Drowning in the devil's filth

Drowning in the devil's filth Big oil and corruption Poisoned Wells The Dirty Politics of African Oil By Nicholas Shaxson £15.99 Palgrave Macmillan ISBN 1-4039-7194-3

This book has at its centre a simple premise - that the oil industry in Africa is uniquely and irredeemably corrupt and

Shaxson's research investigates the questionable activities of oil companies - the independents, majors and super-majors - who, in collusion with an African elite, are diverting oil and gas revenues to their own coffers and the overseas bank accounts of their African co-conspirators.

Accusations of this type are frequently aired in the media, and not even those with oil industry associations can argue that the charges are without foundation, but the proposition that the global hydrocarbon sector is uniquely corrupt remains open to question.

Many would argue that the only thing that is unique about the continent's oil and gas industry is the fabulous amounts of money that are involved. Africa's oil and gas revenues far outstrip the export earnings of all other African commodities combined and comfortably exceed the total value of official development assistance (aid) flowing to the continent.

But is there any evidence that oil is more corrupt than, say, Africa's banana industry or trade in copper or Gum Arabic? If these commodities commanded similarly huge amounts of money, would these industries be any cleaner than Africa's oil business?

It is doubtful, and even if this book fails to provide evidence to the contrary, Shaxson does raise highly pertinent and disturbing issues. He writes that "while some scream that big oil is corrupting and swindling innocent Africans, others claim that it is corrupt African leaders and poor governance that is to blame" and then he states that both are missing the point - although he does not really spell out what that point is. However, his narrative is very descriptive and highly readable.

For example, he likens the oil rigs that are scattered around Africa's west coast to "giant metal mosquitoes, standing on the skin of the earth on spindly legs and drilling down with steel proboscises to suck out all the fluid that is the lifeblood of the world economy. Like the biting insects, the rigs cause irritation around the site of extraction, disrupting communities or polluting farmland."

Our author has a similarly colourful description of oil itself. He equates it to dangerous illegal drugs. "Producing oil seems to be a bit like taking cocaine: if you are already healthy it might invigorate you, but if you are weak or sick, as many African countries are, it can do you serious harm.

"Oil can also be a bit like taking heroin: the injection of cash from each cargo delivers a feeling of well being, but the effect over time is addiction. Just as heroin addicts lose all interest in work, health, family and friends, and instead focus increasingly on the next fix, so politicians in oil-dependent countries lose all interest in their fellow citizens as they try to get access to the free cash."

The first oil-rich African country to receive Shaxson's searching analysis is, unsurprisingly, Nigeria - the world's sixth largest producer. Interestingly, he uses the life and work of that country's late, great musician; social commentator and some would say prophet, FeIa Ransome Kuti, to serve as a cipher because "this man illustrates the indefatigable spirit of this remarkable, bellyaching country".

Nigeria - the melting pot of hundreds of ethnic groups, or what Ali Mazrui called "the grand laboratory" - has been grappling with the question of how to share the oil money, which today makes up to 97% of the country's exports, since practically the first day that Nigeria's black gold was lifted from the ground.

The queue syndrome

It is another great writer and thinker that Shaxson quotes to summarise the problem that Nigeria and many other African oil nations share. That writer and thinker is Chinua Achebe who once described the situation in the country as like a queue. A normal sensible person, Achebe observed, will wait for his turn if he is sure the shares will go around; if not, he will start a scramble. But if people start to push in at the head of the queue, this assaults everyone's belief in the queue and if it happens enough the scrambling starts and it will collapse.

This, the author told this reviewer when attempting to explain just why he thought corruption and oil appear so interlinked, is the syndrome that afflicts Nigeria and many other African oil economies. "Politicians think that if they don't get what they can, someone worse will get it, so even if a dollar's worth of road repairs saves thousands of dollars in broken axles, the potholes remain unfilled."

Shaxson pinpoints the end of the oil boom in the mid-1980s - the oil price fell from $40 a barrel in 1980 to $10 in just five years - as being particularly pernicious for Nigeria.

