Extracting Information, Extracting Lives

Mandakini Devasher
Project Assistant, Access to Information Programme, CHRI

Ironically, resource rich countries in the world are also amongst the most underdeveloped. In the Commonwealth for example, Nigeria, Ghana and
Cameroon in Africa have large fossil fuel reserves and PNG, Solomon Islands and Vanuatu in the Pacific have abundant forest and/or mineral resources. Access to natural wealth has, however, failed to translate into higher or more equitable standards of development. Too often, profits accrued from the development of countries’ natural resources have not flowed back to reinforce and strengthen the economies – and communities – that generated them. The world over, loss of traditional rights of access to natural resources, coupled with the inequitable distribution of profits from their sale have been at the heart of conflicts and rights violations.

The Report of the UK Commission for Africa, released in March 2005, offers some important insight into this problem, placing particular emphasis on the need for transparency in the allocation, distribution and management of natural resources such as oil, natural gas and forests.

Paradise Lost

It is a well-accepted fact that lack of transparency in the management of natural resources has contributed to vast numbers of people being denied access to revenue – and development benefits – that should rightly have accrued to them. Increasingly, it has been recognised that the complicity between governments and MNC’s in encouraging inequitable resource distribution has been at the root of the problem. MNCs bid to win tenders and contracts from governments who often are only too willing to bring them in to extract their natural resources. But the systems that facilitate such deals are notoriously opaque. In the absence of effective oversight and monitoring mechanisms the actions of governments and the corporate world too often go unaccounted - as do vast sums of money. There are many examples in the Commonwealth which bear this out.

Nigeria: Although the largest oil and gas producer in Africa, in 2004, Nigeria was ranked a poor 151 out of a total of 177 countries in UNDP’s Human Development Index. Massive corruption in natural resource management by the government and the oil companies has robbed Nigerians of the benefits of development. Most memorably, in 1995 the international community was stunned by the execution of Nigerian activist Ken Saro Wiwa by the Nigerian Government after Wiwa spoke out against the oil mining activities of Royal Dutch Shell Oil in the Niger Delta. A 2005 Human Rights Watch briefing paper estimated that the infighting in the region has led to serious human rights abuses.

Papua New Guinea: Spread over almost three quarters of the island nation, the tropical forests of PNG have long been witness to indiscriminate exploitation. Due to a strong nexus between logging companies and the political elite, shady deals remain veiled. For example, in 2002, the Ombudsman Commission finalised a three-year investigation into the Government’s decision to award a lucrative logging concession to Rimbunan Hijau, a Malaysian company with a notorious history in the region. The Commission’s findings revealed the poor human development record of the company in its operating region and its failure to comply with its contractual obligations. A Green Peace study identifies that the company and its subsidiaries control more than 50% of PNG’s large scale commercial logging operations and in 2002 exported logs worth more than US$ 50 million from PNG.

Nauru: Nauru is a chilling testament of the immense havoc caused by the mismanagement of natural resources by governments and large corporates. At one time the small population of around 10,000 people enjoyed one of the highest per capita incomes in the world. However, reckless devastation of the country’s environment and massive corruption in government has brought Nauru to the brink of extinction. In 1968, the Nauruan Government won compensation for the decades of mining that had preceded Nauru’s independence, getting settlements from Australia, New Zealand and the UK worth tens of millions of dollars. This money has almost entirely been frittered away in investments in dozens of Nauruan offshore holding companies, which under Nauruan laws are allowed to function in complete anonymity making the tracking of assets practically impossible. The personal stake of government officials in many of these companies has made accountability a non-issue. Individually worth nearly USD$ 500,000 at the time of independence, today Nauruans are facing along with a loss of their livelihood, their identity and their nation.

Stopping the Rot

In the coming years, as natural energy reserves dwindle, the scramble for resources will accelerate. As governments search for new sites from where to source fossil fuels, the danger to developing economies – from the mismanagement of finite resources coupled with wasted and/or stolen revenue from corruption – is all too real.

Key to ensuring sustainable management and equitable distribution of natural resources is transparency. Entrenching a legal right to information is a key mechanism for tackling corruption by fostering an environment which is pro-transparency, pro-democracy and ultimately pro-people.

