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Swiss help tackle oil and mining corruption

Swissaid supports partner organisations in civil society which are involved in the Chadian oil project

Switzerland has joined a global transparency initiative aimed at ensuring developing countries gain a fair share of revenues from mining activities on their land.

This content was published on June 9, 2009 - 14:07

The news has been welcomed by non-governmental organisations and those working in the field, currently meeting for an international conference on the issue in Zurich.

The Swiss State Secretariat for Economic Affairs (Seco) will support the Extractive Industries Transparency Initiative (EITI) with a $3 million (SFr3.27 million) contribution.

"Switzerland therefore wishes to boost its involvement in internationally coordinated efforts to promote transparency in mining and oil and gas and support the worldwide fight against corruption," Seco said in a statement.

The country becomes the 14th Organisation for Economic Co-operation and Development member to join the voluntary EITI, which is coordinated by the World Bank.

In all, 20 developing countries have already signed up, including Swiss partner states Nigeria and Azerbaijan. The initiative also aims to promote good governance in the extractive industries sector, with private companies being encouraged to participate.

The news, announced on Monday, came on the eve of the "Extracting natural resources, transparency wins" conference organised by NGO Swissaid.

"Sinking" money

Swissaid, which had long been lobbying for Swiss EITI participation, said that often countries did not profit from the exploitation of their natural resources and that the money often "sank into dark channels". Good governance and transparency are key, it said.

Peter Eigen, the EITI chairman and a conference speaker, said that the announcement had "made his day".

"I know how good people are in the donor community in Switzerland, so it's wonderful to have Switzerland as a partner," he told swissinfo.ch at a media conference.

He said although Switzerland did not have many oil and extractive companies of its own, it was deeply involved in shaping the nature of investments. This also made sure that it had a stable source of resources.

"In my opinion the investment in a country like Botswana is as much driven by the customers of the mining companies, by the companies which build the pipelines or supply the platforms, and by the companies which finance these big projects," Eigen explained.

Just how more transparency benefits countries – both developing and developed – is a major topic of discussion in Zurich.

Shining Botswana

Among those speaking is the former president of Botswana, Festus Mogae, whose country has been held up as a shining example of how to achieve transparency in mining revenues.

When it achieved independence in 1966, its then leaders negotiated a tough deal with western diamond mining giants for revenues to be ploughed back into development programmes, such as in education and health.

"The issue of revenues was placed on the public platform, so when revenues accrued everybody wanted to know exactly how much was derived and what they were going to be used for," Mogae told swissinfo.ch.

In addition, every change to the agreed programme had to be approved by parliament. The country is now considered a relatively stable and wealthy one.

Mogae said Switzerland's decision to join the EITI as an important step. "Developed countries shouldn't be demanding that African countries, or developing countries, do certain things when they themselves are not asking their companies to show the same transparency," he said.

He added that it took "two to tango" when it came to corruption. "If I am bribed there must be somebody who is bribing," he pointed out.

Opposite in Chad

An example of what can go wrong can be seen in Chad, where Swissaid is active. The World Bank has now left an oil pipeline project from Chad to Cameroon after the Chad government broke an agreement that would have given the revenues back to the population.

The strife-ridden country remains one of the poorest in Africa, despite its large potential in natural resources.

Experts said that the financial crisis – and the advent of new players such as China – showed that transparency was more important than ever in the extractive industries sector.

Eigen hopes that the EITI will eventually become the global standard and that the transparency of payments will be "the normal way to do business". Progress is already being made, he added.

"It is easy to forget that less than a decade ago the idea of extractive companies and governments opening their books was a faint dream," Eigen said.

Isobel Leybold-Johnson in Zurich, swissinfo.ch

Swissaid conference

"Extracting natural resources, transparency wins" takes place on June 9 in Zurich. It is organised by Swissaid and has the support of the Swiss government, including Seco.

Swissaid was founded in 1948 and is involved in cooperative development projects in nine countries.

It operates with an annual budget of around SFr15.5 million.

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EITI

According to the EITI, 3.5 billion people live in countries rich in oil, gas and minerals.

The EITI is a global standard that promotes revenue transparency. It has a robust yet flexible methodology for monitoring and reconciling company payments and government revenues at the country level. The process is overseen by participants from the government, companies and national civil society.

The EITI Board and the International Secretariat based in Oslo are the guardians of the EITI methodology internationally.

The EITI is a coalition of governments, companies, civil society groups, investors and international organisations.

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