14 Nov 2011

Corruption and the Oil Industry

An article published on the Ecologist explores the topic of corruption in oil-rich countries. According to Transparency International’s Corruption Perceptions Index, many of the largest oil producers and exporters are ranked quite low, some of them at the very bottom. What lies behind this connection?

The text mentions how many oil-rich countries continue to have alarming levels of poverty and income inequality, despite decades of high revenues originating from the resource sector. An example is Nigeria, where there is evidence that foreign oil companies maintained close relationships with the military government to protect their interests.

Another example of links between oil production and corruption is the fact that national oil companies, which control exploitation in many countries, are commonly among the least transparent state institutions. Lack of disclosure about revenues coming from oil exploitation can moreover give way to corruption by allowing elites to appropriate resources without being checked by any watchdogs.

Finally, the article mentions an initiative that is expected to bring some change to this sector, namely the Extractive Industries Transparency Initiative (EITI), which binds signatories to implement measures for the disclosure of public funds coming from oil, gas and mining exploitation, both from public and private companies. However, only 35 countries have joined the initiative, and some important players still resist taking part in it.

Read the full article How oil and corruption have become so closely linked on theecologist.org. The pictured portrayed above is also featured in the article.