By Mike Sidwell

Three areas of corporate action are included where disclosure can contribute to improved accountability in the management of extractive revenues: payments to host governments, operations and corporate anti-corruption programmes.

Oil, gas and minerals, or the extractive industries, generate great wealth. Oil export revenues for 2006 alone are estimated to make up approximately 1.8 percent of the World’s Gross Domestic Product (GDP) and more than half of the combined GDP of the 53 lowest income nations. High revenues from the extractive industries have often fuelled corruption, economic stagnation, inequality and conflict. One step towards reversing this curse lies in the transparent and accountable management of revenues generated from the extractive industries. “Oil and gas wealth, if properly managed, should support better services and infrastructure. It should lead to a better quality of life for all citizens. It is the duty of civil society to work with companies and governments to unlock this potential,” said TI Chair Huguette Labelle.

Held at the International Institute for Strategic Studies in London, the evening launch featured a panel discussion on “Turning a transparent profit in the oil & gas industry: Opportunities and challenges for revenue transparency.” Speakers included Vanessa Herringshaw, Director London Office, Revenue Watch Institute; Keith Myers, Partner, Richmond Energy Partners; Juanita Olaya, Revenue Transparency Programme Manager, Transparency International; and was moderated by Michael Peel, legal correspondent for Financial Times.

The Promoting Revenue Transparency Project is run by TI in partnership with the Revenue Watch Institute, and builds on the work of the Save the Children UK ‘Beyond the Rhetoric’ report from 2005. The project aims at making extractive industry revenues of most benefit to society by increasing transparency and accountability.

To read the report and discover more about the project please click here.

By Georg Neumann

Transparency Watch (TW): You have worked in the water sector for almost 20 years. Have you had to face corruption at any point?

Teun Bastemeijer (TB): Corruption has many faces. I can give examples at every level, for example at the community level where leaders can take advantage of the water or sanitation systems by locating taps, hand pumps and subsidised latrines near their houses. At the municipal level it is not uncommon for a mayor to use revenues from the sale of drinking water for his campaign or petty cash. Corruption is often related to the unauthorised or illegal dumping of wastes in rivers because it’s often cheaper to pay off an official than to construct a treatment plant. Unfortunately, there are so many concrete examples that I could go on for ages.

TW: What makes corruption in the water sector such a fundamental issue?

TB: Corruption is one of the key factors contributing to the destruction of natural resources and therefore also water sources. To put it very briefly: corruption leads to the fact that the water, sanitation, food and environment related UN Millennium Development Goals (MDG) and Targets will not be met, meaning a lot of people may die because of corruption, because they don’t have access to vital basic resources. This may be a blunt way of putting it, but I believe it’s not far from the truth.

TW: Developing countries are facing dramatically rising food prices, even causing riots in the streets of Cameroon and Haiti. How does corruption in the water sector relate to poverty and development?

TB: Water and sanitation are key factors in improving the situation of the poor. Any shortcomings can condemn people to poverty, preventing them from reaching a degree of inclusiveness in the economic development that is necessary to combat poverty. The 2008 Global Corruption Report (GCR) on corruption in the water sector - coming out end of June - states that water is one of the main factors vital for economic development, as does the 2006 Human Development Report. Corruption can affect the efficiency of investments and the lifetime performance of infrastructure and facility services in such a way that it causes death and destruction.

TW: How does the WIN tackle corruption?

TB: The WIN concentrates on capacities in the water sector, including environment and sanitation with issues such as water pollution and access to reliable water sources, but we also try to engage actors outside the water sector who can help to tackle corruption because they have the knowledge and experience, as well as commitment, to work on water related issues. We are an expanding network with over 600 members drawn from international organisations, civil society organisations, as well as public and private sectors. We have individual and corporate members from many countries. Through our relationship with Transparency International (TI), we can gain access to information that is needed to fight, identify or diagnose the risk of corruption, but there are thematic areas that need water specialist skills and knowledge. We also do national and international advocacy, as well as local actions, and hope to link up with some of the TI national chapter activities. Though this link with TI and other strategic networks we hope to be able to become a platform for water and governance related organisations to meet.

TW: What are the priorities of your work with WIN for the next year? What are the key events taking place?

TB: The launch for the 2008 GCR is on 25 June in New York with the United Nations Development Programme. In this context, we are also looking into events to publicise the GCR nationally and advocate for change at a country level. The Stockholm Water Week is in August followed shortly after by the International Anti-Corruption Conference (IACC) in Athens in October. Regarding the IACC, we will facilitate discussions about corruption in the different water sectors, including or relating to the environment, sanitation, agriculture and energy. We will also ensure a strong participation of water specialists. In the short term, we hope to gain experience and disseminate lessons learnt through small projects under the recently launched Small Grant Fund and to access additional funds to support more action on the ground. With a view to long-term impact, we are developing a strategic programme framework 2009-2015, taking into consideration the UN Millennium Declaration designated 2015 milestone.

By Georg Neumann

Welcoming the initiative, Huguette Labelle, Chair of TI said that: “Extractive resources need to provide real benefits for the peoples of the countries where these minerals are located.” The TI Chair was one of the panellists invited to participate with Zoellick in announcing the “EITI++” project. The project is inspired by the Extractive Industries Transparency Initiative (EITI), of which TI is a co-founder.

At a meeting convened by the World Bank, Labelle stressed that: “We welcome this initiative because it relates directly to transparency across the value chain of actions in the oil and mining sectors where we have seen in the past extensive corruption, violence, death, destruction and destabilization. The “EITI++” spearheaded by the World Bank can offer the opportunity that the vast mineral wealth of Africa benefits the people of Africa – starting with open and fair contracts between governments and companies, through to the equitable disbursement of revenues to support sustainable anti-poverty goals.”

Also around the World Bank and IMF Spring Meetings, the TI national chapter in the USA organised an expert panel to examine the harmful impact of corruption on development outcomes based on a recent World Bank Detailed Implementation Review (DIR) of five World Bank health projects in India. The session under the title “Corruption as a Barrier to Achieving the MDGs [Millenium Development Goals]: Lessons from the World Bank’s India DIR” included John Zutt (Department of Institutional Integrity, World Bank), John Roome (South Asia Region, World Bank) and Aneta Wierzynska (Transparency International-USA).

In an online brief published in April, TI took a closer look at the relation between poverty and corruption and the anti-corruption strategy of the World Bank.