Tag Archives: Global Witness

Trump’s Afghanistan Strategy will Fail if it Does not Take on Corruption

Trump’s Afghanistan Strategy will Fail if it Does not Take on Corruption

Tonight at 9pm EST President Trump announced his new Afghanistan strategy, Global Witness’ Stephen Carter highlights what is needed for a real change in direction:

“The United States is Afghanistan’s key partner and has real potential to help break the cycle of violence there. But its continued presence will change nothing unless the US and the Afghan government also tackle the root causes of instability. That means fighting the corruption that allows insurgents and strongmen to reap the benefits of the country’s resources, and maintain their grip on power. ‘Nation-building’ in that sense is vital to what President Trump called ‘principled realism’ – not separate from it.

“Corruption is at the heart of insecurity in Afghanistan. It deeply undermines the effectiveness of Afghan forces and the legitimacy of the Afghan government, and is a huge obstacle to any realistic path to stability. Despite successive American military and political leaders acknowledging this challenge, in practice they have rarely treated it as a priority: it is ironic that it is now seen as impossible. If President Trump wants to turn Afghanistan around, there needs to be a real change in the way the US and the Afghan government’s approach governance issues, putting them on a par with military concerns and using levers of support and influence much more effectively.

“The Afghan mining sector is one obvious place to start. It is the second largest source of funding for the Taliban and a major driver of corruption and conflict. Global Witness’ own research, for example, shows how competition over illegal mining in Badakhshan has undermined the stability of an entire province and made it a hotbed of the insurgency. Despite this, basic transparency measures have yet to be put into effect, the Mining Law is missing key safeguards against corruption and conflict, and the Afghan government has struggled to produce basic information on contracts and production. The US has done relatively little to press for stronger action, even though the sector is central to hopes of building up Afghanistan’s economy – and for its ability to fund their own security forces and secure their territory without endless expenditure of American lives and money.

“Under President Ghani and CEO Abdullah the Afghan government has shown itself willing to contemplate serious reforms and to agree anti-corruption benchmarks, even if implementation has so far been slow. America has a partner in Afghanistan, but they need to seize the chance to work with them, and push hard for serious action. The call for ‘real reforms’ is welcome, but it has been made before, and is lacking specifics. President Trump’s Afghan strategy will stand or fall on how well he turns those words into action.” said Carter.

New Leaks Show Shell Oil Executives at the Center of a Scheme to Steal $1.1 Billion from Nigeria’s People

New Leaks Show Shell Oil Executives at the Center of a Scheme to Steal $1.1 Billion from Nigeria’s People

Oil giants Shell and Eni knowingly took part in a vast bribery scheme for one of Africa’s most valuable oil blocks which deprived Nigeria and its people of $1.1billion, an exposé by Global Witness and Finance Uncovered reveals.

New leaked internal emails seen by Global Witness and Finance Uncovered show that Shell’s most senior decision-makers knew that the money they paid for oil block OPL 245 in 2011 would go to convicted money launderer and ex-Nigerian oil minister Dan Etete – rather than to benefit the Nigerian people.

Global Witness has investigated and exposed this case for six years and Shell has consistently denied any wrong-doing, saying it only paid the Nigerian government. The newly leaked emails show this denial is misleading. Emails which went to then CEO Peter Voser reveal that they knew this massive payment would go to Etete. Other emails show Shell execs were told money was likely to flow to some of the most powerful people in the country, including to then President Goodluck Jonathan.

These revelations come shortly after moves by the Trump administration and House Republicans to derail a critical rule, section 1504 of the Dodd-Frank Act, which requires U.S. listed companies like Shell and Eni to disclose payments just like these. U.S. Secretary of State, Rex Tillerson himself lobbied against this payment disclosure provision while serving as Exxon CEO.

 

Simon Taylor of Global Witness, said: “This is one of the worst corruption scandals the oil industry has ever seen, and this is the biggest development so far. Today’s new evidence shows senior executives at the world’s fifth biggest company knowingly entered a corrupt deal that deprived the Nigerian people of $1.1billion. That is more than the country’s entire health budget for 2016.”

Shell and Eni’s corrupt deal has huge consequences for ordinary Nigerians. Right now five million Nigerians face starvation and one in ten children don’t live to see their fifth birthday. The money paid for the block equates to one and a half times what the UN says is needed to respond to the country’s current famine crisis.

Law enforcement raided Shell’s headquarters in February 2016; six countries including the U.S. have investigated the deal. An Italian court will begin hearings on 20 April to determine whether Shell will face trial on international corruption charges. Several Shell executives from the time of the deal may face proceedings in their personal capacity.

