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Libya, U.S. Probe Oil-Company Deals


The Wall Street Journal

By Benoit Faucon, Summer Said, and Liam Moloney

April 8, 2012

New Government Aims to Shed Light on Petroleum INdustry‘s Interaction with Gadhafi regime

Authorities in the U.S. and Libya are investigating oil giants such as Italy’s Eni SpA and France’s Total SA over their past relations with the fallen Libyan regime, potentially casting a cloud on the companies’ ambitions to expand their foothold in the country with the largest oil reserves in Africa.

Last year, a civil war that toppled Libyan leader Col. Moammar Gadhafi nearly shut down the country’s crude production, stressing global oil markets. But as oil-company operations return to normal, the probes may complicate the oil companies’ business in the country.

The Libyan general prosecutor’s office is investigating “Libyan and foreign operators in Libya” for possible “financial irregularities,” its deputy head, Abdelmajeed Saad, said in an interview.

In a March letter reviewed by The Wall Street Journal, the prosecutor’s office formally asked the head of audit at Libya’s National Oil Co. to supply oil-company documents. The letter mentions oil transactions between NOC and international traders Vitol Group and Glencore International PLC as examples of documents it is seeking. Though the Libyan probe focuses mostly on the Gadhafi era, the letter indicates that the request involving the traders includes the period of the country’s civil war through the present.

The companies investigated also include Eni, the biggest foreign oil player in Libya, and Total, Mr. Saad said…Read more.

Algeria: Parallel economy slows Algerian development


News24.com

March 14th, 2012

AlgiersAlgeria‘s parallel economy and tax evasion cost the state colossal sums and undermine development in the resource-rich north African country, officials and experts say.

About half of Algeria’s 35 000 registered importers – 15 000 of them – are on a national blacklist of swindlers and tax evaders, according to Algeria’s anti-fraud chief Abdelhamid Boukahnoun.

Of those, 12 000 failed to submit company accounts, and the rest were put on the list for illicit trading practices, said Boukahnoun, head of the commerce ministry‘s Control and Fraud Prevention Department.

Operators who are on the list cannot engage in foreign trade or bid for public contracts, and they are deprived of tax advantages.

Trade Minister Mustapha Benbada says the black market accounts for half the revenue made by Algerian businesses.

“Most of the above-board economic agents, who are registered with the trade ministry, are involved in black economy practices,” Benbada told an international business meeting in the capital Algiers on Monday. “Half their revenue is generated by the black economy.”

Over the past three years, unbilled transactions have accounted for 155 billion dinars, according to estimates by his ministry.

But Boukahnoun said the true figure is far higher, closer to €10bn since 2009, and experts estimate that the parallel economy accounts for between 20 and 40 percent of gross domestic product (GDP).

They note that businesses are forced to buy raw materials as well as finished goods from the black market.

Economic dysfunction

As a result, large sums of money circulate outside the banking system to the detriment of the economy, Benbada says.

The former French colony draws the lion’s share of its income from oil and gas while struggling to develop its industrial sector.

The use of payment means other than cash – cheques, transfers and the like – is the only way to guarantee transparency, experts note.

The government tried to require wholesalers to use cheques for transactions over €3 000, but had to back down in January 2011 after riots over soaring food costs claimed five lives and injured hundreds.

Analysts blamed the riots on fears among wholesalers that they would have to pay more in taxes, prompting them to raise their prices.

Benbada said the government had not scrapped the idea, and would try again after “laying the groundwork better.”

Nacer Eddine Hammouda, a researcher at Algeria’s Applied Economic Research Centre for Development, said “economic dysfunction” makes a parallel economy inevitable because the formal sector cannot provide enough jobs to go around.

Unemployment among Algerian youths, which reached 50% 10 years ago, has come down to 21%, according to the International Monetary Fund.

While lamenting the black market, Trade Minister Benbada acknowledged that “it is socially useful as it allows tens of thousands of families to make a living”.

“The weakness of the non-market economy, the non-competitive, monopolistic market, as well as the system of pricing that does not reflect market realities are elements that cause the informal sector to expand,” he said.

Africa on K Street: Lobbying Is Not Restricted to the Developed World


Huffington Post.

By Vijava Ramachandran

This is a joint post with Julie Walz.

February 13, 2012

The aid community is well-accustomed to pushing for transparency in foreign aid transactions. But are we missing another key flow of money?

