World Bank joins organizations warning Guyana about oil sector corruption

Nov 05, 2018 News

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As Guyana inches closer towards becoming a mega oil producing state, the World Bank is urging the citizenry and all transparency bodies to be on the lookout for four types of corruption that come with the petroleum sector.
In one of its recent reports, the World Bank outlined these forms of corruption to be: policy corruption, administrative corruption, commercial corruption and grand corruption.
With regard to Policy Corruption, the World Bank explained that this involves corrupt influence on the design of sector policies, as well as the enactment of sector laws and taxes in a manner intended to provide political or personal gains at the public’s expense.
It said that examples of this, take the form of policies or laws being passed with loopholes, tax breaks, price controls, awards of exclusive rights (such as oil blocks to companies and individuals), and special account procedures. It also called for the citizenry to be mindful of the relationships of legislators and special interest groups aligned to oil and gas companies.
Turning its attention to Administrative Corruption, the World Bank said that this refers to the abuse of administrative office to extract illegal benefits in exchange for approval covering a wide range of commercial and operational activities. The Bank said, “In other words, it is looking the other way in the face of corrupt behaviour, or for a favourable interpretation of fiscal regulations in favour of the company.”
With respect to Commercial Corruption, the Institution explained that this relates to procurement abuse, including tender rigging, kickbacks, and cost inflation.
As for Grand Corruption, it said that this is the most common form of corruption and it speaks to the direct theft of massive amounts of money or diversion of production; products, or revenues made from the sector.
HOW TO AVOID IT
According to the World Bank, several steps can be taken to ensure that these forms of corruption are kept at bay.
It noted that robust anti-corruption laws should be drafted, passed, assented to and implemented without fear or favour. It said that the Head of State should start implementing the laws from his Cabinet and any of his ministers, advisors and aids found guilty should be made to face the law. The World Bank stressed that when it comes to anti-corruption laws in oil and gas, the law should not be selective but applied holistically.
The World Bank added, “Dealing with the malaise of corruption in the sector may appear complex and intractable when the management lacks transparency and accountability in managing the affairs of all oil business activities from seismic survey, development, production, transportation, refining, marketing, etc. It is therefore suggested here that all culprits in any form in the sector should be immediately suspended/or dismissed, persecuted and if found guilty, should be imprisoned. This will serve as a deterrent to others and the issue of ‘Plea Bargain’ should not be allowed or permitted in any form.”
Further to this, the financial institution said that fighting corruption in the petroleum sector requires resources the right skills and adequate funding. It said that the resources needed range from moderate for informational campaigns, through serious for technical assistance to capacity building in government agencies and civil society to significant, where complicated investigations and surveillance are called for. It stressed that political rhetoric without these resources will not go far.
It also said that the Government should, as much as possible, implement to the fullest, the global Extractive Industries Transparency Initiative (EITI) launched in 2003 by the former Prime Minister of United Kingdom, Tony Blair. “This is because the initiative is designed to address the paradox of plenty in resource rich countries by requiring transparency of payments made by companies and of revenues received by governments, thereby limiting opportunities for corruption and promoting accountability.”
EITI AND GUYANA
It was in October last year that the International Board of the Extractive Industries Transparency Initiative approved Guyana’s application to become a member of the prestigious anti-corruption body, which demands good governance in oil, gas and other mineral resources.
Head of the EITI local chapter, Dr. Rudy Jadoopat, told Kaieteur News that the next step is for Guyana to submit its first EITI report within 18 months from now. He said that an international team is currently helping local authorities with the preparation of this document.
He stressed that it must meet all the strict EITI Requirements, which are covered in the EITI Standard 2016 (See link for more information on this: https://eiti.org/document/standard).
Fredrik Reinfeldt, Chair of the EITI, said that the expected growth of the oil and gas sector in Guyana is both a huge opportunity and a big challenge. He said that the further development of the mining sector is also an important focus of public debate. Further, Reinfeldt noted that implementing the EITI rules will help Guyana lay the foundation for transparent and accountable management of its natural resource wealth.
GUYANA/ EITI HISTORY
EITI is an international body that was established in 2003 with the aim of making it harder for governments and companies to hide the truth about the proceeds garnered from the extractive industries.
The companies in the extractive sector report on what they are paying the government, and the government reports separately on what it received from the companies in the sector.
A report is then prepared by a Multi-Stakeholder Group. The document, among other things, will highlight whether the numbers data collected from the two add up, or if there is an irregularity.
Dr. Jadoopat explained that Guyana must be praised for its efforts in recent years, which were all geared towards satisfying the EITI candidate sign-up requirements.
The official noted that the Government of Guyana had announced its commitment to implement the EITI Standards since May 2010. He said that Guyana and EITI even signed a Memorandum of Understanding in 2012, which paved the way for Guyana to be assisted with its preparation of EITI candidacy.
He said that the Inter-American Development Bank (IDB), the World Bank and the Carter Center provided assistance to the Government and supported its efforts towards EITI candidacy. Dr. Jadoopat said it is expected that this will continue.
He added that the government, as stipulated in the International EITI Standard 1.4, has committed to working with Civil Society and Companies.
“It has unequivocally and boldly announced its commitment to work with civil society and companies. Also, the government has agreed to ensure that there are no obstacles to civil society’s participation in the EITI processes. It agreed to refrain from actions which may result in narrowing of, or restricting of public debate in relation to the EITI implementation.”
Dr. Jadoopat also took the opportunity to encourage all to consider it their civilian duty to actively participate in the activities and work of the Guyana-EITI.

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