The way that oil contracts had been agreed meant that oil price fluctuations would have an exaggerated impact on government revenues and various factions began to scramble to get to the head of the 'queue'. "The factions were not only ethnic and religious," Shaxson writes, "the civil service was a faction, as were political parties, state government, local authorities - which all fought to maximise their shares."

And while this scramble gathered momentum, millions sank deeper into poverty, yawning deficits opened up and foreign debt grew. Meanwhile, Fela's songs provided a musical accompaniment to what Shaxson describes as "the unravelling" of the very fabric of the nation.

Queerest place in Africa

Shaxson next turns his attention to Equatorial Guinea, a country that he first visited in 1993 at the beginning of his writing career - a career that now sees him writing regularly for both the UK-based Financial Times and The Economist.

He was lured to Equatorial Guinea because he spoke Spanish and had realised that Anglophone, Francophone and Lusophone news organisations rarely sent journalists to the "queerest little place in Africa".

The usual suspects are taken to task in this chapter: ExxonMobil, Marathon Oil et al as well as President Obiang Nguema and the group of his close relatives that control the reins of power and influence. Once again, it is a story of a tiny, hugely affluent minority colluding with big oil whilst the majority of the population live in poverty. Most disturbing are the accounts of the gruesome treatment meted out to political opponents. But speak to any government figure or oil industry player and while they usually accept there have been human rights' abuses and corrupt practices in the recent past, a reform process is underway and oil wealth is slowly uplifting the country's population.

Undoubtedly, the revelations that Shaxson and other journalists have made over the years have had an impact - although, to put it diplomatically, the speed and depth of reforms in Equatorial Guinea still leaves much to be desired.

Not that this really concerns the oil companies, according to Shaxson. "Oil companies do not base their investment decisions on whether a country is well run," Shaxson contends. "They go to were the oil is."

But this statement ignores an increasingly important consideration for oil companies; the issue of reputational risk. As most of them have been learning to their own cost, no company can ignore the potential impact that revelations regarding their dirty deeds, even in far-flung corners of the globe, can have on investor sentiment and their share price. Having said that, the experience that BP had in Angola, the next country that Shaxson examines, does suggest that when push comes to shove, even a super-major will put ethical considerations aside for the sake of oil.

Many will remember the huge pressure that BP (which operates in Angola's ultra-deep waters) came under to reveal its payments to Angola's government, a demand for transparency that BP seemed prepared to make until Luanda objected and BP backtracked citing Angola's sovereign right to commercial confidentiality. A lot of Shaxson's critique of Angola's oil economy focuses on Angola's financial system that, underpinned by oil revenues, has allowed those with the right connections to exploit the massive disparity between the official exchange rate and the parallel 'free-market' rate.

Shaxson says that, when he was living in Luanda, a powerful official could "change $1,000 on the street for Kwanza 1 20m, then go to the Central Bank and ask for the official rate, at Kwanza 6,000 to the dollar, yielding $20,000 of what was in effect free oil money from the bank".

Shaxson was living in Angola during and shortly after the civil war that ravaged the country, and it was this war with lonas Savimbi's UNITA that saw the government 'engage' with the then French national oil company Elf in an oil-for-arms deal that still reverberates around French political circles.

The French connection

This Elf connection is further explored in a chapter that takes a long, hard look at oil-rich Gabon. The company, according to Shaxson, was long "France's strong arm in Africa: channelling money secretly around the world, helping bend foreign leaders to [Frances] will and an effective weapon against British and US companies competing with the French industrial giants".

President Ornar Bongo is, of course, a central player in the Elf legend, a legend that among other things seems to suggest that favoured African leaders were given a 2Oc to 6Oc secret payment on every barrel of Elf oil extracted. The legend began to unravel with the inquiries unleashed by the Norwegian-born investigative magistrate Eva JoIy.

With further chapters that look in close detail at other African oil producers, Shaxson completes a vivid and fascinating journey. He lays bare an industry that is busy extracting what Opec's founder, luán Pere/. Alfonzo, once described as 'the devil's excrement'.