Oil Can Be A Blessing Or A Bane For A Country
The Uphill Game of Oil Corruption
A decade ago, geologists found signs that one of Africa’s least-known countries, the tiny island nation of São Tomé and Principe, might hold a king’s ransom in oil. The first drop of oil has yet to be produced. But these days, little São Tomé may have attracted ample supplies of something else, federal investigators suspect — oil-related corruption. All of this might not seem unusual in Africa, where oil and corruption often go hand in hand.
In recent years, a steady stream of activists like the Columbia University economist Jeffrey D. Sachs have gone there to try to make sure that any energy boom would benefit its 150,000 people, rather than politicians and companies.“Oil can be a blessing or a bane for a country,” Mr. Sachs said. “The theory was to help São Tomé avoid the resource curse.” Mr. Sachs and other activist’s mission: To prevent the country from following in footsteps of other African countries where corruption and waste typically follow oil. In Nigeria, the continent’s largest producer, most people live on less than $2 a day while politicians have stolen or squandered billions. Things, however, have not quite worked out that way. The recent Justice Department indictment of William J. Jefferson, a Democratic congressman from Louisiana, contends, for example, that he solicited a bribe from a company seeking his help with an oil-related dispute involving São Tomé. Separately, federal authorities are investigating a small Houston-based company whose only assets are large holdings in São Tomé to determine if it bribed the country’s officials. At that time, the Texas company was owned by some wildcatters and an enterprising Florida businesswoman named Noreen Wilson. In 1997, Ms. Wilson signed a $5 million contract that gave ERHC, which was then known as the Environmental Remediation Holding Corporation, exploration rights in São Tomé for 25 years. The contract was soon described by some outside experts as extremely lopsided. Soon afterward, Ms. Wilson resigned from ERHC during an investigation of the company by the Securities and Exchange Commission. But she appeared to retain an interest in the island’s future; in 2001, for instance, she apparently reached out to Mr. Jefferson for help. The attorney general’s report may have precipitated last summer’s raid on ERHC’s Houston offices by the F.B.I. Among other things, F.B.I. agents took a file marked “William Jefferson,” a reference to the Louisiana congressman, a publicly filed subpoena shows.
A Columbia University team and others helped draft a new oil law that contained safeguards to make sure São Tomé spent its oil-related revenue properly. The team then traveled around the country, holding meetings on cocoa plantations and in churches, where they explained to residents how the new statute would protect their interests. Unfortunately, by late 2005, some companies that won blocs in the zone controlled jointly by São Tomé and its neighbor were headed by Nigerian businessmen with political ties but no oil experience. In addition, the report found some large multinational oil companies were so suspicious of ERHC that they decided not to bid and added that ERHC “may have made improper payments to government officials.” Whatever the case, ERHC has emerged thus far as the biggest winner in São Tomé. Over the last year, it has sold off various rights to its holdings in São Tomé, making tens of millions of dollars in the process.
Fradique de Menezes, the country’s president, who met on several occasions with Mr. Jefferson, did not respond to repeated requests to be interviewed for this article.
