Pressure mounts on foreign energy firms in Burma to come clean

Wednesday, 28 April 2010 20:07 Larry Jagan and Mizzima News

(In the earlier version of this article published online on April 27 there were several misquotations, errors of concision, errors of fact, a typographical error within a quote and the policy of one company was incorrectly attributed to another. Mizzima deeply regrets these errors, which are detailed in retractions below the following article.)
Bangkok (Mizzima) - International pressure is mounting on multinational oil and gas companies operating in Burma to reveal how much they have paid to the junta over the last 18 years, campaigners say.

Matthew Smith, a campaigner for EarthRights International, which is leading a new campaign to make the oil companies that operate in Burma more transparent, told Mizzima: “These companies should open their books to public scrutiny.”

“Burma is lacking in freedom of information,” he said. “As a result of several complex factors, including billions of dollars in gas revenues, the Burmese regime has remained largely immune to democratic pressures from governments and the people of Burma. Transparency frustrates that phenomenon.

“Everyone would benefit from their [the junta’s] greater transparency and accountability,” Mr Smith said, clarifying that by “everyone” he meant the companies themselves, investors and capital providers and the people of Burma.

The French company, Total, US-based Chevron and Thailand’s PTTEP company are all working with the Burmese government to develop the Yadana gas field in the Andaman Sea, eastern Burma, and the pipeline that connects the project to Thailand.

They are being urged to set an example for all international oil and gas companies operating inside the country and reveal how much they have paid the regime in taxes, royalties, fees and benefits since they started the project in 1992.

“This could provide a model for the future and help set international standards and practises for the country’s lucrative oil and gas industry,” Naing Htoo, also of EarthRights, told the press conference for the campaign’s launch in Bangkok.

All the companies involved in this sector are foreign owned but co-operate with the Burmese government and local companies. Burma’s oil and gas industry creates more than 60 per cent of the country’s national income - estimated to be more than US$3 billion a year. The junta is taking most of this, the campaigners say.

Through currency-exchange manipulation and fraudulent activities - less than 1 per cent of this ends up in the government’s coffers for use on education, health and social provisions. Since the Yadana project started producing gas in 2000, until 2008, it has generated more than US$7 billion, of which nearly US$5 billion went to the junta. Most of that share has ended up in secret accounts at two banks in Singapore, Mr Smith said.

This kind of secrecy also contributes to repression. The massive militarisation and excessive human rights abuses in the areas where there are oil and gas projects, according to Wong Aung of the Shwe Gas Movement, which monitors developments in Burma. “Land confiscation and forced labour are routine in these areas,” he said.

In the past month, more than a thousand villagers in the country’s west near the new Chinese pipeline project have been forced to sign away their land without compensation - leaving them destitute and hungry with no prospect of planting their normal rice crop in the coming season, according to the Shwe group.

“In too many countries, dictators use the country’s natural-resource wealth to keep themselves in power,” Professor Michael Ross, a political scientist at the University of California, Los Angeles, in the United States, said. “Revenue secrecy makes that possible - revenue transparency can help to change that.”

The campaign is supported by 160 non-government organisations, labour unions, investment firms, scholars and policymakers, including the former prime minister of Norway Kjell Magne Bondevik and the former president of Ireland and former head of the UN Human Rights Council, Mary Robinson.

Mr Smith said two of the companies involved in the Yadana project, Total and Chevron, had supported revenue transparency through the Extractive Industries Transparency Initiative (EITI). The World-Bank-endorsed EITI sets a global standard for transparency in oil, gas and mining, with the goal of making natural resources benefit all. It is a “coalition of governments, companies and civil society” that sets a standard for companies to publish what they pay and for governments to disclose what they receive.

He added that Chevron had practised revenue transparency in Thailand, “so why not [in] Burma?”

Referring to private discussions that Total, the operator of the Yadana project, had had with some of its shareholders, he said: “We’ve been in touch with shareholders who have contacted Total to discuss revenue transparency in Burma, and they were told by Total that the company was contractually restricted from practising transparency in Burma, which is untrue.”

The government and the country could only benefit from these sorts of disclosures, the campaigners said.

“It’s fundamental information for macroeconomic policymaking,” Dr. Sean Turnell, an economist at Macquarie University, Australia, told Mizzima. “It would have an impact on taxation planning, exchange-rate movements and interest rates.”

Burma is routinely listed as the one of the most corrupt countries in the world, and greater scrutiny of oil and gas earnings would improve governance and lead to greater economic stability and development in the long run, according to the campaigners.

This kind of transparency would give Burma a greater chance to avoid being robbed blind by its leaders.

“The people of Burma have a right to know the financial dealings surrounding the country’s natural resources, including payments made from foreign oil companies,” said Mr Htoo.

The activists said this would become even more important if the country did move towards having a civilian government after this year’s planned elections, the activists said.

“Burma’s generals are kleptocrats, and the international community should do all it can to avoid aiding and abetting their larceny,” Dr Turnell said.

Retractions. Some corrections have been made in the text above and the following is a retraction of the most obvious errors.

“The Burmese junta is a bunch of crooks who are pocketing millions of dollars, siphoned off from these oil companies and should be brought to book,” Mr Smith said.

Correction: Matthew Smith states categorically that he never said this.

Out of quotation marks, the story said:

The key company in this conglomerate, Chevron, already practises revenue transparency in many of its other operations worldwide, including developing countries.

Correction: Chevron is not the “key company”, Matthew Smith told Mizzima, adding: “Total is the operator of the Yadana project and Chevron does not practice revenue transparency in many of its other operations worldwide - I did not say they did.”

“All we are asking them to do is to follow this practice, which they themselves extol,” Mr Smith said. “At previous shareholders’ meetings the company’s senior executives have said that the confidentiality clause in their contracts with the Burmese regime prevents them disclosing this kind of revenue information.” … “This is patently untrue,” said Mr Smith.

Correction: Matthew Smith states categorically that he never said this. Further amendment of what was said is included in text above.

A point regarding Total and Chevron:

Correction: Matthew Smith states Total not Chevron was the subject of discussion. “We have no information that suggests Chevron told investors they cannot practice transparency in Burma,” he has said since the article was published.

“The people of Burma have a right to know the financial dealings surrounding the country’s natural resources, including payments made to foreign oil companies,” said Mr Htoo.

Correction: This should have read “from foreign oil companies”, Matthew Smith said in response to the published article.