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Subject: GU: Window on the world
Window on the world
Transparency rules for developing countries rich in natural resources need
global application. Murray Armstrong writes
Wednesday June 8, 2005
<http://www.guardian.co.uk>The
Guardian
On July 1 the youngest country in the world, Timor-Leste (what we used to
call East Timor) will score a significant first goal in the fight against
corruption. That Friday will see its petroleum laws, being finalised this
month, come into effect. They will control exploration, development and
exploitation of resources and, crucially, the distribution of revenues. That
requires transparency. Put simply, everything that is paid is published.
Mari Alkatiri, the country's prime minister, said at a recent meeting in
London: "We want to avoid the curse as it has affected many developing
nations." The "resource curse" as it has come to be known, is the social
decay, the political dictatorship, the financial dishonesty, and the
conflict and instability that has visited many poor nations that are rich in
raw materials.
"In our three short years since independence," said Alkatiri, "we have
developed a reputation for transparency." Consultations on the petroleum
laws, which the prime minister envisaged as "a tool that can contribute to
the wise management of Timor-Leste's petroleum resources, to the benefit of
current and future generations", took place in public and were broadcast on
radio and television. The teams visited remote parts of the country and
talked to village leaders.
All gas and oil revenue will now go into a fund dedicated to social and
economic development. This wealth, according to Alkatiri, is "for human
development and the elimination of poverty". That development is defined by
law, and government withdrawals from the fund can only be made with the
permission of parliament. Revenues and taxes coming from major corporations
will be an open book and a code of conduct for public officials has been
established with legal powers to examine unexplained personal assets.
Transparency in Timor-Leste came about partly because of an organisation put
together by the British government. While its name does not easily roll off
the tongue, the Extractive Industries Transparency Initiative (EITI) has
achieved some significant successes since it was launched by Tony Blair at
the 2002 Johannesburg earth summit.
Ten countries are now at different stages in implementing the principles and
methods devised by the body and another 11 have endorsed the programme and
are preparing to adopt the criteria.
The government of Azerbaijan signed a memo of understanding with energy
companies and local non- governmental organisations last November, and in
March published an independent auditor's report detailing payments made by
oil companies and receipts by the government.
Kyrgyzstan was the first country to publish information in the form
recommended by EITI when it detailed revenue from the gold mining industry
in October last year.
In Nigeria, for years near the top of the world corruption league, President
Olesgun Obasanjo has directed all government departments and oil companies
operating in the country to give full cooperation with the transparency
auditors and, to show he means business, has provided security guards for
the team. Their first task is to reconstruct a picture of all payments paid
and received in the last five years and to report monthly to a working group
composed of government, industry and NGOs.
Nasir Ahmad El-Rufai, federal minister in the Nigerian government, said at
the London conference hosted by Hilary Benn, minister for international
development, that the audits taking place will be physical as well as
financial, to identify and tackle theft of crude oil from pipelines and
illegal bunkering. "The poor governance of our relatively substantial
cumulative earnings from oil - about $300bn (?165bn) - in the last four
decades has had the most devastating impact on our national growth,
development, and therefore quality of life of our large population of about
150 million," he said.
But he warned that the "oyster of the corrupt" is still flourishing and
pointed to the "glaringly worrying silence" about the "large scale thievery
from public treasuries" by previous government officials who still have
"comfortable housing within the territories of several G8 countries, all of
whom are subscribers to the EITI principles." Repatriation of these monies,
he said, "should be an important aspect [of policy] by the government of the
UK in its current leadership of both the G8, the EU and its specific
Commission for Africa initiative."
These moves have been welcomed by NGOs such as Transparency International
(TI), whose chairman Peter Eigen said: "It would be good if developed
nations were to set an example in all of this instead of merely requiring it
of poorer countries. Moreover, TI would like to see the principles and
process reinforced and further empowered by a UN general assembly
resolution."
This is echoed by the Publish What You Pay Coalition, a group of 270
worldwide NGOs, which has called on the Gleneagles summit to "send out a
clear political message supporting revenue transparency efforts around the
world". Mike Aaronson, director general of Save the Children, also sees
Gleneagles as being the place where the G8 countries could set the standard
for global reporting. "It would help if it was a mandatory requirement in
the rich countries to oblige companies to disclose all payments," he says.
The tragedies of corruption are continuing. A recent report from Global
Witness showed $1.1bn missing from Kazakhstan, with an American merchant
banker, James Giffen, still awaiting trial in New York, accused of taking
kickbacks worth $78m; missing money in the Republic of Congo is currently
running at about $250m a year; $1.7bn has been salted away somewhere by
officials in Angola; Equatorial Guinea's treasury is missing $500m; and in
the tiny island of Nauru, halfway between Hawaii and Australia, the entire
Nauru Phosphate Royalties Trust, worth more that $1.4bn, is unaccounted for.
"Every time that Nigeria spends eight times the amount it spends on health
annually to service its huge external debt," said El-Rufai, "the world fails
that poor child in rural Nigeria, rather than our powerful elite and their
international partners, who borrowed, stole or wasted the money in the first
place."
On side
Countries implementing some or all of the EITI guidelines:
Azerbaijan, Republic of Congo, Ghana, Kyrgyz Republic, Nigeria, Sao Tome and
Principe, Timor-Leste, Trinidad & Tobago, Niger, Came
Countries that have endorsed the principles:
Angola, Bolivia, Cameroon, Chad, Democratic Republic of Congo, Equatorial
Guinea, Gabon, Guinea, Niger, Peru, Sierra Leone
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