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The politics of money is a global phenomenon. It is practiced everywhere in the world. The issue on debate is the rate in which it is practiced in each of the countries. The politics of money is highly pervasive particularly in countries which are very rich in natural resources. Natural resource endowed African countries are the case in point.
In a dreadful fact which is hard to believe, many natural resource rich African countries are dealing with persistent poverty while their leaders and the international companies that cut deals with them amassed an obscene amount of personal wealth as a result of money politics. Due to this insidious fact, many assumed that their endowed vast natural resources as a real and devastating curse.
Natural resources, particularly strategic security and energy resources are the main nerve center of the global politics of money. From a global security point of view, there are reasons which make the issue of the politics of money in such natural resources more complicated. One of the reasons which make the issue of corruption in natural resources far more complicated from a global security perspective is the increasing collusion of Western interests with Chinese and Russian interests.
The author Frank Vogl in his latest (2012) book entitled “ Waging war on Corruption”, explained that as the Russians strive to build global corporations in the extractive industries, they have no national laws to worry about that suggest they could be prosecuted for bribing foreign officials, and they have the strong strategic backing of the Russian government. China’s state-owned enterprises are investing on a massive scale across sub-Saharan Africa to bolster the country’s resource security. The deals that the Chinese do with host African governments from Sudan to Angola are well kept secret.
However, the last decade has seen remarkably productive actions, mostly led by civil society, to bring explicit transparency and accountability to the world of extractive industry contracting. It is already clear that it will become ever harder for bribe-payers and bribe-takers in this sector to hide. For instance, leaders at the 2003 G8 summit conference in Evian, France, ratified a great deal of planning led by the “Publish What You Pay” coalition of civil society groups and others to set the stage for the establishment of the “Extractive Industries Transparency Initiative”. The goal was to shed transparency on the dealings between major global minerals’ companies and the governments of resource-rich countries.
The extraction of oil, gas and minerals from the ground underpins the modern life style of the people. People depend on predictable supplies. Around the world there are millions of jobs in this sector. Different studies indicated that some 3.5 billion people live in countries dependent upon their natural resource wealth for improving standards of living. They are directly affected by the way the revenues are used. Some people underestimate the importance of transparency. Together with improving standards of governance and democratic accountability, it is a central plank of a wider accountability agenda. This, in turn, is essential to improve development and the prospects of achieving the Millennium Development Goals for global poverty reduction.
Conversely, a lack of transparency undermines public confidence in the legitimacy of the state. When there is corruption, it is always the poor who suffer most. Frank Vogl argued that people need to use transparency in revenue and financial management to allow people to hold government to account and build public trust. Increased transparency will also help to create the right climate for attracting foreign investment, and encourage an enterprise culture.
As a matter of fact, governments need to create this favourable environment, but companies have an interest in promoting transparency too. Transparency should help companies to reduce reputational risk, to address the concerns of shareholders and to help manage risks of long-term investments. And transparency is a positive contribution to development as it increases the likelihood that revenues will be used for poverty reduction.
In this regard, considerable pioneering research and campaigning work to force oil, gas and mining companies to declare their royalty payments to foreign governments has been undertaken by the Publish What You Pay coalition, the “Revenue Watch Institute”, and by “Global Witness”.
In 2008, Transparency International (TI) published a landmark study, Report on Revenue Transparency of Oil and Gas Companies. According to the study, oil export revenues alone were estimated at $866 billion in 2006. This was equivalent to approximately 1.8% of gross world product for that year and more than half of the combined GDP of the 53 lowest-income nations in the world. The research looked in-depth at 42 oil companies in 21 countries of operation to determine, on the basis of their published materials, how substantially they reported information on their revenues. The companies were directly surveyed for comments and for responses to findings.
The study found that, a majority of leading oil and gas companies are far from transparent when it comes to the payments they make to resource-rich countries, leaving the door open to corruption and hampering efforts to fight poverty. The study sought to evaluate the leading companies in terms of their current policies, management systems and performance in areas relevant to revenue transparency in their upstream operations. Revenue transparency in this context included corporate action where disclosure can contribute to improved accountability in the management of extractive revenues, payments to host governments, and corporate anti-corruption programs.
According to the explanation of Frank Vogl, a complex system of scores was assigned to place the findings for each company evaluated within a high, middle and low range relative to their revenue transparency. Companies that made it into the “High Performers” category included BG Group, BHP Billiton, Nexen, Petro-Canada, Shell, StatoilHydro, Talisman Energy and Petrobras. The list of “Low Performers” included China National Offshore Oil Corporation (CNOOC), China National Petroleum Corporation (CNPC), ExxonMobil, INPEX, Kuwait Petroleum Corporation, Lukoil, Oil and Natural Gas Corporation Ltd. and Petronas. The author Frank Vogl declared that this is a legislative victory for transparency.
Anyway, the final analysis is that as this pressure rises, so too will efforts to ensure that the stolen cash is repatriated to the people of the resource-rich countries to alleviate their poverty. What is true is that, Yes, this is a big agenda but it is no longer an unrealistic one.