Revelations in the Economist: The Queensway syndicate and the Africa trade

Anti-corruption campaigner, Global Witness, has released the results of a months’ long investigation into the shadowy China Sonangol syndicate. The Economist ran an in-depth feature article on August 12th based, in part, on the Global Witness investigation.  China Sonangol, known also as The China International Fund or the “Queensway Syndicate” is a corporate partnership that started trading oil in Angola and now operates in oil markets around the world. The Economist article is a must-read for anyone interested in oil and the so-called “resource curse.” The Global Witness report provides more information, as well as proposals for curtailing this type of illicit trading.

Here’s a press release from Global Witness along with a link to the full report:

12th August 2011

Revelations in today’s Economist expose how a syndicate of private companies based in Hong Kong has been able to secure access to vast tracts of Africa’s current and future natural resource wealth in deals struck behind closed doors with pariah regimes.

The story reveals how a private group of investors from Hong Kong have struck some of the largest “resource-for-infrastructure” (RFI) deals ever made with the governments of Angola, Zimbabwe and the former government of Guinea, denying millions of citizens access to their natural resource wealth and dealing with brutal regimes in the process.

The syndicate secures access to resources by offering much needed investment in developing countries’ economies and infrastructure. However, very few of the promised benefits are materialising in the countries concerned, while the tiny elite behind the syndicate are making billions in profits.

The conditions which allow deals of this magnitude to be hidden from view are often complex and localised. But the roots of this problem reach beyond national borders and into the heart of our global financial and political systems.

Global Witness is calling for urgent measures to regulate how access to natural resources is given. It must be clear who won the deal, how they won it, and who stands to profit. This shift towards more sustainable business practice would benefit the citizens of resource rich countries and legitimate businesses.

In particular:

Terms of natural resources deals should be made public – particularly RFI deals given their potentially transformational impact on development if implemented properly.

Resource rich countries must:

• Adopt systems of open and publicly accountable bidding for oil, gas and mineral licences and use them consistently. Too often, ‘commercial confidentiality’ or ‘state secret’ is cited as a reason why more information is not made available on bidding processes or contracts.
• Use their position within the Extractive Industries Transparency Initiative (EITI) to extend its mandate to cover the processes by which exploration and production rights for oil, gas and minerals are awarded. This would ensure a mechanism for the fullest possible disclosure of information and active oversight of the licensing process by independent observers and civil society groups.

Key consuming countries should:

• Demonstrate their clear commitment to anti-corruption measures by enacting or building on existing transparency mechanisms and making sure their own anti-corruption laws have teeth. The US, EU (plus member states), China, India and other major consumers of oil, gas and minerals need to build an international consensus, expressed in treaties, bilateral agreements and other commitments, which explicitly forbids corruption in the extractive industries.
• The World Bank and IMF, regional development banks, export credit agencies and other international bodies should systematically promote an international norm of openness and public accountability in the allocation of oil, gas and mining rights. They must make the disclosure of information a condition of their lending and other forms of assistance.

Global Witness is available to comment in detail on the implications of this problem and what is required from policy-makers and others to tackle it.

Read the Global Witness briefing on how the lack of transparency in resource for infrastructure deals facilitates corruption and undermines development

Download the briefing

 

This entry was posted on Tuesday, August 16th, 2011 at 4:29 pm.