Dirty oil, dirty money…time to rethink our drilling madness?

From DemocraticUnderground.com

I’ve not been writing much lately — too busy with other work. But a number of articles and reports have caught my attention.

Of course, mainstream reporting on oil is generally all good news. It’s the second golden age of oil! Drill, drill, drill. Oil and gas prices will drop! We will become energy independent! Oil and gas will transform economies! Investors will see great returns!

It’s all so wonderful that you can almost forget about climate change and corruption and the fact that we’re really not seeing oil money transform economies in a positive way. Not yet, at least. Oil is bringing in money and raising GDP, but that hardly means life on the ground is getting any better for the average citizen. And, as recent reports from Ghana suggest, oil there  is boosting inflation and putting downward pressure on the cedi — hardly a benefit for the people.

On the dirty money front, Global Witness has recently published an article about  documents detailing alleged grand corruption in Equatorial Guinea:

“A new US Department of Justice court filing has made substantial allegations of corruption against Teodorin Obiang, the son of the president of Equatorial Guinea. …

“The amended complaint was filed yesterday in response to a request from the judge hearing the case to provide more evidence of Teodorin’s corruption, who was minister of forestry and agriculture at the time of the allegations. The new allegations include:

  • Teodorin required timber companies in Equatorial Guinea to pay him personally approximately 10 percent of the value of wood harvested for export (p.21).
  • Since at least as early as 2005, Teodorin has maintained public funds and revenues collected by the Forestry Ministry in an account at a private commercial bank in Equatorial Guinea that he had the exclusive authority and control over (pp.35-36).
  • He received tens of millions of dollars in payments from fraudulently inflated construction contracts in Equatorial Guinea (p.31).

According to the Department of Justice, Teodorin spent millions of dollars on sustaining a luxury lifestyle. This new filing provides more detail including:

  • €7.34 million of renovations to his Paris home in 2006.
  • A $15 million house in Sao Paulo bought in 2008.
  • €3.2 million on jewellery, including a diamond-studded Piaget watch for €980,720 in 2011.

The filing also provides more information on how Teodorin was able to move his assets into the United States using American banks and lawyers. In a number of cases Teodorin used shell companies to hide his identity and ownership of various assets, including his $30 million mansion.”

Read more here: New documents detail alleged grand corruption in Equatorial Guinea

Of course the Obiang family (and associates) would be nothing without oil and U.S. oil companies like ExxonMobil and Chevron, among others. These companies are in bed with Obiang and dictators around the world and the U.S. government does precious little to change that.

Well, there is Dodd-Frank Section 1504, the recent piece of legislation that requires oil companies to disclose the payments they make to governments. The law’s intent is to increase transparency, which is a first step towards accountability. As I’ve written before, the American Petroleum Institute and the major U.S. oil companies are doing their best to prevent this law from becoming effective.

U.S. Senator Richard Lugar, one of the lawmakers behind Section 1504, spoke in defense of the law at a recent USAID conference. The Task Force on Financial Integrity and Economic Development has posted a brief blog entry highlighting Lugar’s comments at the conference and reminding readers that corruption is the single biggest obstacle to economic and social development. Task Force Managing Director Tom Cardamone writes: “The SEC needs to stop delaying and issue the strong transparency rules that Congress passed nearly two years ago. Further delay only serves as an invitation to industry lobbyists to continue to push for loopholes that allow them to execute unaccountable deals with governments. These rules are already long overdue.”

Read more from Cardamone here:  Anti-Corruption Views – SEC now a year late on crucial transparency rules

The industry is booming, making record profits, but somehow Section 1504 is being framed as a major threat to U.S. competitiveness. It’s about as disgusting at the Wall Street bailouts…

In the meantime, private investment is also flowing into oil and gas operations at record levels. This is another “interesting” development. The U.S. government has jumped on the “trade not aid” bandwagon, promoting “private investment” as the key to African economic growth. Private investment is crucially important, but it’s not just any private investment that will lead to meaningful growth. And for now, the bulk of private equity is being invested in oil and gas.

Read more here: Petrodollars — No shortage of private equity investment in oil and gas.

More on this and the environment soon.

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