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There is so much that we don't understand about what really is taking place in many of the countries who are very rich in minerals and other kinds of resources, yet they are so very, very poor.
And the people are suffering so much. It is hard to understand, as you look at some of the African countries. Liberia, for example, that's endowed with the wealth of diamonds, and you would think that these diamonds would be a blessing for Liberia's impoverished people. Instead, they fuelled the civil war and lasted 14 years and took the lives of 270,000 Liberians.
Seventy-five percent of Liberia's population lives on less than $1 per day, and Liberia owes $3.7 billion to foreign countries and multilateral financial institutions.
So all of this is very hard to understand, and we hope that as we move with transparency that we can better understand this. I would like to ask a question of -- Mr. Alan Detheridge, is it?
You know and understand how Shell, for example, works with these African countries, and how the payments are made, how the contracts are put together, et cetera.
My number one question is when you are in countries where you have dictators or very corrupt leaders who obviously are taking the money, the proceeds, the profits, and they are cutting deals but not on behalf of the people, but the money is going into their pockets.
How do you -- I know you work with this. What do you say and what do you do?
MR. DETHERIDGE: Thank you very much for the question. In truth I am tempted to say I no longer work for Shell, so I shouldn't answer that question. But let me nevertheless try to do so.
Let me take the example of Nigeria, which as you know for many years was ruled by corrupt dictators. In fact, I think that's the reason why my former company was so very supportive of the Extractive Industries Transparency Initiative, and why along with a number of other people lobbied the then Nigerian government of President Obasanjo to undertake that initiate in Nigeria.
Our thought was -- Shells thought at the time was that making payments to governments transparent was a very necessary part of reforming Nigeria. It wasn't the only thing that was needed to be done, but it was something that -- it was something that was definitely required.
Now, that was -- Nigeria did indeed implement the extractive industries transparency initiative. And it hasn't solved all of Nigeria's problems. That is true. But what it has done is make it very apparent as to who is getting what money, because Nigeria publishes not only what the federal government receives, it publishes what state governments receive and what each local government area receives.
That has led in Nigeria to a lot of questioning of local elected representatives from people saying, look, you get all this money and I don't see the results of that in my backyard.
That's a very healthy debate. It's also a debate, I should say, that has led to three state governors being put on trial, and some of them going to prison for stealing money.
So the answer to your question, I think, it is difficult for companies to deal in those -- to deal with countries that are repressive and corrupt. Transparency is a help in that respect. This bill promotes transparency, and that's why I'm supportive of it.
Thank you.
REP. WATERS: Thank you very much. I suppose, Mr. Chairman, a lot more could be raised about this. But you know, we don't have the time to talk about Abacha and your past company's relationship with Abacha and what occurred in Nigeria.
But -- Angola is another prime example of a country that's very, very rich, and a country that was in war for a long time. And I guess, while I think the transparency is very, very necessary, there are some other things that I think we need to do, but I'm going to yield back the balance of my time so that the chairman can get to some other people and perhaps we'll have another round -- I could ask a question.
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This transparency issue is very important, and it is somewhat complicated. And we just heard testimony that said some do, some don't.
In the case of Angola, the threat was not followed up on.
I'm wondering what actions could be taken to make certain that the disclosures are accurate. How could SEC and law enforcement determine that they are not accurate, because as I believe that the oil companies in particular that are operating in many of these so- called "third world" countries are -- don't just have transparency and contracts that are above board.
I think they are paying underneath the table to the leadership of those counties. And I don't think that's ever going to be disclosed.
Am I wrong? Am I too suspicious? Am I too distrusting? I'd like anybody to respond to that?
How can we make sure it's accurate?
MS. STEVELMAN: I'd like to say something about that. I think that's where this still fits in nicely with certain other securities laws and other criminal laws. I think that's where you get a really good yield from Sarbanes-Oxley, where Congress has worked hard to make sure that companies that access the U.S. capital markets are subject to stringent internal controls.
Before that, in the Foreign Corrupt Practices Act, 1977, prohibiting bribery and requiring companies to maintain books and records that are accurate, systematic.
These things need to be audited if these companies are going to access the securities markets. Where auditing failures come to light, there is tremendously bad publicity, there is the potential of criminal enforcement.
And so while I believe that there would be soft enforcement at the beginning with respect to this law, there is the opportunity for much harder enforcement under other laws, the Foreign Corrupt Practices Act, for example, where under-the-table payments were discovered.
REP. WATERS: Also many of these governments do not disclose to their people how the money that they are receiving is being allocated or being spent. Is there ever any conversation from the oil companies, for example, with the government about their government processes.
Now I know it's probably unreasonable to ask our companies to try and enforce good government on the companies -- on the countries that they are doing business with.
But I'm wondering if there is any kind of conversation that takes place about that because, as was indicated here by Mr. Detheridge, many of the people in those countries believe that the oil companies are in bed with the corrupt dictators, that they are not paying the amount of money they should be paying, that they support that governments attempt to protect the oil fields for the companies with their military or paramilitary.
So what kind of discussion goes on? I know you are not with them anymore, Mr. Detheridge, and perhaps we are putting too much attention on you, but we really want to know what goes on behind the scenes.
MR. DETHERIDGE: You are asking some very good questions. Let me -- such conversations, of course, are very delicate. But let me just give you one example which comes back again to Nigeria, and I do that because I'm familiar with the case.
And indeed, in discussions with the Nigerian federal government about implementing the EITI, which I have say, President Obasanjo was very enthusiastic about, as was his finance minister.
REP. WATERS: Then why did he have so much disruption of the pipelines? I know him too, and I -- I think he certainly was better than Abacha and --
MR. DETHERIDGE: Sure.
REP. WATERS: -- you know, but why was there so much disruption to the point that people lost their lives?
MR. DETHERIDGE: Let me get to that point, if I may. But there was a conversation about -- well look, if we just published the numbers at the federal level, that's very helpful, it's very good, it's a step in the right direction.
But wouldn't it be much better if you published how much money went to the state and the local level. And that indeed is done, as I said before. It's led to some state governors now that's being arrested on corruption charges.
Now it's a reasonable question to ask, well, since this is all now in the public domain, why haven't things changed more quickly in the Niger delta?
And my answer to that is that things take time. You cannot expect a citizenry in a country that, as you say has been ruled by dictators, is unused to holding its public officials to account for the money which they have spent, you can't expect that to change overnight.
I've been following Nigeria for a number of years now, and I can tell you things are beginning to change in Nigeria. I mean, before it was unheard of that state governors would be arrested and put in jail. That's happening now.
It's not -- it's going to take time. In my view, this bill is a step in the right direction. It enables those kind of conversations to take place.
Thank you.
REP. WATERS: Thank you.
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Yeah, if the gentleman would yield just a bit. As you said, we have always looked with a jaundiced eye at the companies. And we've always wanted more scrutiny on the companies and felt that perhaps they were exploiting, they are not paying enough, that they were in bed with the dictators and they didn't really care about the people.
And I think as you said, and as I'm saying, we are willing to look closer at the governments also. And not only do we want transparency from the companies on what they are paying, we need to find ways to leverage whatever power, relationships we have, to get more transparency from the governments about how they spend their money.
I worked on debt relief. I worked on debt relief in Nigeria, and I kept asking myself, why am I working on debt relief in Nigeria? And they are rich in all this oil and these resources.
And so I'm convinced that I cannot credibly continue to talk about, you know, how poor these countries are when they are so very rich. And we are not doing enough to put the pressure on the leadership of those governments.
So I want to get them both, the companies and the government.
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