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Corruption is one of the big problems in various developing countries that are rich in oil. It has been considered to be pervasive and an important element of resource curse. Corruption has always been extreme in Angola and Nigeria and billions of US dollars have been disappearing.
Most of the disappearing billions are from kickbacks, and this has led to the concentration of the wealth into few hands. Since the countries are endowed with resources, they are said to suffer from the resource curse. Angola is considered to be the second oil produce after Nigeria.
Angola receives a lot of money from various oil companies in the form of signature bonuses that are received before the signing of contracts. The oil wealth has been to line and oil the wallets of the elite and political class within the society.
Unbridled corruption is the norm in the oil economies. In Angola, the aid agencies have estimated that billions of dollars have been lost in royalty payments through corruption.
Corruption and Bribery in the Oil Sector
A lot of oil revenues have disappeared from government coffers according to the reports by the Human Rights Watch and Global Witness. There has been evidence according to studies undertaken in France and Switzerland about the bribes that are given to the president of Angola Eduardo Dos Santos, and it is by no coincidence that he is the Richest Angolan.
Corruption is the main bane of the Nigerian development, and this has eroded the benefits of oil wealth. Corruption is endemic in the Nigerian economy with oil serving to distort the oil structure. The Nigerian domestic refineries have been laid into waste due to the rampant cases of mismanagement and corruption.
It is by no coincidence that Nigeria is ranked as the third most corrupt country in the world. The corruption in Nigeria is manifested in various media sources and tribunals that have been established to investigate some cases of financial impropriety on the government officials (Jerome, Adjibolosoo & Busari, 2005, p. 4).
The oil industry in the African continent, particularly in the largest oil producers like Angola and Nigeria is the centre of corruption and there is a need to introduce transparency in the management of oil resources. This is illustrated in Angola and Nigeria where billions of shillings cannot be accounted for.
Oil wealth is unable to translate to economic development within these countries. Government official have been enriching themselves by diverting oil money and revenue as well as taking of bribes. This was illustrated in Switzerland when a judge froze several accounts that had millions of dollars which was used by foreign businessmen to bribe Angolans.
A trial in Paris of three business executives’ demonstrated that Total Final Elf spent a lot of money in bribes. Halliburton, a US oil services company has openly admitted bribing tax officials in Nigeria (Kochan & Goodyear, 2011, p. 103).
Angola and Nigeria are the largest oil producers in the sub-Saharan Africa, and their economy is highly dependent on oil exports. Despite oil generating a lot of revenues, the two countries and its population still languish in poverty. 63 percent of the Angolan revenue and 40 percent of the Nigerian revenue come from oil.
From the turn of the century there have been a lot of efforts to try to gain access to the oil deposits of Nigeria and Angola, this global competition was intensified by the deep water technology introduced between 2004 and 2008. There is a need for Nigeria and Angola to invest the huge oil deposits in order to enhance the standard of living for their population (Bloomberg, 2012, p. 1).
Management of Oil Reserves
The management of the huge oil resources is considered a crucial factor for the development of the two countries and the reduction of poverty. Corruption, bribery, lack of transparency in the allocation of an oil license is a cause of concern. It is accepted that the misappropriation of oil revenues and assets by the corrupt elites is the main cause of the underdevelopment of these countries.
In Angola, the documented cases of corruption by the Global Witness in the oil sector manifest the rampant cases of corruption. The documented cases of corruption explain how the wealth and oil revenues of Angola have been subverted for perennial gain and to support the selfish aspirations of the elite individuals who are at the centre of power in the country (Global Witness, 2012, p. 6).
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According to the report by the Time for Transparency, approximately US $ 1 billion of the oil revenues goes unaccounted for. The revenues from oil in Nigeria and Angola are often subject to corrupt deals, and the governments are not in a position to account for it.
In Nigeria, people in authority or public figures have high tendency to abuse the oil revenue. Sani Abacha, for example, is estimated to have looted a lot of dollars and dashed it into foreign accounts.
Various multinational firms have been found guilty of bribing authorities in order to gain access to the exploitation and transit of oil (Nicholas, n.d, p. 4). A US construction company called Kellogg Brown admitted being part of a bribing scheme in order to get a contract of constructing a natural-gas plant.
The Global freight forwarding company admitted that through its subsidiaries and affiliate companies, it managed to bribe various foreign and local officials in Nigeria and Angola on behalf of their customers and for this it was forced to pay a criminal penalty after investigation.
There have been a lot of concerns as to how licenses are given to oil and gas companies; this is because there is no prospect of transparency as to the exact amount of revenue or license fee paid by the companies to the respective governments (Global Witness, 2012, p. 7).
In the two countries, corruption characterizes the overall resources curse, and it is considered to be a huge problem. Bribery and corruption in the two countries take a political and bureaucratic form, and it can as well involve the abuse of office by the decision-makers and also corrupt acts by the officers who are responsible for the formulation of policies.
The prevalence of lack of transparency is manifested in the case of Angola. The country has poor distribution of wealth and income due to the unaccountability of the government to the people. Angola is perceived to the highly corrupt in the world, and it is ranked at position 142 out of 163 by the transparency international perception index (Brief, 2008, p. 2).
Angola and Nigeria are faced by rampant corruption and bribery. The players in the oil sector have the belief that bribing and corruption is inevitable. Several oil companies have admitted to having bribed officials in the oil sector in order to gain favors and contracts. Resources curse is closely linked to corruption and bribery in the two countries.
In these countries a lot of money can not be accounted for and corruption is taking a bureaucratic way and government official have developed the habit of abusing oil revenue. The oil sector has been converted as the epicenter of corruption in the two countries. Global Witness, a Non-governmental organization has tabulated various cases of bribery and corruption in the Nigerian and Angolan oil sector.
Bloomberg, 2012. Oil Corruption May Threaten Angola, Nigeria, Global Witness Says. Web.
Brief, 2008. Tackling corruption in oil rich countries: The role of transparency. Web.
Global Witness, 2012. Rigged?: The scramble for Africa’s oil. Gas and minerals. Web.
Jerome, A., Adjibolosoo, S. & Busari, D. 2005. “Addressing oil related corruption in Africa. Is the push for transparency enough?”, Review of Human Factor Studies Special Edition vol. 11, no. 1, pp. 7-32.
Kochan, N. & Goodyear, R. 2011. Corruption: The new corporate challenge, Palgrave Macmillan, London.
Nicholas, S., Oil, Corruption and the resource curse. Web.