Most alarmingly for investors, when the OPL 245 deal was being negotiated Shell had already been charged for violating provisions of the Foreign Corrupt Practices Act for paying bribes in Nigeria. Five months before the deal was struck, Shell had entered into a deferred prosecution agreement – the equivalent to being under probation – with the U.S. Department of Justice. This agreement was still in place when the deal went through. Today’s news suggests Shell may have violated this agreement by entering into a bribery scheme. It is hugely concerning that the company’s most senior executives went anywhere near this deal given the company had such serious sanctions hanging over it.

An excerpt from an intercepted email from Shell’s Guy J. Colegate to Guy Outen, Shell’s Executive Vice President Commercial, New Business & LNG detailing their intent to offer money launderer Dan Etete $1.2 billion. Read this email exchange and other Shell Oil email intercepts HERE

Ben Van Beurden has been Shell’s CEO since 2013. In 2015 he told Global Witness that payments for the block were “morally OK” and “in accordance with the law of Nigeria and international practice”. The leaked emails tell a very different story. Van Beurden, in a phone call wire-tapped by Dutch authorities with Shell’s CFO, Simon Henry, refers to “really unhelpful emails”. One internal email copied to then CEO Peter Voser, stated: “Etete can smell the money. If at nearly 70 years old he does turn his nose up at nearly $1.2 bill (sic) he is completely certifiable. But I think he knows it’s his for the taking.”

Shauna Leven, Anti-Corruption Campaigns Director, said: “This is a huge scandal – it must trigger change. For too long the world’s most powerful and profitable oil companies have masqueraded as leaders of responsible business, while robbing countries of their most precious assets.We could save countless lives across the world if ordinary people were able to benefit from the wealth of their own natural resources.”

“Those responsible at Shell could go to jail for these decisions. The company and its individual decision makers in this case need to face justice. Law enforcement in Italy, Nigeria, the UK, the US, the Netherlands and Switzerland need to cooperate to ensure that this happens.”

However accountability is only one part of the solution, says Global Witness. This Shell scandal is not an isolated case – the oil, gas and mining industry is the most corrupt on the planet according to the OECD. Corrupt deals like this can be prevented through strong enforcement of bribery laws together with strong transparency laws that make it impossible to conduct such deals in secret.

Leven continued: “Over 30 major economies including the U.S, UK, Canada, Norway and all EU countries now have laws in place that require oil, gas and mining companies to disclose what they’re paying any government on a project-by-project basis. Had these laws been in place at the time of the deal, Shell would have had to put these payments on public record. It is highly unlikely that they would have wanted to do that. Shining a light on corrupt deals like OPL 245 prevents multinational companies from scheming with greedy government officials to get rich at the expense of ordinary people.”

A Shell spokesperson told Finance Uncovered: “Given this matter is currently under investigation, it would be inappropriate to comment on specifics. However, based on our review of the Prosecutor of Milan’s file and all of the information and facts available to Shell, we do not believe that there is a basis to prosecute Shell. Furthermore, we are not aware of any evidence to support a case against any former or current Shell employee.” If it was ultimately proved that Etete’s company made bribe payments relating to the OPL 245 deal “it is Shell’s position that none of those payments were made with its knowledge, authorisation or on its behalf”, the company said.

Eni told Global Witness that it was not appropriate to debate the merits of the allegations as proceedings were pending. They noted “inaccurate statements and mischaracterizations of the record, including, for example, your description of the structure of the acquisition OPL 245”, continuing “none of the contracts relating to the 2011 transaction was executed secretly or designed to ‘hide’ any party’s transaction”.

Both companies said they had commissioned separate, independent investigations. “No illegal conduct was identified,” Eni has said, claiming that it “concluded the transaction with the Nigerian government, without the involvement of any intermediaries”. Shell said it had shared key findings of its OPL 245 investigation with relevant authorities and that “we do not believe that there is a basis to prosecute Shell”.

In January Goodluck Jonathan released a statement saying he “was not accused, indicted or charged for corruptly collecting any monies as kickbacks or bribes” in the OPL 245 affair.

Documents

  1. Read the full report from Global Witness HERE
  2. Transcript of Ben van Beurden & Simon Henry wiretap HERE
  3. Read Shell Oil email intercepts HERE
  4. Read the Nigerian charge sheets HERE
  5. Read the Milan prosecutors letter HERE (Italian)
  6. Read the Milan prosecutors letter HERE (English)
  7. Read the Abuja Federal Court letter HERE 

