This material belongs to: The New Yorker.
In February, in one of its first acts of lawmaking, the Trump Administration, with the Republican-controlled Congress, rescinded a pending Securities and Exchange Commission rule that would have required oil companies to disclose details of their payments to international governments in connection with oil and gas production.
The rule, which was mandated by a law co-sponsored by former Republican Senator Richard Lugar, of Indiana, and Democratic Senator Ben Cardin, of Maryland, was designed to combat bribery and corruption, especially in poor countries governed by kleptocrats. Thirty other countries, including Canada and the members of the European Union, had already adopted similar requirements. Yet the American Petroleum Institute and companies such as ExxonMobil, at the time when Secretary of State Rex Tillerson was still its C.E.O., had lobbied against the rule. They said that it was costly to implement and gave unfair advantage to overseas competitors to which it did not apply. When Trump took power, the lobbyists got their way.
A month later, Trump’s Interior Department signalled that the Administration would also withdraw from a certification process of the Extractive Industries Transparency Initiative. The E.I.T.I. is another corruption-fighting effort in the oil and mining sectors that involves governments, corporations, and civil-society groups. The United States officially endorsed the initiative, in 2004, because the George W. Bush Administration believed that it could promote better governance worldwide. The E.I.T.I. standards for transparency in oil finance were initially imposed mainly on poor countries, but, under the Obama Administration, the U.S. agreed, along with other wealthy countries, to adopt the standards. Trump apparently intends to reverse that decision. This is one more area, among many, where the U.S. no longer leads by example.
President Trump frequently talks about repudiating Obama Administration regulations and “bad deals,” but in some fields of international policy he is moving with equal conviction to tear up programs promoting democracy and human rights that were embraced by the Bush Administration and congressional Republican internationalists such as Lugar. In effect, Trump’s nationalism and the example of his own indifference to ethics and financial disclosure risk incentivizing corruption abroad.
“I get a bit worried listening to the rollback that the current government of the United States is actually pushing around the issue of transparency and accountability,” Olanrewaju Suraju, an anti-corruption campaigner in Nigeria, said this week at a conference on graft and the oil industry that the Carnegie Endowment for International Peace hosted in Washington, D.C. Nigeria has a growing middle class and pluralistic, if venal, politics. The country’s anti-corruption activists and some elected reformers have pioneered attempts to battle mass oil theft, through financial-transparency initiatives supported by Europe and America. If that era of transparency policy is over, Suraju said, the relapse will be stark. Under military rule, Nigeria witnessed what Suraju called “the mainstay of the economy operating like a criminal enterprise,” bloating billion-dollar accounts held in foreign banks. Things today are not wildly better, but at least there is a struggle over policy and accountability, and the occasional meaningful arrest. Still, the temptation to steal is great. Nigeria is a country, Suraju pointed out, “where it is possible for two hundred thousand barrels of crude oil to disappear on a daily basis.”
The problem is not just Trump’s indifference to promoting clean government and the democratic rule of law but the persistent and determined lobbying influence that the American Petroleum Institute and other arms of the fossil-fuel industry wield in Congress. “We won the argument about revenue transparency in 2003,” when Bush, no enemy of big oil, was President, Simon Taylor, a co-founder of the investigative and advocacy group Global Witness, said. “So what are we doing still talking about it? It’s because of the capture of politics by industry.” The American oil industry promoted transparency initiatives when participation was voluntary, and the numbers to be reported were more generalized, but it has balked at the kind of specific, mandatory reporting that Lugar and Cardin urged.
It’s not as if oil-fuelled bribery or its corrosive effects on the citizens of poor nations were diminishing. In April, Global Witness published e-mails documenting the case of a payment of more than a billion dollars that Royal Dutch Shell and the Italian oil company Eni made to Nigeria through unusual channels. According to Global Witness, Shell “knew it was party to a vast bribery scheme,” and international investigations are under way. Shell has said that the payments were proper. In June, Human Rights Watch published an extensive report documenting how Equatorial Guinea, a small and impoverished oil kleptocracy in West Africa where ExxonMobil operates, has diverted national wealth away from investment in health and education, partly because of a lack of financial transparency. (ExxonMobil says on its Web site that its local affiliate has “dedicated considerable resources” to programs aimed at “improving education and health,” providing drinking water, and empowering women.) In July, the Justice Department announced civil-forfeiture proceedings to recover more than a hundred million dollars from two Nigerian businessmen whom the department accused of paying bribes to a former oil minister in order to win favorable oil deals. (The former minister has denied the charges.) The prosecutors are hoping to recover a fifty-million-dollar condominium at 157 West Fifty-seventh Street, in Manhattan, and an eighty-million-dollar yacht, the Galactica Star, which were among the men’s purchases.
There is something about oil production that fosters baroque corruption. Oil cargoes trade in a liquid global market in which it is relatively easy to mask ownership of an oil shipment or convert a stolen batch of oil to cash. In many low-income countries, oil theft presents a unique opportunity to obtain sudden transformational wealth, akin to drug trafficking.
In 2014, the Organization for Economic Cooperation and Development released a study of more than four hundred international bribery cases, dating back to 1999. The O.E.C.D. monitors a convention against bribery signed by forty-three countries, and the study sought to identify patterns in public corruption. It found that almost two-thirds of all foreign-bribery cases involved just four industries: resource extraction, construction, transportation and storage, and communication—all fields in which government contracts or licenses are often required. The schemes reviewed were often high-level conspiracies; in more than four out of ten cases, a management-level employee paid or authorized the bribe, and in twelve per cent of the cases a chief executive was directly involved. The Trump Administration, which celebrates chief executives as fresh and effective leaders of government, inherited imperfect but useful policies to combat this scourge. It evidently isn’t interested.
