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EQUATORIAL GUINEA: Equatorial Guinea hosts ethics workshop

by DONNA BRYSONAssociated Press
March 27th, 2006

Is a traditional tribal leader a government official, and could giving money to him be considered bribery? These questions, which oil and gas company executives grappled with recently during a workshop in Equatorial Guinea, are more than an academic exercise.

Oil seems to have enriched Equatorial Guinea's kleptocratic leaders alone, as citizens sank deeper into poverty, disease and hopelessness. The country's critics said the unprecedented workshop on ethics and international law was at best a small step on a long road to reform.

If Equatorial Guinea does manage to transform oil into a boon for anyone beyond the president's circle, it could be a model for other African countries. As oil prices rise, Mideast political uncertainties and violence, and a sense that the world needs to prepare for the day Arab crude runs out, have led to greater interest in African countries like Sao Tome and Mauritania, eyed by oil companies as places with potential for significant growth.

"Any kind of public debate about this is a good thing," Sarah Wykes, an Equatorial Guinea specialist with Global Witness, said of the ethics workshop organized last month by TRACE, a U.S.-based nonprofit group. It helps dues-paying member companies understand and comply with anti-corruption laws, including a 1977 U.S. law outlawing bribery of foreign officials by Americans.

Wykes, whose Global Witness studies how revenues from natural resources too often fuel conflict and corruption around the world, said more than dialogue was needed. She called on oil companies to make public the taxes, royalties and other payments they make to the Equatorial Guinea government, information that citizens need to ask the right questions of their leaders. In the past, one oil company reportedly paid the California university fees of the son of Equatorial Guinea's President Teodoro Obiang.

Dick Horstan, an assistant general counsel for Marathon Oil Corp., said his Houston-based company and other American oil companies wanted to be open about their payments and made that clear during the workshop, which Marathon, a TRACE member, helped organize. But Marathon will only include its figures in an aggregate with those of other oil companies, arguing that publishing them unilaterally would tell competitors too much about its business.

In a statement to The Associated Press Monday, Equatorial Guinea's secretary of state for the treasury, Melchor Esono Edjo, did not respond directly to a question about whether his government would release oil revenue figures, which his president has been quoted as calling a state secret.

Edjo said, though, the seminar was a chance for his government to show "that what we are doing coincides with the principals of transparency."

"Our program for transparency is not only directed at the petroleum companies in the country, but also includes all of the ministerial departments of the government, in which each individual must periodically justify the income and expenses, in order to fight against corruption and improve the standard of living of the population," Edjo said.

Workshop discussions also focused on projects - such as a Marathon initiative to provide mosquito nets and other anti-malaria tools to Equatorial Guineans - that could help oil companies build goodwill. Hence the questions about how to ensure that payments to chiefs and other local authorities for such projects are above board.

Placido Mico, a leader of Equatorial Guinea's main opposition party who has been jailed repeatedly by the country's military regime, said such discussion can only be welcomed. But he said it should not distract from the larger question of whether foreign oil companies were propping up an abusive government.

Marathon's Horstan said oil companies don't have the luxury of choosing the governments with which they do business.

"You need to go where the resources are," Horstan said.

Equatorial Guinea is the third-largest oil producer in Africa - after Nigeria and Angola - producing more than 300,000 barrels of oil a day, according to the Energy Information Administration, the statistics arm of the U.S. Department of Energy.

"The important thing is that wherever you do business, you do business in compliance with the law and in compliance with our ethical standards," Horstan said, adding that oil companies need a relationship with host governments based on respect for law and operate best in stable, growing economies.

Equatorial Guinea's per capita GDP, pumped up by oil, is US$5,900. Half its people, though, have little reliable access to clean water, life expectancy is only 43 and 165 out of every 1,000 children born die in infancy, according to U.N. figures.

In contrast, the people of nearby Senegal, which has a per capita GDP of just US$634 - and exports mostly fish and peanuts - can expect to live 55 years. More than two-thirds of Senegalese have access to clean water, and the infant mortality rate is 78 for every 1,000 children born.

Equatorial Guinea spends the equivalent of 1.3 percent of GDP on health. Senegal, 2.3 percent.

So where does the oil money go? In recent years, the answer has been found in court records.

Riggs Bank, a Washington institution absorbed by PNC Bank last year, agreed two years ago to pay a US$16 million criminal fine for failing to report suspicious transactions involving government officials from Equatorial Guinea and elsewhere.

Equatorial Guinea had been Riggs' biggest single customer, with nearly US$700 million in accounts and certificates of deposit. Much of it was believed siphoned from government coffers for the personal use of President Obiang - who ousted his uncle to take power in a 1979 military coup - and his relatives and friends.

Little wonder TRACE director Alexandra Wrage was surprised at the call to organize a workshop in Equatorial Guinea, a first for the country. Two days of seminars were held, one for government employees and another for the private sector.

Wrage said multinational companies were having to respond to a growing international consensus that business as usual must end. She cited new U.N. and African Union conventions against corruption, and what she called renewed commitment by U.S. investigators to enforce the 1977 anti-corruption law.

Governments, she said, need to reassure potential investors their money will be safe, and to improve relations with international agencies like the World Bank.

Still, Wrage noted that copies TRACE made available during the workshops of Equatorial Guinea's own anti-corruption and ethics regulations were snapped up by attendees who said they were hard to find - an indication the government hasn't done much to spread the word about fighting corruption.



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