Notes to editors

  1. In 2011, Shell and Italian oil giant Eni paid $1.1 billion for an oil block, knowing the money would go to a front company secretly owned by a notorious former Nigerian oil minister, Dan Etete, who had been convicted for money-laundering. Etete had awarded himself the block while in office under the former military dictator Sani Abacha, via Malabu Oil and Gas, a company he secretly owned.
  2. Shell’s annual reports have given scant details about the OPL 245 deal, despite the oil block’s huge potential. But with nine billion barrels of “probable reserves,” the block could increase Shell’s global “proven oil reserves” – a key figure for shareholders – by a third.
  3. In December 2016 money laundering charges were filed by Nigerian law enforcement against Dan Etete and the former Nigerian Attorney General and Justice Minister Mohammed Adoke. In a statement in December 2016, Mohammed Adoke said: “I hope to at the appropriate time make myself available to defend the charge for whatever its worth.” He also emphasised that he did not benefit from the deal, which he said saved the government from a breach of contract suit in which Shell was claiming $2 billion. He called the charges “orchestrated plans to bring me to public disrepute in order to satisfy the whims and caprices of some powerful interests on revenge mission.” The full statement from Mohammed Adoke is available at http://thenationonlineng.net/malabu-will-come-defend-adoke/
  4. Goodluck Jonathan’s full statement is available at http://www.premiumtimesng.com/news/headlines/220059-breaking-malabu-oil-deal-jonathan-breaks-silence-bribe-allegation.html
  5. Eni has issued several press releases on the OPL 245 deal, available at https://www.eni.com/en_IT/media/2017/02/eni-further-forensic-investigations-confirm-no-illegal-conduct-in-acquisition-of-opl-245-licence
  6. Dan Etete’s response is available at: https://www.thisdaylive.com/index.php/2017/02/08/etete-government-did-not-invest-a-dime-in-malabu-oil/
Leaked Trump Executive Order Easing Conflict Mineral Regulations a ‘Gift to Warlords & Corrupt Businesses’

Leaked Trump Executive Order Easing Conflict Mineral Regulations a ‘Gift to Warlords & Corrupt Businesses’

Washington, DC — In response to reports that the President Trump is planning to issue an executive order targeting the US conflict minerals provision, also known as Section 1502 of Dodd-Frank, Carly Oboth Policy Adviser at Global Witness said: 

“Any executive action suspending the US conflict minerals rule would be a gift to predatory armed groups seeking to profit from Congo’s minerals as well as a gift to companies wanting to do business with the criminal and the corrupt. 

“This law helps stop US companies funding conflict and human rights abuses in the Democratic Republic of Congo and surrounding countries. Suspending it will benefit secretive and corrupt business practices. Responsible business practices are starting to spread in eastern Congo.  This action could reverse that progress.

“It is an abuse of power that the Trump Administration is claiming that the law should be suspended through a national security exemption intended for emergency purposes.  Suspending this provision could actually undermine US national security.”

The conflict minerals law, known as Section 1502 of the Dodd Frank Act, aims to help stop mineral trading fuelling conflict in Central Africa by requiring companies to check whether they are funding conflict or human rights abuses through their purchases of minerals, including tin, tantalum, tungsten and gold. These minerals are crucial parts of many products manufactured and sold in the US, from jewelry and airplanes to laptops and mobile phones.

For over a decade, Global Witness has exposed the role of minerals in fuelling conflict and human rights abuses in eastern Congo and played a leading role in securing passage of the conflict minerals provision. 

Congress Votes for Corruption by Overturning Historic Transparency Law in Gift to Big Oil

Congress Votes for Corruption by Overturning Historic Transparency Law in Gift to Big Oil

Washington, DC — Today’s decision by the Republican-led U.S. Senate to overturn a rule designed to stop oil companies striking corrupt deals with foreign governments is a grave threat to U.S. national security and an astonishing gift to big oil, said Global Witness. The news comes just two days after Rex Tillerson, a longstanding opponent of the law while CEO of ExxonMobil, was confirmed as Secretary of State, and the day after the U.S. eased sanctions on Russia.

The oil industry is the most corrupt on the planet. Alongside a broader anti-regulatory push and President Trump’s failure to address his conflicts of interest, this vote to roll back efforts to bring oil deals into the open is another sign of the rapid erosion of U.S. democracy in favor of big business.

The law, known as the Cardin-Lugar transparency provision, requires U.S.-listed extractive companies like Exxon, Chevron and several Chinese oil majors to publish details of the hundreds of billions of dollars they pay to governments across the world in return for rights to natural resources. Bringing shady oil deals to light should help ensure these vast public revenues benefit all instead of lining the pockets of corrupt elites. However, this week, Congress voted to rescind the implementing regulation by the U.S. Securities and Exchange Commission, with the House of Representatives voting on Wednesday and the Senate voting earlier today.

“As Exxon CEO, Rex Tillerson did everything in his power to gut this law, because it doesn’t suit big oil’s corrupt business model. Now he’s Secretary of State Congress has immediately sanctioned corruption by green lighting secret deals between oil companies and despots. These deals deprive some of the world’s poorest people of oil wealth that is rightfully theirs. Given the President’s massive conflicts of interest and his administration’s broad attacks on regulation, it appears our institutions are increasingly being abused to further the business interests of a powerful few. This is how corrupt dictatorships start,” said Corinna Gilfillan, Head of U.S. Office of Global Witness.

