Resources | Thursday 6 June at 7.00pm
Chair: Robert Guest
Speakers: Caroline Kende-Robb, Walter H. Kansteiner III, Tito Mboweni, Ben Okri and Simon Taylor
Caroline Kende-Robb (CK): Good evening Ladies and Gentleman. My name is Caroline Kende-Robb, I’m the Executive Director of the Africa Progress Panel, a Foundation chaired by Kofi Annan. It is my pleasure to welcome you all here this evening to the Zamyn Cultural Forum at The Tate Modern here in London. This evening’s event is one of a series of events focusing on political, social, economic and cultural issues related to globalisation, citizenship and identity. I would like to give a very special and warm thanks to Michael Aminian and his team at Zamyn. Thank you Michael, thank you so much, you have put together a very interesting serious of events and your incredible dedication and commitment are truly commendable. [Lots of clapping]. Yes please, thank you. Thank you also to Marko Daniel from the Tate who also has done fantastic job at pulling everything together so thank you so much [More clapping]. Of course I must also thank the sponsors, Accenture, Barclays, Penguin Books, SOAS and the Tate as well as the Africa Progress Panel. I think we can all be very proud to be associated with this event and I am delighted to be introducing this evening’s theme on Natural Resources and I am sure everybody in this room is very aware that this is a very complex subject and can be extremely contested at the same time. I am delighted to see we have an incredibly high level panel here this evening.
So let me just say a few words to frame the issue. I just have a few issues to raise to basically introduce the topic itself. I think we all know the story of the butterfly that beats his wings and somehow through a change of events unleashes a typhoon on the other side of the world and I think something similar is happening when we use natural resources. Most of us here in this room use these resources pretty much every single day of our lives whether its fuel or even the whitener in our toothpaste and our actions and our decisions, some of them that we don’t even know about or don’t even notice, have an impact all around the world so I think this whole concept of globalisation and citizenship is very much embedded in this theme of natural resources.
I think that some of you may be aware that we wrote this report last year, in fact it came out in May but we started writing this report last year, ‘Equity in Extractives’. What a challenge is that? When we started writing this report on oil, gas and mining in Africa we recognised that although Africa is riding the crest of a global commodities wave, resource led growth had yet to transform the lives of many people in Africa. I think it is a familiar story and in many countries natural resources are in fact widening the gap between rich and poor. Billions of dollars have been squandered on building personal fortunes often supporting corrupt and unaccountable political elites. What we did not anticipate was that over the year the momentum for change would accelerate. Quite surprising, quite surprising when we look back. Indeed I think it is a really rare opportunity in global policy making that all these interests of different parties are beginning to align.
Let me just briefly outline some of the significant changes that have emerged over this last year. So twelve months ago, who would have anticipated that the US mortgage crisis and the Euro zone’s predicament might improve global transparency and accountability? As austerity bites across many of the G8 counties, citizens are demanding fairness and action and this is really changed within the last year and I am sure you are all really aware of that. Many citizens, they feel cheated and they will no longer tolerate secret deals, illicit financial flows and tax havens. For citizens everywhere, in Africa, in G8 countries and other countries across the globe current tax practices raise questions about fairness, social justice and citizenship. Such practices affect the grandma in Manchester up north as well as a mother in Mali but they affect Africa more.
Another significant development is a recent passing of the Dodd Frank Act in the US and similar EU measures that require extractive companies to meet highest standards of disclosure. It was a surprise that these were past. Now the G8 is on the case. I think you’ll all be familiar with the discussions that Cameron has been having with the UK presidency putting tax and transparency on the agenda for the G8 summit this month.
In Africa too citizens are in opposition to the growing squandering of oil, gas and mining resources as evidenced in the under evaluation and mismanagement. Indeed trade mispricing costs Africa governments in the region of 34 billion dollars annually. Recognising the costs, some governments are taking action. Like Liberia, Sierra Leone and Guinea now make mining contracts publically available. This is a huge step. Ghana is strengthening accountability in the management of petroleum revenues. Such actions strengthen the social contract between the state and its citizens.
At the same time many companies are now looking beyond short term profits towards long term investment partnerships. These companies recognise the economic as well as the ethical case for strengthening linkages to local firms and engaging in local communities. They know that sustainable investment needs a stable country and a social licence to operate. What is emerging is that the silos of secrecy are crumbling and this is a shared agenda which is quite unique. In which different parties have overlapping interests and similar goals and as Mr Annan states in the report, ‘Building trust is harder than changing policies, yet it is the ultimate condition for successful policy reform’. He adds ‘Mutually beneficial agreements are the only ones that will stand the test of time’.
So, in conclusion, I just want to highlight about five issues that we raised in the report and made recommendations:
The first is that the G8 summit should serve as a Launch pad for a rules based global system both for transparency and taxation to be developed with the G20.
The second, all foreign owned companies should be required to publically disclose the ultimate beneficiaries of their profitless secrecy.
Switzerland, the United Kingdom and the United States, all major conduits for off-shore finance should signal intent to clamp down on illicit financial flows.
African governments can work towards adding value to natural resources before export, securing adequate tax revenues and spending these revenues more equitably and transparency.
Finally major investors in Africa’s extractive sector, like China, and emerging investors, such as Brazil, must also engage.
So in conclusion, public scrutiny by citizens across the globe will continue to be a crucial force for change. As interests align and the context shifts everyone has a role to play the report says. In stewarding Africa’s natural resource wealth to transform the lives of many in Africa and across the globe. The report concludes that a huge opportunity exists in Africa and leaders across the globe in government, in industry and civil society must take action now. The benefits of seizing these opportunities will not just transform the lives of Africans but will also be felt in countries across the world.
So, just before I hand over I have a quick thank you to say to a lot of the panel members you see here this evening who all helped us put this report together. It was based on a lot of consultation with different parties and different stakeholders. So I have to thank ExxonMobil, AngloGold Ashanti, as well as Global Witness. You will see all the really interesting thoughts and ideas about what we do with the extractive sector reflected in this report. I think that is really important because we can see overlapping interests where people want similar goals and there are many, many ways in which we can look at these overlapping interests.
So with that it is my great pleasure to hand over to Robert who will chair this evening’s debate, thank you very much (applause).
Robert Guest (GW): Sorry that just fell off, I’m going to have to do this sitting down aren’t I? Sorry, can everybody hear me? Is that working? Brilliant. Thank you very much Caroline.
I’m Robert Guest, I work for the Economist Magazine, I’ve done that in various guises: I’ve been Africa Editor for a while, Business Editor for a while. We’re a magazine, who about a decade ago, we did a cover story, quite a notorious one about Africa that was headlined, The Hopeless Continent, and the interesting thing is if you sort of look at a graph at what’s happened to Africa’s GDP growth per head since then it’s just gone up and up and up and up and up. So, I suspect that you can place deep discount on everything that I say.
I’m not one of the speakers I’m just here to try to bring out the best in our wonderful panel today. Let me just try to frame a couple of things before we start. We are talking about natural resources, the things that you find in the ground.
Now I recall, I think it was 2005 visiting something called the Kolwezi tailings in Congo. This was an enormous great heap of cobalt and copper tailings. That’s the by-products of an earlier mining process and basically at the time when all this stuff was dug up we didn’t really have the technology to process it cheaply and easily into pure, precious metals, copper and cobalt. Now we do, so it is basically a big pile of cash lying on the ground, and the extraordinary and tragic thing about it is that it is still lying there. This is not a small pile of cash. I mean you get into a big truck and you can drive up onto the top of it and keep driving for some way. It is absolutely enormous, it’s worth hundreds of millions of dollars and all it would take to turn that into money, the kind of money that could be paying for schools and roads and hospitals in Congo, would be for one moderately competent mining company to come in and process it. That doesn’t happen.
The reason why that doesn’t happen is because the government in Congo is absolutely appalling. Instead of trying to come up with a proper deal with a reputable company to process this, the people in charge are too often interested in just making a quick buck and then a few months later, someone else will just tear up the contract. So it just doesn’t happen. This is a tragedy; this is an extreme example of a tragedy that we see in many parts of the world. There are all these resources there waiting to exploited, waiting to be turned into money that might benefit the people that live on the land where these things are. It doesn’t happen because you don’t have the governance necessary to make it happen. This is a really serious problem.
Sometimes you find, again if you go to the Eastern half of Congo, where I was the year before that, you find that actually conflict can be fuelled by the minerals that are under the ground. You find that when you can’t do business with a government the reputable mining companies stay away and the disreputable ones flood in. And the low tech ones, just the ordinary people who are looking to pan through the rivers to get out gold or looking for diamonds, you find the war lords come in and they want to control the area to get an extract, to get up rents, to extract money from the small scale miners.
I recall going to a village, called Walungu, which is in the Eastern part of Congo, and talking to some of the people who lived there about what it was like living in one of the low-scale, under-reported, low-tech, civil wars that you find in too many parts of the world. One lady I met there really struck in my mind. Her name was Charlotte Numugali. She described the night when the men with guns came to her house and they beat her and they took all her stuff. She didn’t have very much, but they took her food and her blankets and her pots and pans and then they raped her and then they went away. Then a few months later they came again and this time they took all the stuff that the previous lot hadn’t taken and they made her carry them to her camp out in the bush. Then they gang raped her again, then they broke her arms and then finally she was able to struggle back.
