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The Oil Diagnostic in Angola: An Update
Human Rights Watch, March 2001
Cooperation between oil companies operating in Angola and KPMG is critical to the success of the Oil Diagnostic._ The companies possess independent data on oil production and revenues paid to the government that is needed to compare with the figures provided by the government. The agreement between KPMG and the government recognized this, and states that "the Government of Angola will use its authority to require all companies concerned to cooperate fully under industry-standard confidentiality undertakings" with the consultants.24
Most of the major firms operating in Angola have already been contacted by KPMG with requests for data.25 To date, BP, Chevron, Exxon-Mobil, Royal Dutch/Shell, and TotalFina-Elf have all provided information to KPMG; indeed, the Economist Intelligence Unit reported that "most of the oil companies" have provided information to KPMG.26 BP and Exxon-Mobil also met with the IMF to discuss the SMP.27
In 1997, BP recognized that the company's involvement in Angola could become problematic "if the government fails to live up to commitments made to increase democracy, accountability, and transparency and if oil revenues continue to be the main source of income to the government."28 Consequently, BP chairman Peter Sutherland stated that the company would "insist as far as we can that such payments are transparent."29
Following this, and following pressure from NGOs, and after negotiations with Sonangol and the government, BP told Global Witness on February 6, 2001, that it will itself annually publish financial data on Angola, though without specifying when or in what format this would be done. In particular, BP committed to publish the total net production by exploration/production block; aggregate payments made by BP to Sonangol; and the total amount in taxes and levies paid to the Angolan government. Additionally, BP noted that the amount of the signature bonus payment it made for the offshore concession, Block Thirty-One, was recorded in the 1999 annual report for BP Exploration (Angola) Limited available, at Companies House in London.30 BP paid a signature bonus of U.S. $111,089,000 for Block Thirty-One, according to the annual report.31 Human Rights Watch estimates that all of the joint venture partners in Block Thirty-One, including BP, paid a total bonus payment of approximately U.S. $333 million.32
With disclosure of this data, BP set a new standard of fiscal transparency for oil companies in Angola. It is important now that other companies follow this example, as the aggregate financial figures from all oil companies operating in Angola would provide a good estimate of the total amount of revenue that the government receives. It would not, of course, show how the government spent such revenue, but if the revenues paid to the government should differ from the amount of funds deposited in the central bank, then the Oil Diagnostic should uncover the discrepancy. But if there are no such discrepancies, yet questionable expenditures occur after funds are deposited in the central bank, neither corporate disclosure nor the Oil Diagnostic would uncover this.
Recently, the international accounting and consulting firm Ernst & Young has been conducting an audit of the central bank that the government plans to submit to the IMF and World Bank by the end of March 2001.33 It is not clear, however, whether further such audits will take place during the duration of the Oil Diagnostic. In order to achieve complete transparency, the government of Angola should therefore disclose its use of oil revenues by publishing a detailed budget and account of expenditure, in accordance with the IMF Guidelines on Fiscal Transparency.
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