An international study that was conducted on more than 100 corrupt oil contracts lists 12 red flags which all nations must be on the lookout for.
One of the major warning signs on the list includes companies with a record of participation in corruption or other misconduct.
The Natural Resource Governance Institute (NRGI) which created the list with its team of experts noted that oil companies with such a record could indicate that it has a propensity to engage in problematic business practices, or that officials tend to treat it with favoritism.
It noted that while some companies may be wrongly accused by their rivals, the level of scrutiny prompted by this red flag should depend on factors such as the reliability of the evidence or how often the company or individuals involved have been accused.
As it relates to specific warning signs, the Natural Resource Governance Institute said that the company or individuals involved may be under suspicion, investigation or indictment for criminal activity, in the country it is operating in or elsewhere.
Along with that, the Institute said that one might want to pay attention to whether the company or individuals involved have been convicted of criminal activity or violations of other relevant laws, in the host country or elsewhere.
It also said that the company having a long record of litigation or other adverse legal activity that suggests unethical business practices is an important warning sign.
EXXONMOBIL’S RECORD OF MISCONDUCT
Exxon Mobil’s questionable record around the world ranges from its proclivity to underpaying royalties, to being complicit in various acts of misconduct.
With regard to underpaid royalties, it was noted that in 2003, ExxonMobil was found to be defrauding the state of Alabama out of royalty payments, It was ordered by the courts to pay up more than US$100 million in back-pay royalties.
According to www.classaction.org., in August 2012, a Kansas judge approved a US$54 million settlement with landowners who claimed they were underpaid royalties when ExxonMobil made deductions for expenses that occurred downstream of their wells.
The settlement also ended a lawsuit filed in Kansas state court against ExxonMobil over royalties dating back to 2000.
Exxon Mobil was also found to be complicit in a corrupt arrangement in the African country, Equatorial Guinea.
In January 2017 an American Senate Subcommittee investigation into the operations between the Government of Equatorial Guinea and ExxonMobil exposed a number of revelations.
Among the reasons for the hearing was that in 2004, the subcommittee identified a bank account in Washington where ExxonMobil and other oil companies deposited millions of dollars owed to Equatorial Guinea for operating there. The money went to President Obiang’s family, the subcommittee found.
This occurred during the time Rex Tillerson was the CEO of ExxonMobil. Tillerson now sits at the desk of the US Secretary of State.
At one of the hearings, Tillerson was grilled by Senator Jeff Merkley. The politician’s questions were based on how President Obiang became exceedingly rich due to ExxonMobil making payments into a private account as opposed to the country’s National Treasury.
Tillerson was asked to say why ExxonMobil participated in such an activity. Tillerson said, “Senator, I am familiar with the circumstance you’re talking about. That was the subject of an investigation by the Judiciary Committee and there were no findings that Exxon committed any wrong or broke any laws at the end of that investigation.
“In terms of the payments that ExxonMobil would make in any arrangement in any contact with any country, (it) would be no different than they are made with domestic producers here in the US that are operating on federal lands.
“There is royalty and there are taxes to be paid to the Treasury. What the government does with those monies when the company pays is up to the government. Obviously, the US government distributes those funds responsibly and some countries, I understand, do not.”
Tillerson noted, nonetheless, that ExxonMobil’s operations do have positive spin-off effects for countries it engages like Equatorial Guinea, such as job creation. He said, however, that he is not suggesting in any way that that mitigates the corruption that is taking place in the country, but it is not without benefit and not without having American values on the ground in those countries.
After sifting through Tillerson’s statements, Merkley, the senator, highlighted his remarks about taxes and royalties, and the fact that they must go to the Treasury. Merkley stressed to Tillerson that in the case of Equatorial Guinea, Exxon was making payments to a private account which was controlled by the President. He was asked if he saw anything wrong with that.
Tillerson said, “I’d have to review from my memory the circumstance you’re talking about. My recollection is that that account was designated as the government’s account and I think that when it was discovered that the account either may or may not be a valid account, it was closed.”
Merkley pointed out that Exxon’s actions raised a moral question. He asked how the company could be engaging Equatorial Guinea in such a manner that it was essentially enriching the leaders without little thought as to how this was going to impact the people there.
Merkley also pointed out that the unfavourable state of Equatorial Guinea is even reported on by the US State Department.
Tillerson said that while he is aware of the circumstances spoken of by the Senator, he maintained that during his time, there were no violations.
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