The level of human suffering that comes when you have people with guns fighting in a sort of chaotic state over trying to get a bit of money, a bit of gold out of the ground, a bit of diamonds out of the ground is staggering. So, the question that we have is how can we make it different, how can we make it that the resources in the poorest countries in the world and the middle income countries become a blessing rather than a curse. It may be slightly facile to say well yes they are doing it very well in Norway. It is possible that proves only that it’s a good idea to be a functioning democracy with the rule of law before you strike oil. However, I think it can work in other places and it requires the kind of cooperation that you need between governments, which need to be cleaner, and companies, which need to push them in the right direction.
So I am hoping that this evening we will be able to come up with some ideas, to discuss ideas about what the solution is to these problems. So with that I think I am going to start with our first panellist, Sir Walter Kansteiner, who at one point was George Bush’s man in Africa, and is now ExxonMobil’s man in Africa. So he has worked for one oil man and now another oil man. Mr Kansteiner.
Walter Kansteiner (WK): One is considerably bigger than the other!
RG: One is indeed considerably bigger than the other! So as a representative of the largest, private, oil company in the world, I mean many people would see you as the villain, others would say actually the situation would be better if more reputable, functional companies like yours were doing the work rather than the disreputable small ones. What can you tell us about how to solve this question we’ve outlined?
WK: Well thank you very much. Just to perhaps set the stage a little bit using The Economist as the…
RG: Kicking boy again!
WK: Yeah, exactly. To take the other side of it, seven of the ten fastest growing economies in the world are in sub-Saharan Africa. By 2030 there will be more middle-class families in Africa than there are in China. So what is this economic growth attributed to? What’s going on in Africa that is being successful, perhaps for the first time in a long time? And there are lots of reasons. Part of it is in, and this is a bit of a counter to Robert, your story is actually better governance. Some African countries are getting it better, they’re getting it right, they’re actually committing themselves to infrastructure development, better health care, better schooling. With that better infrastructure, comes economic growth. Maybe because we have to be, we are optimists about the future.
To your question about who owns the worlds resources and I think that’s kind of the cornerstone kick-off question and I think it is a good one. The short answer is the sovereign government and the people that live in that country where God put those resources, that’s who owns it.
I think a more interesting question, is who develops this, we know who owns them. Now I will say this, there is an exception to that on who owns it and that’s in North America. Actually North America, who owns it is the landowner, he has the mineral rights too. Virtually, other than Canada and the United States, every other country, actually I think New Zealand might have it too, every other country the mineral rights and the ownership of those rights rests with the sovereign people and their governments.
So to the harder question, who develops that? This is perhaps an idea that we are just coming to really understand. The idea of a global shift and it’s a bit trite and perhaps very easy, especially for us in the west, to say that this global shift is the south south, the China’s the BRICS and they’re developing and they will be the developers of the natural resources in Africa and elsewhere. It is easy to say that but the data is starting to show that in fact that is the case. China today is Africa’s largest trading partner, by far its largest trading partner. Thirty per cent of all Chinese investment in Africa today goes into the extractive industries. As China and the BRICS, and the B of the BRICS of course is Brazil, Brazil is very keen on Africa, as they look to make these investments, how do they do it? What processes do they use? What assistance do they get? That’s a really interesting differential for say the Western, and the BRIC countries.
Sovereign government assistance, be it financial loans, grants become a very important part of how those investments are made by the Chinese, by the Brazilians, by the Indians. So this creativity, and it is financial creativity, is very much a different pattern, a different paradigm and a real shift from what we have seen in the last 50 years. But I will say that Africa’s starting to wonder about this relationship particularly with China. In 2006 President Obasanjo welcomed President Hu to Nigeria and he said, ‘The 21st Century is China’s century to lead the world, take us with you”. Five years later Mr Sanusi of Central Bank in Nigeria said ‘China is no longer a fellow under-developed country, it is the second largest economy incapable of exploitation, we need to be careful’.
So an interesting five year deferential there and so where this paradigm shift is going we’ll just have to wait and see. I will leave you with this picture. So, as the Euro zone went into its 23rd financial crisis a few weeks ago, the BRIC countries were meeting in South Africa, planning for the future. I will leave it there.
RG: Thank you very much Mr Kansteiner.
I’m just going to keep going from my left to right, just because that is easiest. So Mr Taylor, you’re the co-founder of the Publish what you Pay Index. You helped invent that idea and I think just recently Tullow Oil, one of the largest, independent, private oil companies in Africa has agreed to publish everything they pay. You know, how much to each government, when, all that kind of thing. So you know, you could argue that you’ve been a great success here. On the other hand, you could argue that actually this is mostly an exploration company and the big money is in the extraction, not the exploration. So what do you make about, I mean how much of people listening to you, if you take sort of a very big oil company like, I don’t know ExxonMobil, how would you rate them? Be nice Simon, be nice!
Simon Taylor (ST): (You know, you’re separate to some extent to Exxon in my head, I can be mean to Exxon without being mean to you. Perhaps we can come back to that. That’s a very difficult question to answer. I think there’s two answers to it actually. I would suggest that Exxon, along with Shell and BP and a number of others are being very constructive, very functional, very useful within this process called the extractive industry transparency initiative which, for those who don’t know is a process kicked off in 2002 by Tony Blair in response to the launch of the ‘Publish What you Pay’ Campaign. Basically EITI is a process whereby Governments voluntarily come to the table and say that they will disclose the payments they receive from extractive companies and at that point companies are obliged to disclose the payments they make and civil societies integrally sort of bonded into the process. Then there is an international sort independent verification process that verifies the numbers and the whole point of this is to bring accountability to the money flows. It sounds good, it is good, and the principles are good. There are some very much better practitioners than others so I think they mix between reasonably good performance to really bad performance and within there the companies do more or less what they can within the process.
There is a bigger fish to fry really and that is that the EITI is only so good as the countries that volunteer to come to the table. What do you do with the kleptocratically run countries where there is no interest to create a system of governance, because it will challenge the ability to asset strip the country. We could name lots of them here but many will simply not join this process at all and they haven’t done over the last 10 years.
So in parallel to that we need a system, a global system that will require all oil gas mining companies, at least we are talking about the extractive sector at this point in time, to disclose all the payments they make of a significant amount in every country of operation. That has come to the fore as a possibility through the passage of this Provision 1504 in the Dodd Frank Act in the United States in 2010. More recently, this is what Caroline was just mentioning now, the European Union is putting to bed the final stages of the European Accounting and Transparency directives which should be affectively signed, sealed and delivered, probably next Wednesday we hope. At which point we will have, I think it is fair to say the beginning of the role out of a new global standard that will require these disclosures right down to a hundred thousand dollars or euros, depends where you are. You know any item above that would have to be disclosed and you would see this down to a project level.
Now there is a huge fight going on right now in Washington and this is one thing I can’t really call you out on this, because you are sort of out of the loop on that side of things but Exxon together with the other companies I mentioned are at the forefront of a fight, fronted by the American Petroleum Institute to sue the SEC basically to kill off Dodd-Frank, the provision that requires this disclosure. They are not interested, they’ve said this very publically, they are not interested in amending it, they simply want to kill it and the citations that they make as to why are essentially a repeat of all the arguments they present in the public record process that was submitted to the SEC that created the rule that is effectively the mechanism around how this law should be implemented.
You can go on site and you can see all the public submissions and you can see the various comments from the different parties and soon and what the SEC concluded, if you read through carefully its 234 page rule, is that the intellectual merit of we shouldn’t disclose to this level or to this level or the various problems that are cited and now repeated in this law suit, they simply dismiss them and they dismiss them as intellectually non rigorous. Essentially, the evidence was not there to substantiate the arguments, so what do the companies do? Kind of, I have to be rude, in a fairly sort of infantile way, toys out the pram; they simply go to the next stage and will just bludgeon it to death with a law suit. That’s basically what they are trying to do.
So you know we’ve been trying to bring them back round to have a more adult conversation around this and there is counter of course. A counter-legal strategy going on right now and we will see where it goes. I think that the strategy does not work to kill it because, apart from anything else, some of the dual listed companies that are in the states and here in Europe are now going to have to disclose even if they do kill off Dodd Frank 1504 because they are listed in Europe or actually delist from Europe. So there is the choice.
I think a much cleverer strategy actually would be say look there is a breath of wind in the air here. We have got an opportunity to make a new global standard of accountability, let’s run with it. We could work together and actually make something really meaningful. There are numerous other aspects of the work we do on natural resources and corruption including to do with various sort of projects that we’ve analysed and some of which Caroline has referred to, some of the data that we’ve put together which hopefully we can come back to during the course of the conversation.
RG: Super, thank you very much.
Mr Kansteiner, I’m going to let your respond to that but not yet. We are going to get through all the speakers. We have one or two left to talk before we start the fisticuffs.
