[Mb-civic] A Corrupt French Connection - Sebastian Mallaby - Washington Post Op-Ed

[William Swiggard]

A Corrupt French Connection
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By Sebastian Mallaby
The Washington Post
Monday, March 13, 2006; A15

Last year was celebrated as the "Year of Africa." Tony Blair proposed a 
doubling of aid to the continent; the world's rich nations promised debt 
elimination; and the Bush administration talked up its remarkably good 
record in boosting foreign assistance. But 2006 is shaping up as the 
year of "What to do with Africa?" as donors grapple with the challenge 
of making aid work. And unless the development institutions demonstrate 
that they can spend the money effectively, 2007 may be the year in which 
Africa is once again abandoned.

Just look at the Republic of the Congo, a small oil state that lies to 
the west of the other, bigger Congo, which used to be Zaire. The Congo 
we're talking about has mountains of debt and canyons of poverty, so 
it's a candidate for the debt cancellation that was trumpeted last year. 
But it's also rotten with corruption, rendering most aid efforts 
pointless. When the matter of Congo's debt relief came before the boards 
of the World Bank and the International Monetary Fund recently, there 
was a chance to confront this dilemma. Instead, the institutions tried 
to have it both ways. Last week they acknowledged Congo's corruption but 
cut the country's debt payments anyway.

If the bank and the IMF aren't careful, Congo could emerge as their 
version of the oil-for-food scandal that discredited the United Nations 
last year. Congo's oil rogues are in cahoots with some of the same 
operators who cropped up in the Volcker report on Iraq's oil rip-offs. 
Both cases make the French establishment look odious. Both involve 
multilateral institutions whose staffs might want to blow the whistle on 
corruption but who are discouraged from doing so by political masters in 
Western capitals.

The workings of the Congolese kleptocracy have emerged thanks to three 
forces: Earlier efforts by the IMF and World Bank to demand 
transparency; court cases brought by frustrated creditors; and the 
investigative efforts of Global Witness, a British development group. 
The star of the story is Denis Gokana, the head of the state oil 
company, who has arranged for more than $400 million worth of Congo's 
oil to be sold to shell companies owned by none other than himself, 
according to British court records. Just as in the Iraq oil scam, these 
sales were discounted, enabling the shell companies to sell the oil at a 
nice profit to firms such as Glencore -- which, according to the Volcker 
report, was a leading provider of kickbacks to Saddam Hussein under the 
oil-for-food program.

Sales at suspiciously low prices were just one method for draining 
profits from Congo's national oil company and, therefore, from the 
Congolese people. Gokana's shell companies also lent money to the state 
oil firm at interest rates higher than 80 percent per year, according to 
Global Witness. Meanwhile, one of the Gokana firms acquired a tenth of a 
promising Congolese oil bloc known as Marine XI, at a price that has 
never been published. The lead investor in Marine XI is a company 
controlled by an oilman named Patrick Maugein, who also appears in the 
Volcker report. Maugein's company is reported to have bid considerably 
less for the concession than a Canadian rival but won it anyway with 
what the company describes as the "best" offer.

Last year Gokana appeared in a British court to answer some of these 
charges. The judge ruled that his testimony was riddled with lies. The 
creditor that brought that court case, Kensington International, has 
also brought a racketeering case in New York, alleging that BNP Paribas, 
a major French bank, has colluded with Congolese officials to hide oil 
revenue. BNP was the leading financier of Iraq's oil-for-food deals, and 
it was accused in the Volcker report of turning a blind eye to the use 
of front companies to hide the real identities of Hussein's oil 
partners. BNP disputes Kensington's allegations and has described the 
case as an "abuse."

Whatever the French bank's role, Congo's corruption appears not to 
offend the French government, which has led the charge to grant Congo 
debt relief even though the evidence of its unworthiness has been 
reported in the French press. In a detailed article in December, the 
French daily La Tribune explained how millions had been siphoned out of 
the national oil company and how yet more millions failed to make it 
from the national oil company to the national treasury. But, as La 
Tribune noted, President Jacques Chirac and Congo's ruling strongman are 
old friends.

This is a scandal, and it's hard to see why the rich world's taxpayers 
should tolerate even a hint of debt relief for Congo. Last year the 
country earned more than $2 billion from oil, or $600 per person; if it 
spent that money competently, it would not have two-thirds of its people 
living below the $1-a-day line. But rather than send that message, the 
World Bank and the IMF have cut Congo's debt payments and held out the 
hope of outright debt cancellation, provided that the country meets 
various anti-corruption conditions. In the past, Congo has mocked such 
conditions. It would probably mock them in the future the day after full 
debt cancellation went through.

Why does this seem likely? Because you don't have to guess what Congo's 
president thinks of the fight for transparent government. In an 
interview in February, he dismissed the critics of corruption as "people 
who search for lice in the heads of this country's authorities."

http://www.washingtonpost.com/wp-dyn/content/article/2006/03/12/AR2006031201109.html
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