By Natasha Gunaratne
Dr. Peter Eigen |
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Widespread corruption in the global oil and gas and natural resources sector has been a huge concern for Transparency International (TI).
Founder of TI Dr. Peter Eigen told The Sunday Times FT in an interview that the sector is particularly vulnerable to corruption because of the huge amounts of money involved.
Although he did not comment on the oil hedging scandal in Sri Lanka, he said that in general companies get contracts worth billions of dollars so there is temptation for everybody concerned. Dr. Eigen is the Chairman of the Extractive Industries Transparency Initiative (EITI) which is an organization which aims to strengthen governance by improving transparency and accountability in the extractives sector. Governments, companies, civil society, investors and international organizations are working together to promote revenue transparency at the local level and to create more openness, honesty and integrity.
Dr. Eigen said tremendous progress has been made on combating corruption. "Some feel we read more about corruption in the newspapers and hear more about it on the radio and television. The main reason is because people are angry and journalists are angry when they see how elites, through bribery and corruption, are enriching themselves. People don't tolerate it anymore." He cited Siemens, a huge electronics and electrical engineering company in Germany, as an example of this. "About 10 years ago, nobody would have cared about it at all because foreign bribery was allowed under German law and it was even deductible. If a big company operating in the global market was bribing, people didn't think it was something special." However in this case, several people lost their jobs and the company had to incur huge fines. "The awareness on the damage of corruption is now very well spread in society."
The case of Siemens is particularly ironic since the company worked very closely with TI to change corruption laws in Germany, the same ones which they are now caught by. "When companies misuse our trust, it is to their disadvantage. They are damaged." With Siemens, he said it is not a problem for TI that they have failed because it doesn't interfere with TI's agency but on a personal level, it is disappointing.
Dr. Eigen said TI intentionally has a policy of working with powerful actors, whether they are international institutions or governments. "That means you run the risk that you are abused by people with the pretense of doing something about corruption but we accept this risk.
We make it very clear that we need the cooperation of governments and companies because they understand the realities and complications of corruption." He added that there are some NGO's which basically rely on confrontations with the establishment and governments and companies rather than trying to work with them to find a solution.
In many cases, Dr. Eigen said corruption is not just payments made to civil servants for making wrong decisions but may include complications with hedge funds. "If you want to understand that, you have to work with the banks and the oil and gas companies and the government. We found in many cases, these actors want to fight corruption. Companies find they are more competitive if there is no corruption so they would rather have a non corruption international market. However, they think everyone else is bribing so they feel they also have to. We want to address this issue by creating higher standards."
Dr. Eigen said civil society organizations are also prone to corruption because they are human. "They are as corrupt as the private and public sector. Very often, they operate in an area of semi legality because in some countries, particularly in dictatorships, they are not really allowed to operate freely. So they are by nature, somewhat outside the formal structure of government." He said it is very important to introduce guidelines for these organizations because if they don't do it themselves, the state will do it for them. "In many countries such as Russia, you have restrictive laws on the operation of civil society organizations. We introduce codes of conduct ourselves."
Dr. Eigen said there is an accountability charter for civil society organizations which are being promoted in all of TI's national chapters. In the charter, organizations commit themselves to transparent financial systems. "Often, you don't know where the money comes from. Sometimes, it's one rich person pursuing a particular agenda in the country." They also need a better system of transparency and open governance like a democracy or at least a modicum of participatory management.
Civil organizations also need competence. Dr. Eigen said they are committed and passionate about the work they do but in many cases, they don't have a grasp on important issues they are talking about such as climate change, human rights violations and labour conditions. He added that organizations also have to be willing to work with powerful actors in society and find joint solutions.
Dr. Eigen said TI national chapters have a system of accreditation. If they do not publish their financial statements or they are not properly audited, they will be discredited and subject to strict investigations. He pointed out that donors who fund some chapters may not be happy with the way their money is being spent. He also said some chapters are too political and it only serves to damage the credibility of the whole movement. "Some chapters got involved in land occupations in Zimbabwe and human rights violations and as a consequence, the leaders of the national chapters have been arrested and threatened. It is not good for TI because we want them to focus on corruption. If they begin to take up too many other issues such as money laundering or organized crime, then they basically destroy our impact."
Dr. Eigen said the global financial crisis is a wake up call to the world that the governance system for economies is not functioning well. "The markets are right now the masters of everyone rather than the people. It has become a perverse system in the sense that people and the enterprise and society have to adapt to the needs of the market rather than the other way around, particularly in the globalized economy companies are free to operate globally where they can escape the jurisdiction and discipline that comes with systems in other countries." Dr. Eigen feels most governments have lost the reach to really impose justice and discipline in the market.
He said there is no global discipline that makes companies live up to an acceptable standard; so honest companies suffer. "They are the ones who lose contracts because their competitors bribe. The dilemma which companies have with everyone else is competing in a governance-free market and it's hard to remain competitive.
We need a new paradigm of governance for a globalized economy and that is based on a coalition between traditional government that is democratically mandated, the private sector with their global reach and civil society organizations." Dr. Eigen said the system will be more fair and there won't be mass poverty like there is today or unacceptably high levels of child mortality. "Global corruption makes it hard for governments to remain honest. Companies offer them millions of dollars in bribes. This new governance is what I am fighting for." |
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