So, Mr Mboweni, can I call on you next. I’m not going strictly left to right here but we’ve just had a representative of the NGO community here and as you are here representing among other things AngloGold Ashanti, the large gold mining company of which you are the Chairman. Mr Mboweni, for those of you who don’t know, which I’m sure is no one, used to be the Chairman of the Reserve Bank of South Africa, the central Bank of South Africa. He did a really very good job under very difficult circumstances. Interestingly he has now moved to the Chairmanship of a gold company and the relationship between gold companies and central banks is rather interesting because by and large the price of gold goes up when central bankers mess up. When the value of a currency is not maintained stably, when inflation is out of control, people panic and they buy gold and that is great for gold companies. I am sure that there is not link whatsoever here (laughter).
You are a man of many hats and you have a global view of what is going on in the mining business. Perhaps you could address the questions that we have raised so far, the question of who should own the resources, and how good a job are we doing at getting them out of the ground efficiently and in a way which benefits the people who should benefit.
Tito Mboweni (TM): Thank you very much indeed. Thanks for the invitation to be here. You know for all the years that I was Governor of the South African Reserve Bank I failed to get the Economist to be transparent (laughter). You don’t know who the ghost writers are of the articles, you hardly see the line-up of the ownership, it’s one of the most interesting ghost field publications. So if you are going to talk about transparency (laughter) I think we should start there (laughter).
I promised myself when I left the Central Bank that there will be three areas of human endeavour that I will avoid because they are full of so many pit holes. The arms industry, because no matter how hard you try to be transparent there, it’s very difficult. The oil and gas industry, which is full of so many difficulties, and would get my reputation into trouble. Third was the mining industry. I regret to inform you that I am now involved with the gold mine and two weeks ago I joined an oil and gas company so all the problems now are going to come back home to roost.
The company which I work with, AngloGold Ashanti, doesn’t just operate in Africa. It operates I think in about four continents. We’ve got different challenges depending on where we are. In Australia for example we have got environmental questions. Mind the gold but don’t disturb the jewels. In the United States we mine the Rocky Mountain; we cut the mountain, remove the rubble and get to the gold. A key issue is to not overuse water in the Rocky Mountains because of the environmental regulations and laws. In South Africa we face a challenge that our mines are very deep and there are too many accidents. Every time there has been a fatality the mine must be closed, at least for a week. In Ghana, we face very serious problems around the environment. They are problems that have been left behind for us by British miners and the Government when they nationalised the mining industry there. Now they expect us to fix the problem. We’re trying to fix the problem, only if they could cooperate more. In the DRC we face difficult problems. You are mining on the one hand and you are looking behind to see whether anybody is shooting at you.
Then you’ve got the NGO movement. The high priests of everything that’s good who quite correctly have to make sure that you do things properly in the interests of the people. So I’ve learnt in a very short space of time that mining actually involves, the investors who want a return on their investment, you have the communities who not only want to benefit in terms of the workers who work but in terms of community development projects.
AngloGold Ashanti is a slogan that says we want to leave the communities better off by us having been there. Very noble slogan but I can tell you one thing; it is as costly as anything. Just to give an example, in the Eastern Congo we received a concession to start mining but very soon we discovered that ten villages must negotiate to move them, not by force but negotiations, ten thousand dollars per family to move. In no time the ten villages became one hundred villages, that’s it. It’s a different matter. Then they say an old Catholic Cathedral, so we had to move the Catholic Cathedral and build a fresh one. At the end of the process the people say, but we’ve got graves there. So what do you do? So then you go through a long process to move, to relocate the graves. So then you build a school, a clinic. We found an old Belgian, hydro power station that was not functioning any more. We remodelled it, only to find that the actual mechanics still worked so we had the hydro power station supplier generate the supply there and so on.
Then you have the government that you must work with. The governments have different competencies. There are certain situations where the mining company is far more resourced in terms of its intellectual capacity and capability, more than the government. That is why we have this problem where the mining companies end up writing the laws and the procedures and the regulations because the governments have no capacity or capability. A big problem, which maybe the NGO movement should fill?
Then you have within certain countries the challenge that their payment and settlement systems don’t work. In the end there has to be the repatriation of the income earned in the particular company to the head office of the company. May I mention the NGO’s?
Then in certain parts of the world, in Africa, parts of Latin America you have what I call rogue mining companies. I think more often than not are the ones giving the mining industry a bad name. The industry as a whole has to do something about it.
Finally, I think we have the terrible legacy that mining companies have left us with the destruction of the environment and I think mining companies have to be held accountable for this. Very seriously, where there is a pollution of the rivers, killing the fish, destroying fresh water, all of that, this is something the companies must be held accountable to. The governmental environmental agencies are also accountable to this.
I end then by saying that my experience so far, and I am not a mining person per se, but my experience so far is that to a large extent the industry is an enemy unto itself. It has been unable to demonstrate positively what it can do. That it is not just an extractive industry but actually a major developmental resource available in many countries if they act responsibly. So the issue of all the resources is a semantic question because at the end of the day the company does apply to the government for a mining licence so whether the people, the government and so on, that is a semantic question, it’s not that helpful.
The key issue is: Are communities benefitting? Are Companies, not just mining companies, all companies actually, paying what is due to seizure in a particular country? The arms companies are worse, whether they are from Britain, or the US they are horrible. The kind of corruption that you find emanating from British armaments companies is worse. More often than not you listen to British commentators who think corruption in Africa is not in London, it’s here. Similarly in Washington and as so on. That’s where the bulk of the really serious corruption is to be found.
When I was a student here there were two ministers who fought over military contracts, the Minister of Trade and Industry and the Minister of Defence, about which helicopters to buy for the British Army. At the core of that is which company is going to look after which minister when he retires. That is corruption. So I think let’s not have this thing that corruption is to be found only in Africa. That’s racist.
Finally I think we should, I welcome very much the Secretary-General Kofi Annan’s report and I think it provides the basis for us to try to clean up the industry which needs a lot of cleaning up. Also it will allow us to have cleaner governments. I tell you friends for as long as you have military governments you will never clean up government. For as long as you’ve got weak institutions in countries you will never, you’re just dreaming. For as long as the highly educated people in Africa don’t want to live in Africa but in London and New York (I’m sorry Ben) it’s a problem. They do so because the conditions are not favourable where they are supposed to be. I’ll come back to those things later, thanks (applause).
RG: Thank you very much Mr Mboweni. Now let’s move to Ben Okri. As I’m sure you all know he is the Booker prize-winning author of the great novel The Famished Road. A poet, a thinker and as Mr Mboweni rather tactlessly pointed out, a man who lives in London. Now Mr Okri, you once wrote that the magician and politician are very like each other in that each of them is trying to distract your attention away from what he is really doing. I am wondering if you think that is an appropriate image for the mining and oil industries in Africa and maybe you would care enlarge on that.
Ben Okri (BO): I think it is a very appropriate image, very fitting for many reasons. Many wonderful things have been said round the table but amongst the most significant has been a very detailed list of reasons why mining companies cannot do what they ought to do in relation to natural resources and nations. The excuse is the lists are important but they don’t deal with the problems that we’re here having to deal with. First of all, who owns the natural resources? It is more than a semantic question. Actually, it is a question that affects the livelihood of ordinary people as well as very powerful people. It is a question that affects the texture of nations, how people live, how they die. What their salaries are, how they raise their families. I think it is a very, very intimate question indeed. I think it is a question that should be asked in relation to really who should benefit from the resources of a nation. Is it just the shareholders of companies, is it the government, is it the ministers of government, is it those who are actually able to work intimately with deals or is it, should it be the people of the country?
Now I want to speak for the people who can’t be at this table. I don’t think it is important where I live; I think it is much more important where my heart is. It is much more important what my vision is, what my feeling for the world is. Now I think one of the most important things about globalisation and the thing that has been raised around this table is that in the 10 years that you referred to Mr Guest when you had that famous headline about Africa’s hopelessness one of things that has happened is in fact one of the results of globalisation. One of those elements is the element of surprise. We have been surprised by what these factors can mean and how they can influence nations.
It is interesting that it has taken an African magazine to actually say quite clearly that Africa is poised on a very hopeful decade. It’s poised, it’s on a cusp and I think it needs to be stressed what we are dealing with here is the gap between Africa’s potential and the realisation of the potential. That gap I think is where we should address the problem of mining and the problem of resources.
The companies I think should acquire more vision. It shouldn’t just be about the extraction of material from the ground. It shouldn’t just be about looking after the more contingent communities. I think it should also be an act of vision. I believe in globalisation plus justice. I believe in globalisation plus concern for the environment, concern for the local environment. I speak in relation to places like Niger Delta where I come from and that is very, very close to me in terms of what is going on there. I’ll tell you a story to illustrate it.
There was a certain company, a certain oil company that shall not be named (laughter), a certain company that should not be named is moving into a part of the Delta region. As they moved in, they moved in not individuals in ties as beautiful as yours they moved in supported by trucks, by armoured tanks. They rolled over the farms of people, rolled over their houses and there is a particular story that was witnessed by an archaeologist who was part of one of these missions where these tanks were rolling over. The woman who owned the land came running and shouting saying you can’t do this, this is my land and they rolled right over that land. It is that image that haunts me.
