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Oil industry plagued by corruption { October 20 2004 } Original Source Link: (May no longer be active)
http://business.timesonline.co.uk/article/0,,9072-1319977,00.htmlhttp://business.timesonline.co.uk/article/0,,9072-1319977,00.html
October 20, 2004
Oil industry 'plagued' by corruption
By Rhys Blakely, Times Online
Corruption costs businesses and governments more than £220 billion a year, with a number of oil producing states among the worst offenders, according to an international anti-graft watchdog.
"Public contracting in the oil sector is plagued by revenues vanishing into the pockets of western oil executives, middlemen and local officials," said Peter Eigen, chairman of Transparency International (TI), which today published its annual report.
The Corruption Perceptions Index showed that 106 out of 146 countries scored less than 5 against a "clean" score of 10. Sixty countries scored less than three, indicating "rampant" levels of bribery.
The oil-rich states of Angola, Azerbaijan, Chad, Ecuador, Indonesia, Iran, Iraq, Kazakhstan, Libya, Nigeria, Russia, Sudan, Venezuela and Yemen all scored "extremely poorly".
Singling out Iraq, Mr Eigen said that the successful reconstruction of the country would depend on the urgent tackling of kickbacks and bribes. Iraq was in joint 129th place in in the index with a score of just 2.1 out of 10.
"The future of Iraq depends on transparency in the oil sector," Mr Eigen said.
"The urgent need to fund postwar construction heightens the importance of stringent transparency requirements in all procurement contracts."
Recent evidence suggested that Saddam Hussain's regime defrauded the United Nations Oil for Food Programme for billions of dollars, diverting funds allocated to humanitarian relief programmes.
But lucrative deals signed with Western contractors have since been mired in controversy. Halliburton, the logistics and oil company formerly headed by the US Vice- President Dick Cheney, was accused by the Pentagon of overcharging the US Government tens of millions of dollars.
A US Government report last year found "systemic" and "significant" difficiencies in the way Halliburton estimated and validated costs.
"Without strict anti-bribery measures, the reconstruction of Iraq will be wrecked by a wasteful diversion of resources to corrupt elites," said Mr Eigen.
Meanwhile, as TI released its report in London, Nigerian lawmakers were holding a public hearing into allegations that Halliburton had bribed government officials to secure a gas contract.
Corruption was perceived to be most acute in Bangladesh, Haiti, Nigeria, Chad, Myanmar, Azerbaijan and Paraguay, all of which scored less than two.
"Countries with a score higher than nine, that is those with very low levels of perceived corruption, are predominantly rich countries, namely Finland, New Zealand, Denmark, Iceland, Singapore, Sweden and Switzerland," TI added.
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