US corporations contribute to corruption in Africa

by Ken Silverstein and Dena Montague

During most of July, 80 Nigerian women, aged 25-60, peacefully took over a Shell Oil pipeline station near Warri in the Niger Delta, stopping production of 40,000 bpd of crude oil. Although Nigeria is Africa's largest oil exporter and the fifth-largest source of US oil, residents of the oil-rich Delta are among Nigeria's poorest.
The women say the oil companies and the government divert the profits, leaving local people to fight over the crumbs. "Our children and our husbands have never been employed by the company. We want to know why they should continue operating here," one of the women asked Shell. The story is an old one. The people are poor while corporations and government officials grow rich on the natural resources that should bring benefits to the poor.

Recently Halliburton was forced to admit it paid a $ 2.4 mm bribe to a Nigerian government official in exchange for tax breaks. Payments were made in 2001 and 2002 by Halliburton subsidiary Kellogg Brown and Root. Halliburton has been involved with several large-scale projects in Nigeria. In 1999 Kellogg Brown and Root began what was then one of the largest construction projects in Africa: a major expansion of Nigeria's LNG plant in Rivers State.
Halliburton has been active in the Niger Delta and has several collaborative projects with Nigeria's largest oil producer, Shell Petroleum Development, including development of the first major offshore oil and gas facility for Shell. Shell has a sordid history in the Niger Delta. Earlier this year, the company was ordered by the Nigerian Court of Appeals to pay the Ogoni people approximately $ 2 mm for environmental damage.

Few Nigerians anticipate Shell will actually make payments to the Ogoni. What Shell has made are direct payments to notoriously corrupt and violent Nigerian security forces during the Ogoni uprising in the 1990s leading to the execution of environmental and human rights activist Ken Saro Wiwa. The company has also imported arms on behalf of the Nigerian police. Recently, Shell was forced to shut down operations due to political unrest in Rivers State related to the oil industry.
Rivers State, where much of Halliburton's interests are concentrated, has drawn attention not only for the political unrest in the state, but it also has been cited because of widespread electoral fraud organized by President Obasanjo's ruling PDP party. Oil companies in Nigeria see Obasanjo as a strong ally due to his oil friendly policies. A summary of findings by Nigerian Civil Society found that a free and fair voting environment across Nigeria was "the exception rather than the rule." In some areas, voting malpractice was "part of a systematic plan to either disenfranchise the voters or distort the votes."

Vice President Dick Cheney's former company, Halliburton has helped develop projects in at least 20 African countries, including providing military support in Somalia and Mobutu Sese Seko's Zaire, as well as assist in the development of deepwater exploratory offshore wells in Angola and Equatorial Guinea.
At the same time the Halliburton bribery scandal broke, another scandal was revealed, involving ExxonMobil and another oil rich African country, Equatorial Guinea. ExxonMobil is facing an investigation into an alleged payoff of up to $ 500 mm transferred into a private US bank account apparently controlled by the president of Equatorial Guinea.

Ken Silverstein has written an excellent piece on the politics of oil in Equatorial Guinea entitled "Oil and Politics in the 'Kuwait of Africa'", describing rampant corruption and poverty in the oil rich state while oil executives actively court the state for favourable oil deals.
Dena Montague is a senior research associate with the Arms Trade Resource Centre of the World Policy Institute.