So when we talk about natural resources, who does it belongs to, who does it benefit what comes to my mind is the collusion between the big companies and government. There is corruption on the one hand yes but there is also tremendous collusion. It is interesting that Mr Mboweni when you say that the incompetence of governments that makes mining companies have to write their laws for them. If that is the case, why don’t you write better laws?
TM: I didn’t write anything.
BO We’ll come to that. That’s my passion, that’s what upsets me, that’s what frightens me. People talk about all kinds of optimism but when I actually picture, when I Iook at the picture on the ground when I go visiting, it is a horrifying picture. The Niger Delta is one of the ugliest; the effect on the environment on the earth, on the land, on the farms is one of the ugliest things I have seen on this planet. I don’t see why it has to be that way. I’m genuinely perplexed by it and genuinely annoyed by it. I don’t see how anything that has been said round this table explains to me why it has to be that way and why it can’t be differently and why it cannot change. That is what I would like to know.
RG: OK thank you very much indeed.
I think I am going to toss that over to Mr Kansteiner as he’s our oil man here. I mean bearing in mind some of the things Mr Mboweni gave a very eloquent description of just how much a large company has to do to make things OK when you are operating in a country where the government is dysfunctional and it doesn’t get any more dysfunctional than Eastern Congo. I mean Mr Kansteiner how much responsibility do extractive companies have, where do you draw the line?
WK: I think you have to look at it as a partnership. When you are an extractive company coming in to a sovereign nation, you become the partner, you become the developing partner. You know there is a wonderful picture that happened just a few much ago and it was in Nigeria. ExxonMobil, four years ago said, ‘We need to do, what we call, supplier development’. Supplier development is part of kind of a three legged piece that we do in every country that we are involved in. We do supplier development, that’s supply chain, getting local businesses up with the capacity to run, develop, produce and sell products that we need as we develop our production.
The other part of it is workforce development and that is actually what we all call capacity building and we do that through education systems, bursaries, scholarships, training programmes and then the third part of that is corporate investment, be it health, education, infrastructure. All of those things, those three legged parts of all engagements in every country that we are in are extremely important to us.
Back to the story that we just did in Nigeria and that is for first time, and I wish it had been earlier, but it took a long time, it took four or five year, we christened a platform that is an offshore platform that was designed, built, produced and delivered by Nigerians in Nigeria to us. So a completely local supply chain and these are tens of millions of dollars’ worth of products. Now that took four years to get that company, it was a joint venture between NNPC and ExxonMobil to get that engineering, architecture, manufacturing business up and running that they could actually supply. Now they don’t just supply us, they supply not only Nigerian oil and gas companies but up and down the Gulf of Guinea, the entire region.
So you know that is just a story where we take the partnership part of it very seriously and spend a lot of time and a lot of money doing so.
RG: Ok thank you very much. Mr Taylor are you satisfied with that answer?
ST: God how to judge. Look I’ve been in lots of oil production countries and seen what I would consider to be a good project like that with local domestic development but I’ve also seen absolutely appalling
RG: Have you ever seen anyone move a cathedral?
ST: I haven’t seen anyone move a cathedral. I’ve been to Abu Simbel which was moved, which was not done by an oil company but quite impressive. I think there is a bigger set of things going on. You’ve rightly pointed to what is going on in the Delta. We are currently investigating and continuing to investigate a story. In fact this is in Nigeria right now that involves both Shell and Amni who acquired an oil block, a contentious oil block that was originally obtained, in fact stolen by Abacha’s oil minister, a dictator, Abacha’s oil Minister Dan Etete who is also a convicted money launderer, who set up a company in 1998 and then promptly organised the giving of this oil block to his company. He owned the company through a sort of hidden set of proxies and so on and then as Abacha Senior died he then defrauded a junior out of the shareholding of the company. Now he pretty much owns the whole thing, certainly controls it.
The horrible thing about this story really, leaving aside the legitimacy or not of him taking the block, the company in the end really wanted to get the block. You might think that if you develop this offshore block and it generates revenue for the state that is a good thing and perhaps it is but their efforts to get the block have gone through various different channels. There is all sorts of great complications I won’t go into now. At the end of the day the deal was constructed in April 2011 in which the company has agreed to be one billion, ninety-two million and forty thousand dollars to the government and almost instantaneously the government cascaded one billion, ninety-two million and forty thousand dollars out of the recipient account which in itself was not the appropriate account to pay money into if you acquiring an oil block in Nigeria because it has to go into the Federation account and to pay money for an oil block not into the Federation account is a breach of the Nigerian constitution. So that straight off was a crime. The money then cascades out and goes to an account earmarked for Malibu Oil and Gas, a company that Dan Etete owns or now owns and controls. Very shortly after, and this is how we know about this, the middle man, in theory involved in the deal, felt that they had been ripped off and then sort to freeze the money that was in London and some of the money was frozen, the amounts that they thought they were owed and there’s various legal processes going on right now which are in the process of resolving themselves. We will see what happens. But shortly after that, so by late August 2011, 801 million went out of this account in London to two accounts in Nigeria and 400 million, we don’t know what happened to the 401, but 400 million, sorry 401 million further cascaded into the accounts of five shell companies all set up by an individual who has very close connections to some very senior officials in the current government.
Where did the money go? Where was the benefit for Nigeria of this if this is worth a billion dollars to a man who essentially stole the block? Why didn’t the government take it back off him? Instead our opposition at this point is that certain people stood to benefit and they worked out a mechanism in order to pay the money across and this is the mechanism they chose.
I think the point I would raise is, you know, we will have to wait and see whether this transaction from the company side was a legal transaction or not and some very clever legalling went into the thinking behind this. But what we do know from the court testimony that has already come into the public domain is that both companies spent nearly two years in personal meetings with Entete deciding what price would need to be paid, wining and dining him, enjoying in quote unquote “iced champagne in one location and nice lavish meals in a set of other meetings”.
And so I suppose my point really is, the conclusion we have come to is that they may well have paid the money to the Nigerian government but they did so in the full knowledge that the money would end up in the company possession of the man who stole the block in the first place. So when we start to think about how we can make these kind of transaction function I would suggest it takes two to tango and there is a company responsibility element to this and there is also obviously whoever happens to be a corrupted individual who operates in a governance vacuum in whatever state we happen to be talking about whose obviously the other part to play. And then there is all the middle people and the bean counters and the accountants and the lawyers who set up the clever system. But there is also the systems out there like the banks that take the money and like the hidden shell companies that get established in tax havens where you can’t find out who owns the companies. And so if we really want to deal with this stuff and really seriously want to deal with it so that the money flows can be transparently seen going through the system and hopefully end up being deployed for the benefit of the people who really own the resources and let’s face it, it’s the people of the country, then fix we have to fix a number of things.
One of those things involves transparency of the revenue streams and down to a significant detailed level which is why we need project level disclosure but funnily enough the oil companies don’t want that which is why they are trying to kill Dodd-frank Fifty in the States.
And then other areas we need I think are, you know, beyond the governance. We need to address this whole issue of disincentives. We need to start looking for assets that are stolen out of countries and freezing them and repatriating them and prosecuting people who are in the process of setting up corrupt deals and I include in that the individuals within companies who decide to set up deals that, you know, may well be illegal. They jolly well shouldn’t be!
RG: That’s a very interesting description of a very complicated deal there and I presume that what you’re suggesting here is that there were some companies who were trying to follow the letter of the law while subverting its intent. Is that what you are saying?
ST: I am suggesting they spent two years negotiating directly in different places having ice champagne and lavish meals with a convicted money launderer who they knew or should have known had stolen that block and they put together a deal in which they knew the transference of the of the money from government would then go to the company owned by this person and if they didn’t know that, frankly I don’t think it’s creditable given what we know about the way in which the process was put together and it doesn’t say very much for their due diligence given what we can find out and it hasn’t been that difficult. It’s been time consuming, it’s been difficult, complicated yes but if we can find this kind of stuff out how come they can’t over a period of more than a decade? It just doesn’t stack up. So I don’t really want to get stuck necessarily on one deal but it represents I think where we are going to in some, some cases, not all companies, not all places and some companies we see, as I said, don’t do a good thing here but behave impeccably here so there is nothing if you like, pardon the expression, black and white in this. It’s sort of depends on the location and the people involved and the opportunities.
RG: We are going to have a little bit more to and fro here before we throw it open to questions from the audience, so bear that in mind if you want to think up a penetrating question to throw at any one of the panellists.
I would like to throw this across to Mr Mboweni if I may. What you said there about how companies, you know you get companies who behave well in some jurisdictions and badly in others. I mean if you are a country right you have one government ok and that is government is, you know, either very clean or not very clean or somewhere in between. The supply of potentially crooked businesses in the world is almost infinite isn’t it? I mean there is always going to be someone out there who wants to, you know, pay bribes in order to get an advantage.
And so from a countries perspective is it not the case that the thing you can fix most easily starts at home and Mr Mboweni you have had experience in government. What do you think?
TM: Well I know that corruption takes place because you have got two parties or more who are corrupt. Make it you know, they meet and so on and a deal comes up that is born.
