Active civil society, free press pivotal to prevent corruption in oil sector

– US legal expert tells symposium

An active civil society and a free press are key to guarding against public corruption in the development of the oil and gas industry, according to American legal expert Vicky McPherson.

“The most important thing to acknowledge about corruption is that you can have all the laws and regulations in place but if you don’t have the leadership and the personal conviction, quite frankly, to not steal from the public coffers, none of this matters. That is why I want to underscore the role of civil society and free press in all of this,” McPherson told an oil and gas symposium at the Pegasus Hotel yesterday.

The symposium, hosted by the African Business Roundtable and facilitated by the Caribbean Institute of Forensic Accounting (CIFA) in collaboration with the Guyana Oil and Gas Association(GOGA), yesterday began a two day conference under the theme “Public Corruption and the Curse of Oil: Lessons from Developing Countries.”

Vicky McPherson

The meeting sought to explore why the oil industry in most developed countries is linked to widespread corruption and fraud, including increased attempts at theft from the public coffers.

McPherson is one of many regional and international panelists that will discuss with citizens here how they can protect sovereign interests to avoid these pitfalls.

A shareholder in the Washington, DC office of international law firm Greenberg Traurig, where she says that she has represented clients around the world on inter-transactional matters involving the oil and gas industry, McPherson urged the populace to be watchful and vocal when wrongs are evident.

“The thing that distinguishes many developing countries from others on how corrupt their systems become after the discovery of oil and other natural resources are those two factors: whether or not the civil society is active and vocal in the development of that industry and whether the press will report what it finds when it ultimately does its job,” she said.

“If those key factors are in place here in Guyana, you can escape the curse but you will still have, unfortunately, incidents of corruption because at the end of the day it’s a personal decision by each person, who would touch this contractual regime that is going to have to be put in place, to decide whether they are going to benefit personally. So, I encourage the civil society, who are citizens, to demand transparency and if the citizens demand transparency, that will go a long way, in terms of ensuring that the government and those who benefit from government contracts do not personally benefit to the detriment of the country as a whole,” she added.

‘Will and leadership’

McPherson also argued that encouraging a public-private partnership framework is key to everyone benefiting from the oil and gas sector.

Noting that she understands such a framework was being prepared here, she said that the best case would be to separate technical and financial proposals for projects and that government not base contract awards on just low costs. She also underscored the importance of due diligence systems being put in place to safeguard awards on capital projects and current expenditures, while adding that a transparent procurement system, where contractors and possible investors are vetted would be best for an assurance that government and the nation would get value for money.

Building on McPherson’s arguments was chartered accountant and certified fraud examiner David Holukoff, who said that developing nations needed to be vigilant and check the backgrounds of companies and investors thoroughly.

Citing his extensive career working in the Caribbean, Holukoff said that he has seen companies that were kicked out of Canada working in developing nations. “I have seen them in some of the Caribbean countries,” he said.

He too stressed that a country’s leaders have to set examples and have the determination to show zero-tolerance for corruption. “This is just not about the laws because there are always loopholes…it is a lot about the will and the leadership at the top and their unwillingness to accept corruption and [getting] rid of bad players,” he stressed.

He lauded the Bahamas’ recently-elected Prime Minister Hubert Minnis for his declarations at the just-concluded Caricom Heads of Government summit. “The Prime Minister of Bahamas opened up with his talk that any minister who was found to be accepting payments would be fired. And he just said it as pointedly as that. It is the first time I saw a leader in the region talk so frankly and openly about it with apparent conviction,” he said.

Meanwhile, Chief Executive Officer of Guyana’s State Assets Recovery Agency (SARA) Aubrey Heath-Retemyer wanted the panel to state if there has been any attempt to determine the level of involvement by larger countries in compromising smaller, developing countries. “Some of these countries, producing oil or other raw material, their governments are being pressured to deliberately be corrupt by larger nations. I know that some of them that were corrupt all by themselves but I know there is a growing body of evidence which shows that smaller countries were deliberately pressured into that situation by other countries… could you quantify—is there any the level of pressure that has been brought to bear on these nations to make them corrupt?” he asked.

Afra Raymond, Chartered Surveyor and Managing Director of the Raymond & Pierre Ltd firm in Trinidad and Tobago, responded, saying that it was difficult to measure.

However, he pointed to the issue of transparency, while saying that detailed information on government’s spending should be had so that the public can know if there are nefarious persons being granted contracts and be able to object. He used the example of Jamaica’s establishment of its Office of the Contractor General to make available in detail data on government-funded projects.

“We have a stereotype about Jamaica being criminal, about Jamaica being disorganised, about Jamaica being lawless, about Jamaica being unruly. This is actually the report of their Contractor General in my hand. This is a report of every contract of the government of Jamaica between these two covers… at the back of it there is a CD, you can go on the website and find all of the information online. So, if I want to know, because I am suspicious of this fellow, how many contracts he got… I can find out. In Trinidad and Tobago we have nothing like this. The Finance Minister himself probably doesn’t know,” he said. “We have a responsibility as Caribbean people to put it in mind and this is what I am talking about,” he added.

Dr Perry Stanislas, an international expert in policing and security issues, echoed Holukoff’s observation that very often people who cannot operate in developed countries in North America, the United Kingdom and Europe will run to developing countries because they know the systems are weaker.

“They know people are more inexperienced and come and take advantage of the people,” he said as he named Allan Stanford as such a person. “How this man end up in Antigua and the next minute is lauded by Cabinet… I spoke to my colleagues in law enforcement and in Britain you can’t do that. You can’t come from a foreign country and have access to Cabinet. Special Branch, MI6 have to have a full background check of who you are. The people look at the developing countries as soft.  Things they can’t do in Britain, the United States and Canada, they will come to the Caribbean and Africa and do and because of that colonial mindset we are less rigorous, less demanding and they will abuse our system,” he added.

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