Archive for October, 2011

In an unprecedented show of unity in Uganda’s parliament, opposition and pro-government MPs this week banded together in a bi-partisan demand that the government temporarily halt the completion of any oil agreements until an independent regulator is in place. Citizens and their representatives across the political spectrum believe there should be more transparency in the oil industry. Ordinary people believe it is their right to know whether they are going to benefit from what government has negotiated. Access to oil Production Sharing Agreements (PSAs) would enable civil society organisations to push government, firstly to insist on a fair price for the country’s resources, and secondly to ensure that the nation’s oil revenues go into the budget process and can be invested in poverty reduction measures rather than being used for personal gain.
The events of last week sprang from a collective sense of suspicion at the mystery involving agreements signed between the Ugandan government, the Italian oil firm ENI and London-based Tullow Oil. As the government continuously refused to make public the details of PSAs, popular opinion formed that ordinary Ugandans were not going to benefit from the emerging oil sector. Coupled with this is the fear that if President Museveni gains access to substantial oil revenue, the combination of considerable oil funds and strong presidential powers could increase the ability of his government to remain in power indefinitely.
After nearly 20 days of haggling over a landmark petition signed by more than a third of MPs, Speaker Rebecca Kadaga finally recalled the House to debate allegations of “shameless corruption” among other concerns about the oil sector on Monday 10th October. The petitioners produced bank statements and made allegations that between June 1 and July 16, 2010, Tullow Oil paid up to $100m to “expert” bureaucrats for “professional services”. The documents name Foreign Affairs Minister Sam Kutesa, Internal Affairs Minister Hillary Onek and Prime Minister Amama Mbabazi for receiving these payments. Former Tullow Oil country manager, Mr Brian Glover, allegedly wired the money from the company’s accounts with Bank of Valetta in the secrecy jurisdiction of Malta.
Tullow Oil has claimed it holds no bank account in Malta and describes as “outrageous and wholly defamatory” allegations it paid bribes to Ugandan ministers using its cash deposits in Malta. Tullow’s CEO Aidan Heavey, on 11th October 2011 wrote a letter to Speaker Rebecca Kadaga stating that “Tullow Oil are in the process of making investigations on the floor of the House and that Tullow rejects all those allegations on the name of Tullow and if such are made outside parliament, Tullow will take up legal action.” The accused Ministers deny all allegations and claim the documents are forged and designed to implicate them in bribery.

Lake Albert, Uganda with Tullow drilling site - Photo by Wolfgang Zeller

Why is the debate important for Uganda?
The accused Ministers are among the most powerful within the ruling NRM party and belong to an inner core of President Museveni’s regime through marriage and historical connections. An attack on them hits very close to the President who has also dismissed the documents as forgeries. Museveni has been criticised for putting an elite force commanded by his son, Col. Muhoozi Kainerugaba, in charge of security at the oil wells. A private security firm, Saracen, which is owned by his younger brother, Gen. Caleb Akandwanaho, is also involved in providing security to the oil companies. It does not matter to the average Ugandan that these documents could be forgeries and that the existence of the bank accounts is unverified. The suspicion has been planted and confirmed by the fact that some of the Ministers named have been cited for corrupt behaviour before. Matters are made worse by the fact that the President’s patronage has protected some of these same Ministers from investigation in the past.
The Attorney General Peter Nyombi claims it is the oil companies that insisted on the confidentiality of PSAs. Tullow Oil has threatened legal action against anyone discussing its involvement in the bribery allegations outside Parliament. As the main player in Uganda’s oil exploration, Tullow Oil would be setting a dangerous precedent in limiting discussions regarding its dealings with the country’s elected representatives on behalf of its citizens. Mineral extraction companies and the oil industry in particular have a reputation for secrecy that should not be allowed to stand if the fight against corruption is to have any benefit in developing countries. Considering the amount of local public support for the MPs’ actions, it is clear that Ugandans want answers now.

Extractive Industries Transparency Initiative
Ugandan MPs have demanded that the government joins the Extractive Industries Transparency Initiative (EITI) framework. This move is a nod to the importance of transparency in minimising the effects of the so-called ‘resource curse’ seen in many African countries. Secrecy in both government and company dealings enables corrupt behaviour to flourish. EITI and the Publish What You Pay campaign are part of a growing movement that demands that mineral extraction companies disclose all payments made to governments for individual projects. The idea is that this information would empower citizens to demand better services from government and improve the financial transparency of companies often alleged to be the partners in crimes of corruption committed by government officials. Critics argue that EITI and other voluntary ‘self-policing’ schemes are likely to reproduce the dominant view in western countries of ‘corrupt African governments’ and have yet to prove if they can deliver in reducing the corruption, secrecy and tax avoidance practices common in the extractive industry itself. Nevertheless, they have undeniably opened a new space for public debate on these issues in developing countries like Uganda.

Suzane Karambasaizi Muhereza

Read Full Post »