Now the legal route helps in that when you find the corrupt people you can send them to jail. As an example to the others. And then the process, I am sure, it develops a whole set of jurisprudence perhaps in the process.
So legal regimes are very important but also the moral and spiritual regime of a country is very important, you know, and a whole set of things.
I didn’t come here to discuss corruption because it’s, you know it’s a huge global problem that can be discussed I am sure at some other place.
I think the key issue Ben Okri is saying that, with due respect I understand what you are saying, but what I was trying to mention is that most of the highly technical African’s that should help us to fix the continent don’t live at home. So the key legal people, the juries, the mathematicians and so on don’t live there because the conditions are not conducive for them to live there. So they are not there to help us fix things and what to depend from time to time on these so called development experts while the second generation missionaries sort of come there to think they can come and civilise Africa. But if you can mobilise all these Africans to come home and work it would help a lot. I understand their circumstances which sometimes make it difficult and also maybe people can operate global. So that is the point I was trying to make.
The second point I was making was that when I said the issue of ownership in this conversation is a bit of a semantic question. I meant it in the sense that if you move from one jurisdiction to the other, governments define ownership in different ways. If you go to South Africa they will say mineral ownership vests with the people and the state represents the people. Does it? Or you go to another country, they just say state ownership. Another place they say no, these minerals beneath the soil here belong to King so-and-so. So for a mining company what you do must approach the appropriate authority to make an application. It differs from place to place. Maybe. Anyway we can talk it later.
It is really complicated and a question does arise sometimes and I have asked that question in my company, should we really be in the Congo at all? You know? Because it’s a minefield. It’s a difficult difficult environment to operate. Somebody might ask the question should you be in Argentina at all. And whether big mines there in Argentina with all the difficulties which are there. So I think companies have to have maybe a list of characteristic countries where they can operate and where they can’t. But if we are not there in Eastern Congo, whether one likes a democratic system of government there or not, but the fact of the matter is that they say they had an election. They were democrats. Now how much democracity does to the people is a different matter. Should you be there in the Eastern Congo or not is a very difficult question.
According to some of the regulations coming out of some of the US laws it may be difficult for us to operate in the Congo. Some computer companies have difficulties for example using the gold from the Congo as part of the manufacturing of the gold chips then you need in the computers. But on the other hand I know for certain that areas we’ll operate have benefited quite a lot by our presence. Is that sufficient?
And every time I come back to my days as an anti-apartheid struggle activist, when we used to say these American companies must pull out of South Africa because by their presence there they are bolstering the apartheid system. So out. Barclays out. These ones out. And so on.
So what should the criteria we should allow us to operate in countries or not? As a former activist I come across that question all the time and should you be in Angola at all...there is a democratic government in Angola but should you be operating there, well I operate there. Not just in oil, not like ExxonMobil but as a manufacturing company.
Should we be in Mali at all? Now investment in Mali that took place over many many years. Now there are problems in Mali. You can’t close a mine today and open it tomorrow. So you have to decide what is a strategic level in the medium to long term. It is a very difficult process. And what I emphasise again, I think the mining companies over the years have not done themselves any favours by their own behaviour and they relationship to the communities and governments.
About the point Ben about the drafting of legislation. I was making in particular reference to the work was recently done by the World Bank around the capacity of governments to write and understand complex contracts and legislation. I know for certain that, I won’t mention the name of the company, that company has got a legal department that is far bigger than the legal department of the country where they operate. There is no way in which the legal department in that country can sit and have a proper legal conversation with that company. The consequence of which has been that the drafting of those contracts and laws happens to be done by that company. Whether that is a good laws or bad laws that is a different thing. I am just mentioning the issue in terms of capacity and how we need to mobilise capacity for...
I mean the issues are complicated but I think that I have seen instances where things have worked. Our operations in Australia, despite the difficulties that we have with the environmental loss and all other things it is working. Safety standards are high, we hardly have fatalities in Australia. But in South Africa where the gold mines are as deep as 4 kilometres underground almost every other month somebody dies there and it’s a big problem. I have seen how companies have polluted rivers in South Africa in Ghana and in other places and I have also seen how lack of capacity from the government has allowed the infiltration of the industry by unscrupulous so-called small scale miners in Ghana for example. Chinese, Lebanese, and so on who have no care whatsoever for the environment or the community where they operate or paying tax or contributing to the growth and development of that country. Well, maybe again I made a mistake by joining a mining company. Should I have stayed as pensioner of the Central Bank?
RG: Can I ask you just a quick follow up there. I mean a lot of governments don’t have the same detailed knowledge of mining industry law as big multi-national mining companies do. Is there an organisation to which you think they can usefully turn for advice? I mean do you think, for example, that the help that the World Bank gave to the government of Chad in trying to work out a deal for an oil pipeline there, do you think that that sort of thing can work well or...
TM: There are thousands of organisations out there and institutions that can help countries. World Bank is one of them with all its problems. The United Nations, the UN, is probably the best placed institution that can help. But you also have thousands of legal firms which can assist governments. I know speaking from London is not a good thing because bankers are unpopular here but you have many capable legal components or otherwise of investment banks which can support governments and there is the NGO’s. That’s their job anyway, to help. The only thing that I don’t like about the NGO’s from time to time, as I said earlier on, is that they tend to behave like the second generation missionaries. I don’t like that. That have come on a kind of civilising mission to try and help these poor incompetent incapacitated Africans. I hate that. I can’t stand it! These high priests of goodness!
But I think that the capacities and I think governments as well in Africa and Latin America as well and so on, need to learn how can we best utilise the Diaspora as well. There are many capable people in the diaspora. We are finding for example that we are able to source Ghanaians who now live in Australia for our business and they understand the environment much better than South Africans can understand but they live in the Diaspora.
BO: But you are contradicting yourself...
TM: I know. I want you to come back home.
BO: I was enjoying you wandering around to your self contradiction.
BO: But you inevitably will because the upshot of what you are saying when you talk about, you know, you’re saying that really people should not travel. They should not find the opportunities that they can in the world. In fact the background to this conversation is not just natural resources actually it is globalisation. It’s the movement of people across the globe. What you seem to be saying is that you want to put a prohibition on people moving across the globe.
BO: It’s a very dangerous sort of area to go. But that’s not what I want to address.
TM: Let me just finish very quickly...and then I will let you...
BO: Well you have been speaking for about 15 minutes...
TM: So yes, people must come back home. Yes, we can reach them wherever they are in the diaspora because we need that capacity to be able to engage with the companies but anyway.
RG: Mr Okri... say whatever you like and then we are going to throw it open to questions from the audience.
BO: Well I am going to try and keep it brief. Just a couple of things I would like to say.
First of all, I would like to know is there some kind of more than a regulatory mechanism whereby cases that you spoke about can be officially tried. Something like the Hague? Something that has authority and teeth in terms of the world. Because otherwise if there isn’t then really what you are talking about is just a paper case.
ST: I think it’s hard to answer that in five seconds but there may well be different opportunities in those central places like the Hague, no.
BO: But shouldn’t something like that be set up because otherwise these things that you are talking about will continue to happen and these are part of the problems of these nations. It’s like a giant leaking tank basically.
ST: Yeah but it takes two to tango and sometimes a whole bunch of others, not just whoever happens to be corrupted or you know whose sort of emerged from the governance deficit place but it takes predatory behaviour coming from the side that enables this to happen which is kind of I think where your coming from with company behaviour and it goes in to environmental instruction as well. If you run roughshod over the rules or there aren’t any perhaps or you just you take advantage, you get things like happening. We come across this kind of stuff all the time.
BO: I mean a very recent example that hasn’t been addressed but I think should be at some point is what happened in Marikana which is when you raise the issue of whether mining companies, your mining company should be in Angola I tend that take the view that, you know, those whose come from a great moral background actually are the people that we look to to help establish that moral background.
RG: Can you perhaps tell the audience what happened in Marikana? There may be one or two people who don’t know.
BO: It’s a very complicated story do you want to tell the story?
RG: I can give a very brief summary if you like.
BO: Very brief and I’ll add to it.
RG: Ok, very briefly it was a mine in South Africa. There were two rival unions who were competing to represent the workers there. There was a certain amount of violence between the unions and there was also a standoff with the police where the police shot a large number of people and this, I forgot what the death toll was, but it was really staggeringly large.
BO: It was significant even in relation to South African history.
RG: I will shut up. No you carry on.
Well this is a very brief...
Audience 1: It was a British mine not a Chinese mine...
RG: Did I say it was a Chinese mine?
Audience 1: No, but it’s important to say whose mine it was. You said it was a mine...
RG: Ok, ok. Thank you for that.
BO: It is a very precise audience.
RG: Yes very precise audience.
BO: They are not going to let you get away with anything.
For me what is interesting in the case of Marikana is not just what happened. It’s the vision again. It’s those who are on the board, those who should know better as it were. I am concerned and I was in South Africa at the time. I was deeply concerned at what happened. At the way it was handled and at the fact that significant conclusions have not been reached.