The right to information is ordinarily premised on the public’s right of access to government held information. In the context of extractive industries however, the right to information has been effectively implemented to require governments to proactively publish the details of tenders and contracts entered into with corporations involved in natural resource extraction, as well as more general information about negotiations and revenues earned.

The G-8 Declaration on Fighting Corruption and Improving Transparency (2003), EU Transparency Directive (2004) and the Transparency Compacts between G8 and developing nations at the Sea Island Summit (2004) are some of the efforts that reflect growing commitments by governments to openness in the extractive industries sector, with a focus on making transparent details of public budgets, revenues, government procurement and payments. Most notably, in 2001 the World Bank launched the Extractive Industries Review (EIR), a stakeholder and civil society consultation directed at drafting a set of recommendations to guide the involvement of the World Bank Group in the extractive industries sector. In 2003 the EIR published its report with recommendations for the World Bank to consider. The World Bank Management Group responding positively to the report has affirmed that in the future “… the Bank Group will require transparency as a condition for new investments in EI [Extractive Industries] in line with our support of the EITI [Extractive Industries Transparency Initiative]. For new large projects we will require transparency immediately to ensure that revenues are properly and transparently accounted for; for new smaller projects, we will expect it within two years.”

Publish What You Pay

The Publish What You Pay Campaign (PWYP) was launched in 2002 by the Open Society Institute in collaboration with other NGOs. It is a civil society initiative which encourages and monitors the disclosure of information on contracts, payments and the like by governments, corporations and funding agencies like international financial institutions. The Campaign’s main agenda is to get multinational oil, mining and gas companies to publish details of the payments they make to states in the developing world.

Extractive Industries Transparency Initiative

The EITI is a positive example of how the push for transparency in natural resource management has been implemented in practice. Responding to the growing need for transparency in extractive industries due to massive corruption and illegal exploitation in the sector, in 2002 the EITI was launched by UK Prime Minister, Tony Blair, at the World Summit on Sustainable Development in Johannesburg. The initiative has been spearheaded by the UK Department for International Development and has the active involvement of the World Bank Group.

Though currently restricted to extractive industries such as oil, gas and mining, there is growing pressure that the principles of EITI should be extended to other natural resource sectors like forestry and fisheries. Within the Commonwealth, countries that have signed up to the EITI include Nigeria, Trinidad and Tobago, Ghana and most recently Cameroon. In these countries, this nascent initiative is already showing success.

Commonwealth Involvement in EITI

Ghana-Rich in gold, diamond, bauxite and manganese mines, in 2003, Ghana announced its decision to join the EITI. In the same year, the Mineral Commission began releasing its revenue figures, production data, company receipts etc to national newspapers. Meanwhile an Interim Management Committee (ICM), a multi-stakeholder steering committee of government and civil society representatives, has been formed to oversee implementation of the EITI. Reporting guidelines and templates have already been designed for companies and the government. 

Nigeria: Nigeria also committed to the EITI in 2003. Nigeria’s work in this area includes amongst other things an independent audit of revenues and payments in Nigeria’s extractive industry and the publication of all data and information an audit of the oil sector. A draft EITI bill was submitted to the National Assembly in early 2005, to be passed as a law.

Trinidad and Tobago: With most of its income accruing from oil and natural gas, in Trinidad and Tobago the EITI was introduced in January 2005. Implementation is too new to be able to draw conclusions about the effectiveness of EITI efforts, but it is a positive step forward for the Caribbean that the country has taken the lead in signing up to this important initiative.

Campaigns and initiatives like the EITI are however hampered by their voluntary nature. The EITI enforces mandatory disclose only after a country has agreed to be bound by its principles. It is imperative that resource rich countries in the Commonwealth are strongly encouraged – by their public and their peers – to sign up to the EITI, as the best means of ensuring their economic futures.

Only the Beginning

Governments hold natural resources in trust for the people whom they are elected to serve. It is their responsibility to ensure that the benefits of the development of these resources are distributed equitably across society and not merely to facilitate individual interest. Just the new push for corporate social responsibility recognises that it is no longer conscionable to argue that profits should come before people.

Commonwealth governments could consider entrenching the benefits of these initiatives by: