Examination of Witness (Questions 540
- 559)
TUESDAY 16 JANUARY 2001
MR SIMON
TAYLOR
Mr Worthington
540. I want to return to the IMF, and your research,
which is absolutely clear-cut in the report, that the attempts
by the IMF to make more transparent, to clean up Angola's public
accounting system, has been undermined by the international oil
companies; that is a very serious assertion. Can you put details
on that?
(Mr Taylor) I think the fundamental basis of that
is that the companies in Angola are not transparent; this is perhaps
nothing new. They are not transparent in Gabon, they are not transparent
in Azerbaijan, they are not transparent in Nigeria, and look what
we have seen in those places. From a solution perspective, what
we have been trying to do for the last year, through a process
of dialogue and also a process with the FCO, is to see if it is
possible to start an initiative, I suppose akin to the co-operation
between the State Department in the US and the FCO here, with
regard to diamonds; it is to see if it is possible to work out
how the oil companies could creatively become transparent about
what it is they pay to the Government. Now there are perhaps lots
of ways of looking at that, and one thing that is very clear to
us is, no one company wants to stick its head above the parapet.
And, within the sphere of companies, I would describe there are
kind of three groupings, which perhaps I should not name, there
are some which are perhaps the more enlightened companies, of
which you spoke to one last week, but I am a bit disturbed to
hear that they are into facilitation payments, whatever that means.
And, having spent all of this last year saying "We don't
pay bribes," I have to ask them, who is the arbiter of what
sort of facilitation payment, and when does it become a bribe;
and, on top of that, they paid 400 million dollars in their signature
bonus, of the 870, and then signed a confidentiality clause. So
one could make the assertion, with those three companies, that
they actively took part in a process in covering up what they
paid. Now why did they need to do that; there are only five or
six companies in the Angolan ultra-deep water sphere who can do
this kind of work. If all five said, "We're not signing confidentiality
clauses," then where is the big deal. It would have been
possible, but instead they chose not to do it. So what we are
looking at is how we can see a strategy where all the companies
could move together and publish all their payments, and do it
everywhere, so they do it in Nigeria, they do it in Gabon, they
do it in Azerbaijan, they do it everywhere. And, actually, there
is nothing new in this; if you look under SEC filings in the States,
you can see what Exxon and Chevron pay in taxes, or Texaco, and
so on, you can find similar data under Company House filings for
BP and Shell, you can find the same kinds of things in Norway,
in Holland, and so on, all these key countries where there are
major oil interests, but you find none of this data available
in countries like Gabon, Azerbaijan, Congo B, and so on. And I
think that it is fair to say that in the absence of such transparency
the companies are complicit in the process that is going on, some
actually are much more so than that, some are actively involved
in all sorts of shady dealings. I know one.
541. You mentioned Elf particularly there?
(Mr Taylor) Am I allowed to say that in here?
542. Your evidence is ...
(Mr Taylor) I would prefer to be franker about Elf
perhaps outside, but suffice it to say there is a company that
we know has been supplying weapons to Angola through a subsidiary
that does not exist on the books, and it is invisible. And I have
to ask the question, what is an oil company doing supplying weaponry?
Mr Robathan: Could you tell us which
oil company it was?
Chairman
543. Could I just clarify the situation on confidentiality.
If you wish it, we can go into private session.
(Mr Taylor) I understand that is a bit cumbersome,
so if it is easier to talk afterwards I am happy either way.
544. It is a matter for your judgement, but
if you requested a private session I am sure the Committee would
not mind; we will do it perhaps at the end.
(Mr Taylor) Sure; to make it easier, yes. I can be
more frank then, yes.
Mr Worthington
545. I am only referring to your reports which
you have published.
(Mr Taylor) Yes; we have not published this stuff
yet.
Chairman: It is published material. That
would be your point about Elf, it is published material.
Mr Worthington
546. I am not using anything that has not been
published, and it is in your report, `A Crude Awakening'.
(Mr Taylor) Sure, Chairman.
547. Can I look at one other person in the oiligarchy,
Mr Costa, Vice-Minister of Petroleum, so, therefore, Angolan Government;
so "Feared by the oil companies"; runs FUNDANGA foundation
for `social contributions'". What does that mean?
(Mr Taylor) He ran, or at that stage he ran, this
foundation for `social contributions'. In terms of "feared
by the oil companies", we just thought that was a very strange
comment, but it was consistent across everyone we spoke to in
Angola, everyone said, "This man is feared by oil companies."
I think it is probably fair to say, he is no longer in that position,
so his relevance perhaps drops out, but I think it was relevant
at the time of publishing. I think there are more significant
players within the oiligarchy than him.
548. You see, the reason I am asking is that,
why are the oil companies, these big, international companies,
that—when you publicised about diamonds, De Beers started
shaking, they feared the name of their company, and they acted,
and other people acted.
(Mr Taylor) Not for a long time.
549. Not for a long time; but you could see
movement, because they feared losing their good name. You are
saying really that, the oil companies, which is much more manageable,
everyone knows who they are and they meet each other all round
the world, but the oil companies can have a considerable contribution
to ending the turmoil in Angola, to ending corruption, and I am
trying to work out why they will not do it. And then you come
with a quote that says "feared by the oil companies",
and what are these `social contributions'?
(Mr Taylor) I think it was a point of interest with
him that he ran a social foundation, we did not delve too much
into what that foundation does, but it was expressed as a social
foundation, so it was just a point of interest. I think the point
of "feared by the oil companies", as I understood it
at the time, was that here was a person who was instrumental,
or key to get on your side, whatever that means, in order to get
what you needed, in terms of oil blocks, and what have you. Now
I do not think that is still the case, because he has moved on,
I am not even sure what his position is now. So it was just a
point of interest, I think, that he was a key person within the
Presidency, as a group.
550. I am just trying to identify why the oil
companies would want to keep things quiet, why they would want
to behave in a non-transparent way; what is in it for them?
(Mr Taylor) Because some of them are absolutely paying
bribes, large amounts of money, is the bottom line; and one of
them has been involved in arms trading. I do not think all of
them are paying bribes, but, to be honest, to be frank, having
spent some time in Angola, I have to say, I find it extremely
hard to understand how it is that such companies can get contracts
without paying bribes, because it seems to be that is how it works,
that is the process by which you get a contract. I know that is
a very broad assertion and it is very difficult to prove it, but
it is how things are done. I know of quite a number of different
examples of quite well-known companies that have obtained what
they wanted in Angola through the payment of bribes, and I know
specifics but I cannot talk about them because my sources would
be in big trouble in Angola; but they have come from too many
non-connected and well-connected sources just to discount them.
And I think one of the real problems is, apart from anything else,
if one was going to run with something like that, you have to
think not only of your source but also you have to think about
how you can prove it, and we have not run with stuff that I know
because I cannot prove it, but I happen to believe it is true.
551. So basically you are saying you would not
get into the Angolan oil-fields for Block 31, 33, whatever it
is, unless you paid a bribe?
(Mr Taylor) I find it hard to believe how it happened
without. I cannot say for sure that all of them did, I am being
very careful about it, I just find it very hard to understand
how it was done without, that is just my view. Maybe the facilitation
came in the form of political support for Angola on an international
stage. I cannot quite answer that, because I think it is important
to understand that there is a sort of symbiosis between oil companies
and national interests, which everyone is probably aware of. I
am not trying to paint a sort of really murky picture about this,
but there is a national interest across the three main companies
we are talking about, this country, France especially and the
US, especially France and the US seem to be in major competition
with one another and do not trust each other. And if you look
at the US interest, just for example, in 1998, I think, Madelaine
Albright said that, currently, at that stage, 8 per cent of US
oil imports were coming from Angola, the forecast is set to rise
to 20, they are talking about. If you compare that with the 1
per cent that came from Kuwait, and the US was prepared to commit
half a million troops to that, then you can see the strategic
value of not upsetting the incumbent government, which decides
whether or not you get your oil interest. I think it is very clear
that there is that interest, and I am not pointing the finger
so much at this country, at all, actually, but certainly at those
two. I think you can see that reflected in foreign policy, you
see a very tough line over UNITA and an almost absent line regarding
bad things that are going on on the Government side; and it is
very clear to see it, a very, very token gesture, complaints,
when it comes to press freedom, and stuff like that, but nothing
really assertive.