That is not as serious to my mind as what happens in places like Guinea and bauxite miners, where you actually have people in government actually say to individuals who are struggling and working in the mines and being paid very very little, say to them well it is not the problem of the government. It’s the problem of your relationship with the companies but actually it is a government problem. It is always a government problem.
ST: We have got another nasty, sleazy deal that’s gone down in Guinea which we could talk about afterwards.
RG: I think given the wonderful detail you went into on the last individual case I think I might throw this one open to the audience. Now just a housekeeping point. Raise your hands, I will point to whoever I think should be given the microphone. Please if you could wait until you’ve got the microphone and then please say who you are or you don’t have to ok but if you would like to say what you do...Please also ask a question. Do not give a speech and try to be as brief as you can.
So let’s start on my right here with the gentleman. Wait until you’ve got the microphone. Thank you.
Audience 2: I am Bobby Beneton, Professor of Management as CASS Business School. I want to start with the questions Mr Mboweni also started with.
I study conflicts and mining for a living and I think the two questions you raised about who owns and who benefits are actually much closely related than you think. People are asking the question who owns resources because they haven’t benefited from it.
I study mining in Australia. There has been mining in Australia for 250 years and there are no aboriginal CEO’s, there are no aboriginal Vice Presidents. Yes they have jobs, they clean toilets and I think the price to pay for the environmental and social dislocations are too much to ask for.
Your other question I think, Mr Okri, you hit it on the head and I am going to ask those two questions as to how do we expand on that. Is collusion between the state and the cooperation’s. To say that sovereignty exists with the state and God put resources there, it’s an incredibly naive position to take because after conflicts I am studying I stopped at 25 because they only fit on one A4 piece of paper. It is no coincidence that all the 25 countries are former colonies. It is also no coincidence that all the companies involved in these conflicts are head quartered in Paris, Berlin, New York and Montreal. The difference is instead of white men in suits, now you have black men in suits so there is a collusion very much between that and if God put the resources there then there is a divine failure as well as a state failure because the troubled communities are saying how do we resist this?
So the real question I want to ask is, again this is a particular tribal leader I spoke to who has tried to take out a fund to say I want to pay this to the mining company to leave the bauxite in the mountains. Then he stopped and said actually I have to pay the government people as well and even the NGO’s because they won’t have a cause. So my question is how do we take your question about should we have mining and ask the question is it possible to imagine an economic development future without extraction in those regions? How can that conversation take place in public policy other than this field?
RG: Mr Mboweni, would you like to answer some of that? There were quite a lot of questions there.
TM: I’m just waiting for the mining centre, you know Ben says I talk too much.
(Unknown): I’m sorry perhaps we should take a cluster of questions from the audience and then go back to the panel?
RG: Do you want to speak?
(Unknown): No, there are other people I’m sure that want to speak.
RG: Well, there are yeah.
TM: Maybe two or three or something like that.
RG: Yes sir, if you could wait for the microphone so people can hear.
Audience 3: There are sort of two images really, watching a while back a wonderful programme that was on the BBC called ‘Welcome to Lagos’, it was a young man called Selender who was working a rubbish tip in the middle of Lagos and he was joking with another friend that actually in his village he had an oil well, and for the me the contrast between this guy from the Niger Delta working in a rubbish tip, recycling rubbish and where he came from. Probably from one of our civil rights activists said, probably about $40 billion has come out of that area and he’s on a rubbish tip. And what has come out of his area is fuelling civilisation in London and Paris and it’s just amazing. The other side to that and how it leads to conflict is that Abacha who you’ve mentioned was involved in a project at one point to turn himself into a civilian president and went round and gathered what we call all these different area boys from around the country as part of that project. He brought them all to Abuja from the Niger Delta and these kids looked around at Abuja and thought we’re living with nothing, no water, dirty water, polluted environments and the money that has come from our neighbourhood has built this, and that was when the insurgency started, in the Niger Delta. So there are a lot of very angry people who are fed up with mining companies and other extractive industries coming in, fuelling civilisation in other parts of the world and leaving them in abject poverty and the anger is rising and so I think a lot of these things that we’re talking about we need to do something about because people are getting fed up. The final image I wanted to talk about is of Robert Maxwell who used to sit on top of his building in Holborn and every so often as people were passing by he would want to go to the toilet and he would piss over the side of the building on the people below, and I sometimes feel as though the extractive industries are doing that to the rest of us.
RG: Do you have a question?
Audience 3: No, it’s a point of information, but the question is that in 2001 after September ’11 because it is all about collusion, after September ’11 we were able to count down very quickly all the financial stuff that was fuelling terrorism. So we know it can be done, yeah? No we know it can be done.
Audience 3: No we know it can be done and we need to stop the collusion.
RG: Maybe if you could pass the mike to the gentleman right behind you there, that will be the quickest question we can get to, and after you’ve asked we’re going to get a couple of brief answers from the panel.
Audience 4: Thank you, my name is David Gee, this is not a debate, it’s not a debate when you have five men speaking and only one woman, it’s not a debate when you have four white people and only two people of African heritage, it’s not a debate when you have six, basically wealthy people, and no poor people talking about the fate of most of Africa which is still very poor. It’s not a debate and the way you’ve been talking about Africa as if it’s one place, not withstanding what Tito Mboweni and Ben Okri have been saying, as if Africa is a single place and not a collection of communities, a collection of different cultures. Is the same kind of presumption of colonial entitlement, the colonial complacent presumption, it’s the very same presumption that carved up Africa in the first place, it’s an imperial presumption and there is a new empire and it’s based on cooperate power. If we’re talking about dysfunctional governments,
Unknown: Question, is there a question?
Audience 4: I’ll come to the question in a sec. We’re talking about dysfunctional governments, if you go to
Speaker: Pass the microphone or get to your question.
Audience 4: You take the top of a mountain off, that is dysfunction, that is dysfunction going on there. My question is how come the debate got organised with five men to only one woman, four white people, only two people of African heritage and no poor people at the table, no activists and no one who can represent a genuine diversity of views on the issue?
RG: Well, I think actually all the panellists are of African heritage and they do seem to represent a diversity of views, from oil companies to global witness to mining to poetry to moderate. If, I don’t know, does it count as a genuine debate? We will try and make it more genuine if you like. Now would the other panellists like to reply to, there was a comment about Nigeria and the inequality there, perhaps Mr Okri would like to respond?
BO: I think that was eloquently spoken about actually, it doesn’t need further elaboration.
RG: Ok fine.
BO: No just to add to that that it is, he’s right that people are getting angrier and it’s not just in Nigeria that they are getting angrier. They are getting angrier in Tanzania, they’re getting angrier in South Africa, they’re getting angrier all over the continent. I think that anger is going to be an important part of the transformation that we’re looking forward to. The transformation is not going to come from these guys, it’s going to come from those people, the angry ones.
RG: Ok, would anyone like to address Mr Beneton’s question? Mr Mboweni perhaps?
TM: I couldn’t quite understand the question, but I did ask the question about whether mining companies should go into certain jurisdictions or not. The global question about whether they should be mining or not I think is maybe worth discussing that today, but maybe we should. I know there have been mining proposals which have been brought before my board which were not taken up because we felt that on a whole set of reasons we were not comfortable going to mine in that kind of jurisdiction.
Unknown: It was too expensive?
TM: No, no not because of expense because overall the consensus was it was not favourable. The political environment, where there is a dictatorship for example, it is very difficult. Where there are human rights violations, and when one of the biggest questions that [inaudible] there has been a very big question to answer. I’m assuming that no one here in the audience is saying there should be no mining companies, I think what you’re saying is mining companies must take responsibility and operate in a manner that benefits the people of a particular countries as well. I think, if I understand it as what you’re saying, and you find at least the companies I know, you’ll find there is that attempt to undo so many things which have been wrong. Let me give and example in South Africa, the position of black mine workers in South Africa for many years has been absolutely unacceptable, over many years. Living in single sex male hostels and so on. Now what is the responsibility of both the state and the mining companies today? Is to undo that historic injustice by making sure that accommodation for workers is proper, by making sure that that labour sending areas benefit from the fact that they are sending the labour to the mines, but the communities are not developed, something has to be done about it. It’s about health, education scholarships and so on. But at the end of the day if I hear Ben correctly these things are more than just money, it’s a bigger question I think he called the vision. Where are we going? I think that’s a difficult one, but we should discuss it.
RG: Ok let’s have this lady here, then that gentleman there and then at the back. So let’s start down here please.
Audience 5: Hello
RG: I’ve got my eye on you don’t worry, and if you could make it briefer than some of the earlier questions.
Audience 5: I promise. My question is to Mr Kanstiener and Mr Mboweni. Considering the need for a vision, and I agree with Mr Okri and I would appreciate actually straight answers from both of you, given the undeniable finite nature of oil and minerals do extractive industries have real conversations in the board room about the long term viability of the future of your companies as much as you talk about your short term ROI?
WK: Great question
RG: We’re going to get that gentleman in the middle there.
Audience 6: Thank you, I think mining has never been a benevolent exercise so to expect mining companies to exercise any kind of responsibilities [inaudible] I wanted to ask my question just about Zimbabwe, do you think the model that Zimbabwe has followed enforcing mining companies to give 51% to the government, into community share trusts is a viable model
BO: To give how many percent?
