West 'creates' conditions for corruption

Angolans have not benefited from oil revenues

A report on the Angolan oil industry has called for greater transparency and criticised Western governments, oil companies, lenders and regulators for creating the conditions for "state looting".

By refusing to publish what they pay to the Government, oil companies create a necessary condition for the operation of state machinery of state looting

Global Witness

In the report 'All the President's Men', London-based pressure group Global Witness claims about £1bn - a third of Angola's annual state revenue - went missing last year due to transparency failures in Angola and abroad.

The report was presented to Angola's foreign minsiter Joao Miranda in London but he did not respond to BBC's World Business Report request for an interview.

The report comes after the death last month of Angolan rebel leader Jonas Savimbi, which has raised hopes for a lasting peace and also greater scrutiny of how oil revenues are spent.

Until now Angola's oil and diamond industries have been shrouded in secrecy as they funded the three decade long civil war.

Who's to blame?

According to Global Witness, which specialises in the relationship between conflict and resource exploitation, the war has been used to enrich Angola's ruling elite through "highly organised economic abuses involving full-scale appropriation and laundering of state assets".

It criticised Western governments' foreign policies for focussing "two miles down" on oil to protect national business interests.

Of the oil companies, only BP is singled out for praise for promising to publish accounts related to Angola.

"By refusing to publish what they pay to the Government, (other) oil companies create a necessary condition for the operation of state machinery of state looting," the report said.

Oil revenues are propping up the Angolan economy

The International Monetary Fund, World Bank and national export credit agencies are also criticised for failing to apply transparency tests on their operations.

Huge oil-backed loans shrouded in opaque accounting practises that funded the war caused the IMF to cease lending in June 2001.

Stock market regulators should also require companies to list the payments they make to nations to secure contracts, Global Witness said.

Oiling the wheels

The Angolan oil industry is jointly run by foreign oil companies with the state oil firm Sonangol.

Oil accounts for 42% of Angola's annual output, 90% of total exports and 80% of government revenues.

Angola is the second largest producer of oil in sub-Saharan Africa after Nigeria and the US purchases about 75% of all oil exports.

Only one offshore oil field - TotalFinaElf's Girassol block - is in production but others are expected to come on line in 2003-4.

Until then, Angola will see no money from taxes or revenue sharing beyond the signature bonuses, much of which - Global Witness believes - has gone into elites' pockets.