Making simplicity work
Posted on by December 2, 2009 by jon.brunberg
The idea behind the Exctractive Industries Transparency Initiative – EITI – is as simple as a model for transparency and accountability can be. One part in a business deal discloses its payments to the public and the receiving part discoses its revenues from the same deal to the same public. These reports are analyzed by parties from the civil society and any discrepancies accounted for.
The EITI deals exclusively with industries that extract natural resources such as oil, natural gas, diamonds or other minerals and the states that have these resources on its soil. The idea is that this process would disclose corruption and unfair deals that are not benificient to the public in these countries and that contracts between companies and states can be re-negotiatiated if necessary. The Guardian now reports that EITI has approved its first two members: Liberia and Azerbaijan and that it already has renegotiated contracts in Liberia:
Liberia, rich in mineral wealth, was until 2005 one of Africa’s most notorious killing fields. The first peace-time president, Ellen Johnson Sirleaf, decided early on to sign up to the EITI. Its inaugural report reveals that the main contractor, the Luxembourg-based ArcelorMittal, was asked to renegotiate its initial contract after analysis suggested it had been negotiated with the company rather than the country’s benefit in mind. Now the taxes it pays are the main source of mineral-related revenue for the government.
The report also revealed a payment the company had made but the government had not received. And it exposed other companies that had not reported at all, and other payments that had apparently been made, but not received. This, it said, generated local comment and inquiry.
EITI’s model seem to be one way out for countries that have been bogged down in corrupt practices and plagued by plundering and injustices. It will be very interesting in the coming years to see wheter it will work for other countries as well.