A recent article by Geoffrey York, African bureau chief for the Globe and Mail, described a contract signed a few years ago by the Government of Rwanda with Racepoint Group, which was tasked with doing an image makeover for the Rwandan government for a monthly fee of over $50,000. The rationale was that public perceptions of Rwanda were dominated by the horrific genocide that occurred in the 1990s, along with accounts of human rights abuses and media censorship. The contract with Racepoint reportedly aimed to increase the number of stories of Rwanda’s successes and block criticism of the government and its alleged human rights abuses. The effort landed more than 100 positive articles per month in newspapers from the New York Times to BBC, increased discussions of travel to Rwanda by 183%, and decreased discussion of the genocide by 11%, according to Racepoint.

In 2007, Racepoint also led a campaign to promote Libya‘s Gaddafi as an “intellectual and philosopher,” in advance of the thirtieth anniversary of his rule. Four years later, Libyan rebels hired the Washington lobby firm, Patton Boggs to help them unseat Gaddafi.

Other African governments have also invested in lobbyists. The Kenyan government contracted one of the top Washington lobbying firm Chlopak Leonard Schechter to restore its reputation after stories of election-related violence dominated the news headlines. It hoped to further U.S. support for its military and intelligence work, fighting piracy and dealing with the deteriorating situation in Somalia. Chlopak Leonard successfully placed positive stories in US media outlets and was able to call attention in Congress to the Somali crisis. President Obama’s Somalia policy even includes specific recommendations from the Kenyan government’s proposal to fight piracy and terrorism…Read more.

Libya can’t start afresh by sticking with corrupt contracts


Moving sand dunes, rocks and mountains in Tadr...
Image via Wikipedia

Guardian.co.uk

By 

September 11, 2011

The National Transitional Council’s pledge to honour contracts signed by Gaddafi‘s regime stores up trouble for the future.

The crumbling of the Gaddafi regime has intensified discussion of the challenges that lie ahead for Libya. Democracy, pluralism, national reconciliation and religion are all critical issues that will need much work. In my own opinion, though, re-establishment of the rule of law is the most pressing of all issues. Corruption, left unchecked, constitutes a threat to the future security of Libya.

A few years into its existence, the Gaddafi regime began to morph into a criminal enterprise that siphoned off Libya’s wealth either for personal enrichment or to buy friends for the regime both at home and abroad.

Naturally, the government controlled all revenues flowing into the Libyan treasury and maintained a vice-like grip on contracts. Over the years, the percentage “commission” on any given contract grew exponentially and, in many cases, was reported to exceed the actual value of the base contract.

We are unlikely to ever know the full details of the financial wrongdoings that have taken place in Libya over the past 40 years. However, what is undisputable is that Libyan government contracts were the primary vehicles for corruption.

Contracts with foreign companies provided an easy and convenient way of laundering money outside the country. At least part of this money was used by the regime to finance international terrorist activities includingsupporting the IRA, the Lockerbie bombing and endless conflicts in the African continent. Contracts with local acolytes provided an equally easy and convenient way of financing the drugs trade, smuggling and other criminal activities.

Much of the corruption in Libya is institutionalised in long-term contracts signed by the Gaddafi regime with companies all over the world, most notably in Russia, China, Italy, Germany, the UK and the US.

The National Transitional Council has been under tremendous pressure from these countries to publicly state that these contracts will be honoured – which it has done, perhaps because of its dependence on the goodwill of the international community. It seems to have done so without placing any condition or reservation. To renew contracts without removing the embedded fraud, where it exists, is a huge mistake…While they might feel they cannot afford to alienate the very countries that have supported them, short-term expediency cannot trump long-term interests and those interests are serving the needs of the people they work for: the people of Libya who will be in no mood for business as usual…Read more.

INTERVIEW-Libyan council wants oil firms to return fast


An oil well in Canada, which has the world's s...
Image via Wikipedia

AlertNet

Source: Reuters

September 2, 2011

By John Irish

PARIS, Sept 2 (Reuters) – With infrastructure damage from Libya‘s six-month conflict fairly limited, foreign oil companies should return as fast as possible to restore oil production, the interim administration’s reconstruction minister said on Friday.

In an interview with Reuters during a meeting with donor groups and post-conflict rebuilding experts, Ahmed Jehani said oil would be key to getting the economy running again and foreign contractors were needed for their technical expertise.

“The issue of damage is not much and you can get procurement very fast. This is helped by fact the producing wells are under contract to international firms, if they feel they can deploy their people,” said Jehani.

He could not say how quickly Libya, which has Africa‘s largest oil reserves and boasts top-quality crude, could see its output back at pre-war levels of 1.6 million barrels per day.

“We could go back to normal levels if you have the companies coming back to operate fields and then they can judge,” he said. “The parts under Libyan management we could get up very fast.” Read more.

Infographic: Which Countries Are Most Reliant on Libya for Oil?


