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ExxonMobil-Rosneft oil deal unlikely to open the taps of transparency

Where there’s oil, there’s corruption – and Russia has plenty of both. So can state-owned Rosneft be trusted in this deal?

Looked at one way, ExxonMobil joining hands with the state-owned Rosneft is a vote for world peace. What better than to have a symbol of American capitalism clasped to Russia’s bosom? By such joint efforts countries become tied together and unlikely to fight wars. Only last week President Medvedev shook hands with Kim Jong-il. Maybe the US can find a backdoor through Moscow to meet the totalitarian leader and quell his nuclear ambitions.

Yet such a view is beyond naive. If anything, countries with considerable oil and gas resources find themselves riddled with corruption. That is the inevitable consequence of the riches that flow from oil and gas sales, especially when the country has yet to develop sound business and legal processes before the gushers flowed.

Russia was already a victim of corruption dating back to the communist regime and beyond. It is the same in Nigeria, Venezuela and the Middle East where oil came before stable government and oversight by the courts.

Ask any Nigerian business person what is the key to the country’s advancement and they will tell you a fair judiciary – not one that continues to protect wealthy people and companies that can afford to pay bribes or pull political strings to avoid prosecution.

There is a similar situation in Russia. Some commentators believe the situation is improving, but Transparency International recently ranked Russia at 154 out of 178 countries for levels of corruption. Nigeria was better placed at 134 while Venezuela was worse at 164.

The Committee to Protect Journalists has documented the killings of 52 Russian journalists since 1992, most of them business and political reporters. There has been little respite in the past few years. Only Iraq, the Philippines and Algeria have worse records, and the killings in Iraq, though shocking, are more to be expected.

Exxon executives will tell themselves they represent such a big company that they are immune to petty bribes at one extreme, or political attempts to strong-arm them at the other. Yet they should be wary. Russian news agencies report that prime minister Vladimir Putin expects Rosneft to develop oil fields in the Gulf of Mexico and Texas as part of the deal.

Will these ties make the world a safer place, or one where environmental and safety concerns are embraced? What transparency will there be in Rosneft’s accounts and can its attempts at corporate social responsibility be trusted?

Exxon cannot claim an unblemished record. Nor can BP, which was the first in line as a marriage partner for Rosneft, but at least they are forced to disclose some important information about their activities and explain their mistakes. © Guardian News & Media Limited 2011 | Use of this content is subject to our Terms & Conditions | More Feeds