History repeats itself

The oil—for—food scandal recapitulates itself. Chirac once again is a handmaiden of corruption that hurts the poor and the downtrodden. Sebatian Mallaby writes in the Washington Post,

The Congo... has mountains of debt and canyons of poverty, so it's a candidate for the debt cancellation that was trumpeted last year. But it's also rotten with corruption, rendering most aid efforts pointless. When the matter of Congo's debt relief came before the boards of the World Bank and the International Monetary Fund recently, there was a chance to confront this dilemma. Instead, the institutions tried to have it both ways. Last week they acknowledged Congo's corruption but cut the country's debt payments anyway.

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

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

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

Ed Lasky   3 13 06

The oil—for—food scandal recapitulates itself. Chirac once again is a handmaiden of corruption that hurts the poor and the downtrodden. Sebatian Mallaby writes in the Washington Post,

The Congo... has mountains of debt and canyons of poverty, so it's a candidate for the debt cancellation that was trumpeted last year. But it's also rotten with corruption, rendering most aid efforts pointless. When the matter of Congo's debt relief came before the boards of the World Bank and the International Monetary Fund recently, there was a chance to confront this dilemma. Instead, the institutions tried to have it both ways. Last week they acknowledged Congo's corruption but cut the country's debt payments anyway.

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

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

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

Ed Lasky   3 13 06