Audience 6: 51% of mining proceeds, the model that Zimbabwe has.
RG: So you’re addressing that question to Mr Okri are you? Or to anyone? Ok. Right and there third question in the back there, gentlemen in blue.
Audience 7: Thank you my name is Giles, the question to Mr Kanstiener and Mr Mboweni and also to Mr Taylor. Is there enough, I mean you don’t hear much about whistle blowing in mining companies and extractive companies, is there more that can be done from government, from mining companies themselves to encourage this?
RG: Ok, what shall we start with? Perhaps Mr Kanstiener would like to respond to the question of oil being finite, go ahead please?
WK: It is very much discussed. It’s discussed because it is the very future of our corporation and it’s important to our shareholders and it is discussed in the near term and in the long term. Every year ExxonMobil puts out a production that is looking ahead to supply and demand. We call it the energy outlook and we spend millions of dollars doing it. Now we spend millions of dollars doing it because that’s what we base our capital expenditures on. These are not platitudes that we think might be nice. This is what we really believe is going to happen. So it’s a forecast so we can forecast where we are going to spend our money and these forecasts suggest energy demand is going through the roof. The middle class families of the world demand electricity. They want power in their houses or their apartments. They want to be able to cook. Instead of burning wood they want charcoal or gas or preferably, we think, gas.
But the mix of those energy sources that are going to supply that electricity or fuel is going to change and we know that and we try to anticipate it and plan for it. It’s moving from coal which is the largest single source of electricity today in the world to natural gas. So we are seeing that and we are planning for that but we very much look at a long term. You know the energy demand in Africa to be specific is probably the fastest growing of anywhere other than South East Asia. South East Asia is probably first and Africa is probably second. And it’s partially because we are coming from such a relatively low base. You know it’s about what, 15% of the population of Tanzania has electricity in their homes. 15%.
Audience 8: No renewables?
WK: And part of that package is renewable absolutely.
No doubt about it. Renewables...can solar be a part of it? You bet. Can wind be a part of it? Can be nuclear be a part of it? Now maybe not in Japan but nuclear is going to be a part of the mix. So you know there are going to be all of the above that produce the energy demand that this world wants.
TM: But if I understand the question very well it’s whether companies discuss the future of the company and also the future of the community, whatever it is. What’s the medium to long term? Well in my case the board certainly does discuss what is the medium to long term viability of the company, in particular mine, but also what is the current plan to ensure that when we close the mine the communities do not as well come to an end. You know the ghost towns and things like. What to do about that and to ensure that when we leave that area the environment continues to be viable. And it is very difficult for mining companies because historically they have not cared about the environment and you have to have very clear closure plans, how to rehabilitate the environment going forward and are there any viable projects which will keep the communities going thereafter. So it’s not just the shareholders that one must care about. You must also care about other stakeholders in the business in the practical sense and in the budget for the company you see budget lines about the plan for the community when the mine closes.
RG: It seems that there’s two sort of environmental questions here. One is the direct effect of pulling stuff out of the ground [inaudible] and then there is also what you do, particularly if you are talking about hydrocarbons, when you burn them. I mean there was a study that came out recently which we covered in the Economist that sort of suggested that we are not going to run out of oil because there’s so much already there in the reserves that of we were in fact to dig it all up and burn it we would be going so far over the sort of limit of what we think we can think we can put in the atmosphere without very dangerous change to the climate that actually we are going to have to figure out a way of not burning it. Nonetheless...
BO: So we can burn it but we won’t because of these changes...is that what you are saying? Because you said two things there...
RG: I am saying that if we do burn all the stuff that we have already found that’s extractable that we would put so much carbon dioxide into the atmosphere that, unless we come up with an amazing technological fix such as geo-engineering, we would be going into the very high probabilities of catastrophic climate change.
BO: So we can do it. Your saying we can’t...we can’t do it...the argument is this...
RG: ...I think it would be very unwise to...
ST: You can burn it but they consequences would be a disaster. So if we don’t want the climate disasters we can’t burn it which by default means a significant proportion of the stock market value of oil companies, which is to a large extent predicated on the bookable reserves, is redundant.
Therein lies the problem. Your value is there if you can burn your product but since we can’t burn your product your value needs to be devalued and that’s just a mathematical fact of life. That’s the quandary.
RG: I think we should answer the other two questions that were asked. Who would like to tackle the Zimbabwe nationalisation question? Either perhaps Mr Okri or Mr Mboweni? Mr Okri do you want to do it?
BO: There is 51% nationalisation.
RG: The deal is then Zimbabwe recovers...the government has said that all companies at some point will be, they have to put 51% of their shares in indigenous hands and there is an argument that much of this means basically handing it over to members of the government.
BO: Well nationalisation has defaults and positives sides. In Nigeria, as you know, it has not been beneficial the people. It’s not been beneficial at all. You are talking about people whose backyards...I come from a place where oil literally comes out of the backyard as well. If I were an American believe me I would be seriously seriously rich. So it works only if there is accountability and if there is a genuine desire on a part of governments to put that back into society. That’s when it will work. That’s when it will be of great benefit to the people. But I don’t see that happening where I come from at this particular time but that’s not to say that in 10, 20, 50 years time that that might not be the case.
RG: Ok, thank you very much. Mr Mboweni...ok did anyone want to answer the question about whistle blowing? Mr Taylor perhaps?
TM: In our case we do encourage whistle blowing but you know at the end of the day it’s whether the management takes it very seriously and will do something about what has been reported. I mean here we are dealing with contracts which are worth billions and billions of dollars and whenever there is a huge contract around you must know that some things like to go wrong and so we encourage people to come forward and report. But I think at the global level we still have to create an environment which is favourable to whistleblowers. You might think that I was reading a story in the FT today or another day about some fellow who blew the whistle but he ended up being the victim because the society and the companies did not support him at all. So yes we should encourage whistle blowing and protect those who have come forward.
RG: Ok. Gentleman with the beard in the middle who seems very enthusiastic about asking a question and then perhaps when we have done that you could pass it to the lady a couple of rows in front of you.
Audience 9: [Inaudible] My name is Andy Higginbottom. The answer to many of the questions from the floor is on the day after World Environment Day why were we so stupid as to allow the future of our planet to be left in the hands of a few mega corporations? I mean in actual fact this is a very pro-corporate agenda. It’s only Ben which has opened up the debate in terms of what communities want, what workers want, what people want right? Because the way you framed it, it is not the colour of your skin it’s the way you frame it right, which is that those people over there don’t have to govern themselves, they are all corrupt, they are all war lords and so on and the corporations are the good guys. Well the corporations like Maxwell and like Barclays Bank are not the good guys and that is a system of corruption where the money ends up here! And its massive profits from the extracted industry.
BO: Can I dissociate myself...
Audience 9: No you don’t interrupt a question. I will come back to you right...now we expect a higher moral standard. You claim for mortality, the antiapartheid struggle but you are here as a representative of a corporation, Mr Mboweni right...
TM: No, I was invited in my personal capacity actually.
Audience 9: Ok well you are here as the chair on the handout right and in Colombia, my question is this right, there are tens of thousands of people in Colombia in Tolima who protested on environment day yesterday, forty/fifty thousand people. They don’t want your gold mine. They have made it very clear. So are you going to uphold the morals of the previous struggle or are you just going to repeat this corporate greed. Are you prepared to walk away from Colombia even though it means you don’t make as much money because it’s better from the environment?
RG: Ok, thank you for your question. Can you pass the microphone two forward to the lady there please.
ST: Can I just say something...
RG: Can we have the other question first and then we will...
Audience 10: I quite like the heat to die down just a bit before proposing this but the reason I think that the question of who owns the worlds resources is a good one and it speaks to the whole issue of justice and benefit and 51% and how you negotiate and how you even define a fair deal, is because if you took it as a logical conclusion and if you looked at a countries assets as we currently know them and you ask not just who stands to benefit but you develop a vision around it depending on how much you have in terms of population, how long those resources might last, what they are worth, what the cost to the environment would be, to the economy, the jobs and so on you may come up with a very different answer to begin with. You might come to that conclusion that actually for this country it’s not worth even starting and the reason I am very interested in this is because the World Bank and others have defined 20 countries in Africa as being resource rich. But when you do the math down to the per capita benefit you will get a very different and much shorter list which means to me that resource rich, and when we talk about assets and Africa’s wealth we are talking about wealth for a very few and we are not talking about wealth for Africans and if we explore that question of whose innumerate the population, really think through vision as Ben mentioned again and again and again we may come up with some very different conclusions whether or not we go or don’t go.
RG: Yeah, I think we have got the question there.
Let’s try and answer those two before moving on to some more because we are very short of time.
I would actually like to throw it out to Mr Mboweni because I think...
TM: Why throw it at me...
RG: Well no because I would like to say in Mr Mboweni’s defence that, and I mean I have lived in South Africa for a certain amount of time and I don’t know any serious person there who doubts Mr Mboweni and his struggle credentials or passion against apartheid and the laws that he is best known for having helped write there were in fact the labour laws rather than anything to do with mining. I think the question...I mean I don’t remember the apartheid struggle being about not mining at all in South Africa. I thought it was something to do with control of the government but what’s your...do you feel that you should pull out of Colombia?