Crude oil pollution has created irreparable harm to Nigeria’s Niger River Delta. Global Witness recently highlighted how a questionable oil deal between ExxonMobil and the Nigerian government is currently being investigated by Nigerian law enforcement. | Photo: AFP

This move sets the U.S. in opposition to a broader global trend toward greater transparency and accountability in how oil, gas and mining revenues are managed. Thirty other major economies around the world, including the UK, Canada, Norway and all 27 members of the European Union – have laws requiring their oil, gas and mining companies to disclose their payments to governments. Dozens of major European and Russian oil companies have already published their payments to governments. Claims made by the oil lobby that greater transparency will harm U.S. oil companies’ competitiveness has proven untrue.

Global Witness notes with concern the complete fabrication of facts by the Republican leadership in their presentations about the Cardin-Lugar transparency provision.  They have relied on the American Petroleum Institute’s “facts,” which have been discredited over the past six years in multiple fora, while being totally unwilling to hear an alternative view. This is evidenced by their absence during the actual debate, not to mention the fact that many in the leadership who have pushed this resolution receive vast sums from the oil and gas industry. In the absence of a better explanation, it is difficult not to conclude that big oil has just had its lackeys liberate them to be corrupt.

“The U.S. has thrown away its global leadership on tackling corruption. Oil, gas and mining companies from other countries have already disclosed over $150 billion in payments under similar rules, meaning citizens can begin to hold their governments to account. If they can do it, you have to ask – what have the U.S. companies got to hide?” said Gilfillan. The law was finally implemented in 2016 after being passed in 2010 as part of the Dodd Frank reform act. It was implemented following a broad campaign from civil society groups, investors and community leaders all over the world.

Prior to the vote, Bishop Cantu, Chairman of the Committee on International Justice and Peace at the United States Conference of Catholic Bishops said, “Transparency in extractive industry payments to governments is important to us as leaders of the Catholic community of faith and institutions that are investors and consumers. We believe these principles, policies, and rules can help protect the lives, dignity and rights of some of the poorest and most vulnerable people on earth. The rules have moral and human consequences as well as economic and political impact.”

Republican Vote to Eliminate Landmark Transparency Law Jeopardizes National Security

Republican Vote to Eliminate Landmark Transparency Law Jeopardizes National Security

Washington, DC — Today’s vote by the Republican-controlled House of Representatives to undo a rule designed to stop corruption in the oil industry poses a grave threat to U.S. national security, said Global Witness today. 

The oil industry is the most corrupt on the planet, according to the OECD. Yet today the House of Representatives voted through a resolution to void the rule implementing the bipartisan Cardin-Lugar anti-corruption provision, which requires oil, gas and mining companies to disclose details of the hundreds of billions of dollars they pay to governments across the world in return for rights to natural resources.

“Make no mistake – this vote by the Republican-controlled House works in favor of corruption and against core American democratic values. The law under threat exists to deter U.S. listed oil, gas and mining companies from cutting secretive deals with corrupt regimes, tyrants and dictators all over the world – undoing it threatens our national security,” said Corinna Gilfillan, Head of U.S. Office at Global Witness.

Children sail past an oil pipeline head near their home at Andoni settlement, Bonny waterways in Rivers State in Nigeria. Global Witness recently highlighted how a questionable oil deal between ExxonMobil and the Nigerian government is currently being investigated by Nigerian law enforcement. | Photo: Pius Utomi Ekpei AFP/Getty Images

“Rex Tillerson led efforts to undermine this law as ExxonMobil CEO, while many of the politicians in the House who voted to gut it receive money from the oil companies who have benefited from these secret deals. Now on the same day that the House voted to undo this provision, the Senate has confirmed Tillerson as Secretary of State – we have a pro-bribery House and Trump administration doing the bidding of big oil.”

This comes just days after Nigeria’s anti-corruption law enforcement agency seized a billion dollar oil block from Shell and Eni during a corruption investigation. Had the U.S. anti-corruption rule been in place in 2011, this crooked deal would never have gone through, leaving the companies’ investors and the Nigerian people much better off.  The deal itself deprived Nigeria’s people of a sum worth 80% of its 2015 healthcare budget. Given that the block in question is estimated to hold as much as 9.23 billion barrels in probable reserves, investors face substantial losses from a backroom deal they knew nothing about.

Global Witness recently highlighted how a questionable oil deal between ExxonMobil and the Nigerian government is currently being investigated by Nigerian law enforcement.

The Senate is expected to vote on a similar resolution as early as tomorrow. The news follows President Trump’s signing of executive orders designed to force through the environmentally devastating Keystone XL and Dakota Access pipelines last week.