Most of the data collated by Transparency International indicates that Nigeria is one of the most corrupt oil-producing countries worldwide. Meanwhile, studies show that many producing countries have not only failed to develop in a well-thought manner, but also to prudently use their oil revenues, which in some cases even brought harm to a country rather than develop it. There are many problems associated with oil revenues. First, there is the issue of considering them a source of income (that is, for consumption and public sector salaries) instead of being a source of investment funds, for example to be used in infrastructure development. The problem here lies in the daily news about high oil prices, which gives the impression that oil money would be able to address all difficulties. Therefore, the challenges facing many producers of crude oil are not limited to failure to leading the countries in question towards a productive economic model, but also include the misuse of oil revenues. This has often caused frightening levels of inequality, in tandem with armed conflict, authoritarian regimes, and an absence of democracy and basic freedoms. In addition, billions of dollars have become concentrated in the hands of irresponsible rulers who disburse oil revenues as though they belonged to their personal accounts. Then to make matters worse, there is the issue of corruption, which is endemic to many countries' vital oil sectors. Reports from Nigeria, confirmed by officials, have revealed that oil sector corruption costs more than $6 billion annually. Corruption takes on many forms, from the smuggling of petroleum products across the border, to bribes of officials in the oil sector. Yet the single most important problem faced by Nigeria is the practice of loading huge tankers with crude oil without the value of the shipment being recorded, for the benefit of the state. Singling out Nigeria as an example is motivated by the magnitude of corruption there, and the ongoing attempts to curb or reduce it. Furthermore, these revenues are being lost in a country gripped by poverty, despite its agricultural wealth and abundant natural resources. This was reiterated by Nigerian Oil Minister Diezani Alison-Madueke, who said in a speech last month that Nigerian President Goodluck Jonathan had met with British Prime Minister David Cameron to discuss efforts to reduce corruption. Alison-Madueke said that the president's attempt was only a part of a series of contacts he is making with other leaders to obtain help in eliminating corruption. It is worth noting that a number of lawsuits were brought by the Nigerian authorities against European companies which the former accuse of complicity in oil sector corruption in Nigeria. Interestingly, most of these legal cases are being filed in courts in Europe, where these companies are based. However, the issue of oil sector corruption often goes in vicious cycles, even as politicians in oil-producing countries speak of diversifying their local economies, and ending reliance on oil revenues. But the fact of the matter is that those politicians are the largest beneficiaries of the domination of the oil sector over their countries' economies, and gain illegally from the oil revenues for their own benefit. It is no surprise then that in some oil-producing countries, including OPEC members, oil represents 90–99 percent of exports. Oil companies, in collaboration with officials or local middlemen, play a major role in the prevalence of oil sector corruption. As is well known, criticisms of these international companies in the past focused on their being extensions of their home countries' governments, and then on the pollution their operations result in, in producing countries. However, there aren't enough studies and research available about these companies' disregard for transparency in their operations or investments. The companies are “okay" with accusations regarding pollution, rather than observers being concerned by their lack of respect for transparency in their operations, as this would be a far more serious and more damaging accusation. The studies available suggest that corruption spreads in a given country due to chaos and the absence of strong authorities to enforce laws and monitor compliance with them. If citizens feel that there is order and punishment for breaking the law, then chaos would be reined in; otherwise, bribery would be prevalent and laws would be broken for its sake. In countries where corruption is endemic and queuing is a formality, and because waiting costs oil companies thousands of dollars each day while officials in charge of queuing system – that is, enforcing the law – are given raises of less than 1 percent of the kickbacks they can receive from the companies in question throughout their terms; bribery becomes easy, and it allows companies to reduce loading time or avoid losses due to delays. There are also cases that are even worse, and which have actually happened in Nigeria: Companies agree with officials in charge of loading tankers to load shipments at night without noting this in official records. As a result, companies reap millions of dollars in profits in return for shipments they did not pay for, while the officials receive large sums in their offshore accounts for their services. Yet this kind of bribes only takes place in weak states ravaged by chaos or civil war. In this type of huge bribes, it is not only about individuals, but also about cover from higher-ranking officials, who receive large bribes to allow this to happen as well. The amounts involved are shocking, and far exceed what is paid in other sectors. The result of this corruption is not only obscene enrichment of certain individuals, but also accumulation of corrupt political money that leads countries to severe problems, from the spread of a culture of corruption to the rising clout of armed militias, and over time, this undermines the political authorities in a given country. * Mr. Khadduri is a consultant for MEES Oil & Gas (MeesEnergy)