TM: Well that question, I wasn’t aware there was this demonstration.
Audience 9: The question is do...
TM: No no.
Audience 9: ...those tens of thousands of people who do not want your mines...
RG: Yes we have heard the question.
TM: I heard the question. Pardon?
Audience 9: Are you prepared to pull out?
BO: He is going to give you the question again....
TM: No you don’t have to do that. I have heard the question. I have not received any information about whether the total view of the Colombians is that we must not mine there. Now we can debate this, whether if a section of the South African population says there should be no eating horses after the 4 months so they stop eating horse and we were having that debate in South Africa actually. A section of the Colombians say they don’t want the mining. Can we have a debate with them because that’s not the impression that I have got from other Colombians there. Now there are some very difficult issues in Colombia and one must not belittle them and I am sure those issues will have to be considered but we have not reached a point...I am sure you don’t expect me to stand here in London and say that the one billion dollars invested is now going to be withdrawn. You don’t expect me to say that certainly but I am sure the people will consider all the issues but mining is difficult in any environment and if you a chief executive of a mining company you would know what the difficulties are.
I think what I understand this conversation to be about is that mining companies need to have found a more better medium to long term vision, there must be more responsive to the issues of the people, they must be careful about their relationships with government and so on. Some of the issues I tabulated at the beginning. And that there is a feeling that mining companies are benefiting more, extremely more, than the ordinary people are benefitting, both materially and environmentally and other issues...
ST: No competition?
TM: Maybe promotion of competition...
ST: but that relationship is the same for logging companies who operate with globally predatory bases. It’s the same for oil and gas, it’s the same for pretty much the whole extractive set. There are shining examples but that’s why this stuff does go back to the government and I think one of the things I slightly take issue with, at least if you are going to fire this sort of big colonialist sort of thing in my direction is that if you listen to what I was saying, it take two to tango and this stuff goes on right here in this city. You know some of the, I will give you another quick example that doesn’t go into a lot of detail. We investigated a bank looting process that came out of Kirgizstan and we found a company that listed, not listed on the stock exchange, but that it’s domiciled here in London that’s dormant. It has a director that was dead for two years before it was created and although it filed accounts to Companies House saying it was dormant 790 million dollars went through it. That was half of the pension fund of the people of Kirgizstan that got looted by corrupt people.
So my point is we can view this as a sort of, you know a conversation by outsider in, I think we also have to look at the evidence and the evidence points to the fact that there are predatory companies that behave very badly. There are companies that behave better. Some of them are the same, it depends where you go, and there are corrupt individuals who operate in a terrible way in a governance deficit and that’s a fact and the evidence shows that.
So as to your question should companies go in or what do we do about this whole problem of un-burnable carbon and so on, absolutely I think there are places where companies shouldn’t go in. I can see the quandary for mining companies that already are in there when it blows up in their face. I don’t know what you do about that.
RG: I think we have time for two more questions so long as they are brief...sorry were you asking...so there is one and then there is one more perhaps that lady at the edge there.
So this gentleman in the very front row first please.
Audience 10: Yeah, thanks very much. The question I heard coming through most loudly was the question asked by Ben Okri was does the Niger Delta have to be like that? And I have been looking for the answer. I have heard Simon Taylor say that there is some progress with transparency and legislations that come in America and so forth...
ST: It has taken 15 years...
Audience 10: Right but its some progress and I have heard Tito Mboweni, my brother from South Africa, saying that the mining companies need to take responsibility and be accountable.
So those are two things I have heard but I am not convinced that there is going to be some major transformation in the Niger Delta anytime soon. So my question is what is it that needs to happen to change that situation because it is a truly shocking situation that exists in the Niger Delta and what are you going to do about it panel?
RG: Can we take the last question and then...
Audience 11: My name is Alex and I am a teacher in London and I spend my day with young people, I am a science teacher trying to explain to them why it’s so important that we consider the kinds of questions you have been talking about today and my question might be a bit vague, I hope it’s not too bad. It’s just that isn’t the biggest opportunity in countries that are developing to learn from the mistakes that have been made from countries that have already developed, have made mistakes, have polluted land, sea, air and they are now in decline some of those countries as we have talked about briefly. Can’t we learn from those mistakes because that’s exactly what I am trying to teach my children every day.
RG: Ok, great. Let’s go to Mr Okri.
BO: It’s a very important question. The only problem with the question is when you talk about learning from the countries that are supposedly in decline, they are in decline from a particularly high place. So, you know, if they were to go on declining like that for another 100 years it will still be an Everest compared to the conditions of people in places like Nigeria that I know about. So to ask at this rather late stage in the human story that one set of people go on and join their decline and all of the benefits that are attached to it while another set of people should go on living in very difficult conditions and have not have some of the benefits that you take for granted with your decline is kind of seriously unfair question to ask about the human spirit. It’s unfortunate but it’s like saying freeze history at this point, let everyone remain exactly at the point we are right now. It’s simply not fair. It’s not possible. It’s not possible at all for the very simple reason that people can see how people are living in other parts of the world. You know the world is now so interconnected that it is impossible to hide your own misery from yourself. It’s not possible yeah. So that’s a very difficult question.
What can be done is how to learn from the mistakes in a way that still makes the development of our people possible. I mean everybody wants to live a life, a reasonably good life, on this planet. It’s a human right. You have decent roads, electricity, send their kids to school. It’s a human right to want the best for yourself and for your family and the only way which it can be done on this planet right now is by tilting some of the balances towards those who have not had for a hell of a long time and might not have at all if we go on like this. That’s a problem. It is an impossible moral dilemma.
What are we going to do about the Niger Delta? Well I can tell you one thing that will go on happening if something doesn’t change. The situation there will get worse. They will be more oil, local oil, terrorism. They will be more kidnappings. There will be more blowing up of oil mines. There will be a greater call for breaking away of that region. It will get worse and worse it will become one of the most dangerous places, not only in Nigeria, but in Africa. I don’t know what it takes for a country and for these great corporations to actually see that a situation has now reached the point where it is intolerable. It can go no further. I don’t know what it’s going to take. Maybe the stupidity, the levels of stupidity we are talking about it so high that we are going to have a catastrophe never before described before we actually start to see a turning point. I can only see it getting worse. I don’t see how, with the visions that I have heard around here, it’s ever going to get better.
RG: Thank you very much. Because we are really running out of time now what I am going to do is to ask each of the panellists to say just like two or three sentences to what they think the conclusions are this evening.
So quick fire starting with ExxonMobil.
WK: I thought should the minerals and resources just be left in the ground question was a good question and if you asked the people in Mnazi Bay and Tanzania they want that natural gas because they want electricity. They don’t want it to be left in the ground. They want it to be produced effectively, cleanly, efficiently and they want to be the beneficiary of it and we respect that.
RG: Great, thank you very much. Mr Taylor?
ST: I think we’ve barely touched the subject. We’ve referred to a number of sort of positive things that are going on there. There are other things going on but I would stress that they, you know to drive change, to seek to drive change, is not a fast process especially when you have huge vested interests going in the opposite direction and you know it causes everyone at every level I think to play that role whether it’s in a local place or trying to change laws in other places that can prevent the kind of things we are talking about from happening in the first place. And furthermore create consequence for the individuals who are actually the decision makers who make certain things happen. Right now there is no consequence for assets dripping a country. You can just do it and this city down the road here provides a brilliant conduit to move the money and you can’t find it.
RG: Thank you very much. Mr Okri, super briefly.
BO: Super brief. It took a couple of thousand years for different peoples to get to the point where we can have this kind of conversation here.
There’s only one language that I think that we understand. We understand the language of violence or the language of inevitability and I think we are faced with both of these languages right now and unless the companies and the governments have a vision that is a vision for the benefit of the people, it’s either violence on the one hand or inevitability on the other.
RG: Thank you. Mr Mboweni, last word goes to you.
TB: I think I have already summarised my views earlier when I said I think the conversation sought to brought out to the attention of companies but also hopefully the audience as well about what the keys issues are that will confront what has been a big struggle in my head, which is one of the reasons why I accepted the invitation to be here, was the relationship with the G8 Summit. So I don’t know this conversation has made any contribution to the G8 Summit at all and that’s the reason why I came here, 11 hours. I thought we were going to talk about how we are going to influence the G8 Summit. As it is we will probably be closing companies than influencing the G8 so I don’t know how the organisers are going to pull put anything to do with the G8 Summit because we didn’t even mention G8 during the course of this whole conversation. But anyway, thank you very much for the invitation.
RG: Well thank you very much Mr Mboweni. I think the answer to your question is that the G8 meets to consider big issues facing the world and the way that Zamyn is organised is that we take a number of the big issues and say what we think that they ought to be focussing on and obviously we have many different and passionately felt views on that and we are very grateful for your contribution, and also for that of Mr Okri and Mr Taylor and Mr Kansteiner and thank you all very much for coming tonight.