a very good thing,” he said.

Cruz, who is Angolan, called for greater tact in the fight against corruption among African officials.

“The best thing is to influence them by having a positive discussion in a controlled environment . . . Confrontation doesn’t help,” he noted.

“There are people in government in Africa who are willing to change. The new generation of African leaders wants things to change,” Cruz added. “For the old guards who are opposed to change, nature will take care of them. Some of them cannot even attend office work from nine to five in the evening.”