Latest update April 17th, 2024 12:59 AM
Sep 28, 2020 News
Corruption is endemic in the petroleum sector, not just among license/rights holders but among their partnering sub-contractors and suppliers. That’s why the Natural Resource Governance Institute (NRGI) is encouraging more oversight for these companies in its 2020 report titled ‘Beneath the Surface: The Case for Oversight of Extractive Industry Suppliers’.
“Large oil, gas and mining projects are usually associated with a few big names such as Shell, Exxon, Rio Tinto, Gazprom and Codelco.” NRGI stated. “These are rights holders— companies that receive licenses from host governments to extract resources. Typically, however, lower-profile companies do much of the work to take natural resources out of the ground. These are suppliers—companies that provide the goods and services that make extraction happen. They range in size from multi-billion-dollar international conglomerates like Halliburton, Schlumberger and Caterpillar, to specialized or local firms that may only have a handful of employees.”
It stated that between 2008 and 2017, oil, gas and mining companies spent an average of just under a trillion dollars a year. Set to remain one of the major financial flows from extractive industry projects, NRGI pointed to corruption risks in the operations of suppliers, including bribery, favoritism and state capture.
An analysis done by NRGI found that suppliers played significant roles extractive industry corruption scandals and foreign bribery cases in at least 29 countries across five continents.
NRGI said that suppliers would sometimes bribe or offer illicit financial rewards to gain an advantage; use an intermediary or supplier to pay the bribe, among other illicit methods.
The non-governmental organisation listed some key examples of corruption cases, involving suppliers. Some of these suppliers are even in receipt of contracts for works to be done in Guyana. They are ExxonMobil sub-contractors like Saipem, Halliburton and SBM Offshore.
ExxonMobil has been using Saipem as its prime contractor for the installation of subsea facilities for its developments in the Stabroek Block. The Italian company was hauled before the US Securities and Exchange Commission (SEC) where it settled with a fine of USD$24.5M an allegation that its employees paid approximately €198M to an intermediary that would assist it in obtaining contracts from the national oil company of Algeria, totaling well over USD$10B. The fine was handled by ENI, which had a large controlling interest in Saipem at the time. The intermediary is alleged to have, in turn, channelled money to Algerian officials. Saipem, nor the parent company, confirmed or denied the allegation. Earlier this year, an Italian appeal court overturned a previous corruption conviction laid before Saipem for the same matter.
As for SBM, ExxonMobil’s prime shipbuilder, there is a history of bribery of officials to gain advantages. US court statements state that the SBM made “commission” payments to sales agents between 1996 and 2012, in order to deliberately and systematically bribe officials in Brazil, Angola, Equatorial Guinea, Kazakhstan, Iraq and elsewhere. SBM executives bribed officials with over US$180M. These bribes resulted in approximately US$2.8B in profits. Subsequent lawsuit actions led by the Public Prosecutor of its home country, the Netherlands; the US Department of Justice; and the Brazilian Federal Prosecutor resulted in millions of dollars in fines being paid.
Halliburton in 2017 was forced to pay US$29M to the SEC to settle a bribery probe. By paying the fine, the company got off without admitting or denying wrongdoing.
In this case, the SEC alleged that Halliburton pay millions to an Angola state-run company to secure a lucrative oil deal. It made the second time in eight years that Halliburton got into trouble with the SEC and was fined for corrupt practices.
JAGDEO ADDING MORE DANGER TO GUYANA AND THE REGION
Apr 17, 2024
2024 CWI Regional 4-Day Championships Round 7…GHE vs. CCC Kaieteur Sports – After a highly-successful round 6, Guyana Harpy Eagles will look to take full advantage of the out-of-sorts...Kaieteur News – Every school teacher should take a close look at the students in his or her classroom. The probability... more
By Sir Ronald Sanders Waterfalls Magazine – On April 10, the Permanent Council of the Organization of American States... more
Freedom of speech is our core value at Kaieteur News. If the letter/e-mail you sent was not published, and you believe that its contents were not libellous, let us know, please contact us by phone or email.
Feel free to send us your comments and/or criticisms.
Contact: 624-6456; 225-8452; 225-8458; 225-8463; 225-8465; 225-8473 or 225-8491.
Or by Email: [email protected] / [email protected]