Latest update November 21st, 2024 1:00 AM
Vet all oil companies to verify beneficial owners – Expert
…Keeping corruption at bay
By Kiana Wilburg
Even though a nation’s oil wealth holds the potential to bring about transformative development, there are numerous examples across the globe which shows that it can do quite the opposite while creating the perfect breeding ground for corruption to flourish.
Expert on Oil Sector Corruption, Alexandra Gillies
If Guyana intends to avoid the latter disaster, expert on Oil Sector Corruption, Alexandra Gillies, asserted that there are a few strategies which can be employed.
According to the advisor at the Natural Resource Governance Institute, a not-for-profit group, Guyana can ensure it does proper vetting of all companies so as to verify the true owners who stand to benefit.
During an exclusive interview on Kaieteur Radio’s programme, ‘Guyana’s Oil and You’, Gillies said that the trend towards beneficial ownership disclosure is indeed promising as it has exposed on occasions that there are public officials who act behind the scenes so as to benefit from deals or contracts that are awarded.
The industry expert said there are times when there is a company that they are linked to but their interest in that company is not obvious or transparent in any way because “it has someone else’s name on the door.”
“I think that beneficial ownership reporting and screening companies for political exposure has started to get better in some countries (and) it has a lot of potential because often what’s motivating the corruption is individuals who are influential members of the elite- finding ways to position themselves so that they, their companies, or their allies receive some of these lucrative business opportunities.”
Gillies, who has worked to promote transparency and combat corruption in the oil sector for more than 10 years, stated that at the end of the day, the oil is a public resource, it belongs to the people and the government manages it on their behalf.
With this in mind, the author, of “Crude Intentions: How Oil Corruption Contaminates the World”, stressed that transparency must be at the heart and soul of the sector. She said that secrecy runs counter to that objective.
With Guyana being a full-fledged oil producing state, other industry analysts have shared sentiments as expressed by Gillies on the need to improve the vetting of companies.
In fact, the Natural Resource Governance Institute has advised local authorities to increase beneficial ownership screening so as to reduce the sector’s risk to corruption.
The organization, which is dedicated to improving countries’ governance over their natural resources, noted that in most natural resource-rich countries, when a company is seeking the right to explore for or produce oil, gas or minerals, sector, rules require that regulators check basic information before granting the company a license and accompanying contract.
In this regard, NRGI said that the regulator is supposed to judge whether the company is technically competent, financially sound, and is in compliance with environmental and safety rules.
It noted, however, that licensing rules generally do not require screening of whether public sector officials have interests in an applicant company, which could create serious conflicts of interest.
The Institute said; “We reviewed over 50 mining and oil laws around the world and found that about half contained prohibitions on government officials or their close associates – often called ‘politically exposed persons’ (PEPs) – holding interests in companies applying for extractives licenses, but none required regulators to actually check whether or not such PEP interests existed as part of screening license applications.”
It added: “This is a potentially critical gap in regulatory oversight, because a large body of real-world cases suggests that the ability to hide a company’s true beneficial owner is a major enabler of corruption in the granting of extractive rights.”
In Guyana, there is no legislation or piece of regulation which requires beneficial ownership screening for politically exposed persons.
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