Q&A: A Rotten Deal in Nigeria and the Global Movement for Transparency

Global Witness has reported extensively on the OPL case in Nigeria. Why is this story so important?

The OPL case is one of the worst corruption scandals in the oil, gas, and mining sector. It shows the problem with the lack of transparency around deals between government officials and powerful multinational companies, in this case Shell and Eni. The OPL sale meant $1.1 billion was taken from Nigerian citizens and the Nigerian economy. That’s more than Nigeria’s entire 2016 health care budget.

The real-life impact of these corrupt deals is that people do not benefit from these revenues. They don’t, for example, help fund public services such as education, health care, and infrastructure. If companies do not feel consequences for this kind of corruption, they will not change their behavior—and these resource-rich countries will continue to suffer huge amounts of poverty.

It’s been six years since you broke the OPL story. What influence has the coverage had on Nigeria in the time since?

Shell and Eni have been put under a huge amount of pressure to explain to shareholders, investors, and the public why they got involved in this corrupt deal. Our April 2017 report Shell Knew actually led to Shell changing their position on this case. Previously, they said they had not done anything wrong; now they admit that they did know that some of the money would go to a convicted money launderer and a former oil minister.

Five different countries have begun investigations into whether these companies broke the law. Shell and Eni are both facing trial in Italy. Last year, the Dutch authorities raided the head office of Shell in the Netherlands. An environment is being created in which the risks of corrupt dealing is much higher because shareholders, investors, the public, and the media are asking questions.

How can activists and independent oversight actors use Global Witness’s work to challenge corruption?

The great thing about transparency is that once you put information out in the public, it can be used in all kinds of ways. NGOs in Nigeria have used the information to question the Nigerian government officials who were involved in this deal. Members of the Nigerian House of Representatives have also made similar inquiries.

Using the data can be as simple as asking a company to explain why they haven’t paid any taxes on a particular project, which can create dialogue between citizens, companies, and governments. Investors are also very interested in this information, because their financial risk is high.

There are also efforts to track the money. A huge amount of cash and assets were distributed as bribes to various government officials, and some of that wealth now is in bank accounts in Europe and the United States. About $85 million is frozen in accounts in the United Kingdom, and the Nigerian government is trying to get some of that money back. When President Buhari came to London last year, he pointed out that Western governments have an important role to play in ensuring that stolen assets are recovered.

Nigeria was one of the first members to join the Extractives Industries Transparency Initiative (EITI), which requires oil, mining, and gas companies to report payments they make to governments. Has EITI been effective in exposing corruption and improving accountability?

From my perspective, the most important benefit of EITI is that it has led to normative change; transparency in the extractives sector is now commonplace. This is a huge shift from 10 years ago. Also, the EITI is a specific kind of transparency initiative in which civil society sits at the table with companies and governments, and then they negotiate what information will be made public and which rules will govern the extraction of natural resources.

Civil society must be involved because without that participation, you could end up having the information but not the accountability. Civil society tends to be the only actor that wants real accountability and change, so it’s crucial to the functioning of EITI.

Global Witness and our partners have been campaigning for a long time on the issue of “beneficial ownership,” because when we investigated corrupt deals, we found that even when we could see the payments, we could not see who owned the companies which received them. Many are set up as shell companies to hide the ownership of a government official or to enable money laundering. So we campaigned for the EITI to require oil, gas, and mining companies to disclose their beneficial owners. The EITI International board agreed last year, and companies in all 51 EITI countries will need to disclose that information by 2020.

What other measures can the international community take to stop money laundering through shell companies?

Most jurisdictions have laws against money laundering, but there are huge loopholes. We are working to push the European Union to require public disclosure and full public registries of the real owners of companies. The United Kingdom has this type of register, but the rest of Europe is lagging.

We also believe that trusts should disclose their beneficial owners, because money is often diverted to trusts set up by family members. The European Union and the United States also have transparency legislation. All European oil, gas, and mining companies started to disclose their payments to governments last year, and we have started to analyze that information.

Unfortunately, the United States recently reversed the implementation of its transparency legislation, which means that U.S. companies like Exxon and Chevron no longer need to disclose the same information. This is a huge step backward, and we are exploring options to challenge it.