Good Politics

As unrest continues to mount and conflict rages on in Libya, questions surrounding the North African nation’s oil exports remain in the air. The international Energy Agency said in March 2011 that the country’s oil production has “slowed to a trickle” as the fighting has prompted international companies to halt their operations and close ports.

What does this mean for the countries that receive shares of Libya’s typical daily output? Here’s a breakdown of which ones depend most on the turbulent but oil-rich nation.

Source: Good

‘Libya’s oil deals need to be transparent’


Pie chart of world oil reserves by region
Image via Wikipedia

Guardian

Sitting on Africa‘s largest oil reserves, one can expect foreign oil companies to be beating a path to its door clamouring for contracts. But campaigners urged the National Transitional Council (NTC) to refrain from any new oil concessions until an elected government is in place to avoid perceptions of a Libyan “oil grab”.

“Any deals at this time could raise concerns within Libya that international support for the NTC is driven by a desire for access to oil rather than for the benefit of the Libyan people,” said campaigning group Global Witness. “The NTC is likely to have to honour Gaddafi-era contracts in order to get oil revenues flowing. But no new deals for the exploration or exploitation of oilfields should be considered until an elected government can review existing rules and laws to ensure robust transparency and accountability.” Read more.

Lobbyists line up to new Libyan government


united states currency eye- IMG_7364_web
Image by kevindean via Flickr

26 August, 2011, 07:31

It’s no surprise that America is quick to put itself in the picture of the whole ordeal in Libya as the United States isn’t exactly a known isolationist nation.

Aside from involving itself in the politics of the country during the current revolution, American PR companies have begun a bidding war to offer their services to a nation with a new government and new faces.

Corporations, companies and politicians in America aligned themselves to Colonel Gaddafi only up until late. As the revolt escalated, however, ties were cut and contracts broken. Now with the Transitional National Council being considered the governing body of Libya by parts of the world, the US included, American entities want to invest in an all-new Libya.

Washington-based lobbyists Patton Boggs have already inked a deal with Libya in the days since the coup heated up, and are charging the new government upwards of $50,000 a month for consulting fees. In a new report by the National Journal, it’s revealed that strategists at The Harbour Group have also lined up to hop on the Libyan bandwagon, and while they are offering their services for free right now, they could be setting the groundwork for a long-lasting, big-money contractRead more.

Africa’s Flourishing Niger Delta Threatened by Libya Water Plan


The Niger at Koulikoro, Mali.
Image via Wikipedia

Global Policy Forum

February 3,  2011

By Fred Pearce

Yale Environment 360

The Niger delta is Africa’s second largest floodplains. It sustains millions of farmers, fisher people and herders and is home of a rich diversity of wildlife. But, Libya supports a project to divert the Niger River for extensive irrigation upstream and make Libya self-sufficient in food. This plan is the result of a backdoor deal between Libyan leader, Moammar Gaddafi, and Mali’s President, Amadou Toumani Toure. Mali, one of the poorest countries in the world, has agreed to hand over land to a Libyan-controlled organization and “undisclosed rights” to the Niger delta in exchange for aid and investment. Yet, this will prove detrimental to Malian food security. The Niger delta will run dry, diminishing the seasonal floods and damaging the livelihood of millions of poor citizens.

Daouda Sanankoua is an aquatic mayor, and proud of it. The elected boss of the district of Deboye arrived for our meeting in the West African state of Mali last month by overnight ferry. At this time of year, the majority of his district is flooded. Thank goodness. “More water is good,” he said, peering at his foreign inquisitor over his glasses. “Everything here depends on the water, but the government is taking our water.”While we spoke, in the tiny schoolyard of Akka village, a few meters from the lapping waters of Lake Deboye, the headlines around the world brought news of flood disasters in Australia, Brazil, and Sri Lanka. But Daouda was grateful for the annual swelling of the River Niger, which left most of his 24 villages marooned. For without the water, they would be desert.The floods in what geographers call the inner Niger delta nurture abundant fish for the Bozo people, who lay their nets in every waterway and across the lakes. As the waters recede, they leave wet soils in which the Bambara people plant millet and rice, and they expose vast aquatic pastures of bourgou (or hippo grass) that sustain cattle and goats brought by nomadic Fulani herders from as far away as Mauritania and Burkina Faso. This inland delta is Africa’s second-largest floodplain and one of its most unique wetlands. Seen from space, it is an immense smudge of green and blue on the edge of the Sahara.But this rare and magnificently productive ecosystem is now facing an unprecedented threat, as a Libyan-backed enterprise has begun construction of a project inside Mali that will divert large amounts of Niger River water for extensive irrigation upstream…Read more.

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