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Report: Cos. paid bribes to secure oil in Liberia

Report: Cos. paid bribes to secure oil in Liberia

September 27th, 2011 by JONATHAN PAYE-LAYLEH, Associated Press in News

MONROVIA, Liberia (AP) - International firms and local officials are paying bribes to secure future contracts in Liberia, a report by a London-based watchdog said Monday, even though oil is yet to be discovered in the country.

An oil rush is currently under way in West Africa, where the United States Geological survey has estimated that up to 3,200 million barrel could be found in the nations of Liberia, Sierra Leone and Guinea.

Among the findings of the Global Witness report is that at least one oil company - Oranto Petroleum - paid a bribe to the Liberian legislature so that an oil contract would be ratified, and Chevron Corp. ignored evidence of corruption when it later bought shares of that company through its local subsidiary.

"Despite evidence of this corruption being in the public domain at the time, a large share of the three offshore contracts awarded to Oranto was purchased by Chevron in 2010," the report said. "It raises serious questions about why Chevron would choose to get involved in a deal which may have resulted from undue influence."

Chevron did not immediately respond to calls seeking comment on Monday. The authors of the reports said they wrote to Chevron in July and August 2011 asking to know when they first became aware of the payment of the bribes by Oranto Petroleum, which sealed the deal in 2007 and then sold 70 percent of its shares to Chevron in 2010. Global Witness said they received no reply from the oil giant.

Natalie Ashworth, a Global Witness researcher, told reporters during the report's launch in Monrovia on Monday that the watchdog is in possession of receipts showing the bribes were paid.

"We got bank payment vouchers. And we also have receipts from members of the legislature themselves," she said. "We have documentary evidence that up to $120,000 was paid to the legislature over a period of two years," she said.

The report also charges that companies with no previous experience in the sector were awarded contracts and that even the government agency tasked with monitoring the oil sector paid bribes to the country's legislature.

Analysts often speak of a 'resource curse' in describing West African countries like Nigeria, Gabon and Equatorial Guinea where the discovery of oil led to an infusion of cash. The oil revenue has done little to benefit the population of these countries, however, and has largely been diverted to the country's ruling class. In Nigeria, dissent in the oil-producing region has fostered instability including the rise of a rebel group.

Titled, "Curse or Cure? How oil can boost or break Liberia's postwar recovery," Global Witness argues that if oil were to be found in Liberia and the sector remains unreformed, the industry could undermine the country's already weak governance system.

Liberia rediscovered stability in 2005 with the election of President Ellen Johnson Sirleaf, following 14 years of civil war. Sirleaf, a former World Bank economist and a darling of the Western donor community, is credited with numerous reforms and is running for a second term in next month's general election.

The report mentions a number of positive developments, such as the passing of a law mandating transparency in the extractive industries sector, but says these reforms do not go far enough.

For example, the government agency responsible for regulating companies, known by its acronym of NOCAL, "suffers from a huge conflict of interest, acting as both the regulator of the oil sector and as a company mandated to profit from oil," said the report.

"This conflict of interest has brought predictable results, with NOCAL paying members of the legislature to ratify oil contracts between 2006 and 2008."

NOCAL chairman Christopher Neor admitted money had been paid by the state-run oil company to the legislature on the request of the lawmaking body during the tenure of his predecessor.

He added: "But the intent was not an intent of bribery. It was intended to facilitate certain types of work ... A bribe is given to influence some actions to benefit someone unfairly," he said. "That was not the case."