Mr Colman
552. Really just picking up on what you said
to Ms Kingham, and, actually, in a sense, following what you are
saying, which is about pointing the finger to this country. You
mentioned, in talking about what was going on, in terms of bribery
and corruption being involved in various deals whereby money was
being siphoned on the back of oil, and, if you like, on the back
of purchases for arms for Angola, and you mentioned there were
bank accounts in the Isle of Man, in Jersey and, you said, in
London.
(Mr Taylor) Company structures.
553. I heard bank accounts, that is what you
specifically said.
(Mr Taylor) I meant company structures.
554. The question is, really, and you may want
to answer this in private session, are there any, in fact, you
believe, wrong-doings going on which need to be told to NCIS,
we have taken evidence from them and they are very interested
to pursue these matters, to the Metropolitan Police, who now have
a money laundering unit; do you believe there is, in fact, action
that needs to be taken dealing with these bank accounts, company
structures, or companies, or individuals, who are indulging in
money laundering using UK financial services?
(Mr Taylor) In answer to your question, I think the
first thing I should say is, I do not have the whole picture;
what I have got though is enough of the picture to understand
something pretty rotten is going on. You will have heard of Jean-Christoph
Mitterand being arrested in Paris, during the Christmas period,
and he just got out; he is a component in a much wider scandal,
which involves two other main individuals but probably some others,
in fact, some others, to varying degrees. He is not the key player,
I think he was an introductions man. But the other individuals,
one of whom is in gaol and the other who is on the run, do have
company structures which are intimately part of this process of,
on the one hand, loan provision, or the setting up of loans, and,
on the other hand, the subsequent provision of weapons through
these companies and structures. And one of the frustrating things
for me is that you have a process going on of investigation in
Paris, and yet sister companies and structures relating to the
companies that are being dug into in Paris are resident here and
in the US, and probably in Brazil as well, and nobody is doing
anything with it. So one of the things I have been doing, in fact,
since mid December, I would say, is talking to different people;
on Friday, for example, I was in the DA's office in New York,
trying to see how it could be that US company structures could
be examined, and the answer seems to be that, in the absence of
a formal request coming out of the investigators in Paris, nothing
moves. In that light, I have also been talking to people in NCIS,
but I am not quite sure if I have got the right people yet, who
are interested, but, again, I suspect that the formal move to
do something, to look at these things, will have to come from
a formal request from Paris, and I am not quite sure when and
if that is going to happen.
Chairman: Piara Khabra is going to talk
about tackling corruption.
Mr Khabra
555. What kinds of anti-corruption work are
being undertaken in Angola, are any of them being successful;
and, in your opinion, what kinds of anti-corruption activity should
the donor community be funding?
(Mr Taylor) There are a number of different corruption-type
seminars, I do not know how else to describe it really, but meetings,
taking place, and there have been for years, I think, which have
been facilitated by different NGOs on the ground, and those involve
individuals from within government ministries and departments
who are freely talking, I think, without the naming of names,
about, in their experience, what is going on. I think that is
a useful exercise, just because there is a process of airing grievances,
and so on. In terms of a significant move, we have the IMF's programme
that was signed in April, which, to be frank, I have quite a few
reservations about, because, given the scale of the problem that
I have been talking about now, and given that most of these transactions
and activities have been taking place in and through offshore
companies, in other words, the financing and the revenue is not
passing through the national budget at all, I think that is my
fundamental problem with the current IMF programme. Because, as
I said in the document, for years they have been looking to try
to begin a process of auditing the oil accounts, they are now
talking about auditing the diamond accounts, but that is going
to take longer; the IMF has come in, and it seems to us that what
they are doing is not what could be described as an audit, despite
the fact it was trumped as something that they were going to do,
they were saying that "We are going to do an audit; we're
going to look in full detail at what's happening in the oil accounts."
I am not saying what they are doing is negative, it is a step
forward, I just think it is almost as if, instead of aiming ten
feet high and getting eight, they aimed five feet high and got
two; so there are lots of things they could have gone for, at
the time when they came in, which they have not, and some of which
I have detailed in here, very briefly. But, for example, if I
can find the key points, there is no provision for any significant
retrospective analysis of oil accounts, and the expenditure, because
I think that is very crucial here, for the period 1998 to the
present day. Now I know politically that is very difficult, because,
as people in the IMF told us last week, basically that boils down
to a forensic examination, and politically the IMF cannot do that,
and certainly not with the absence of an agreement from the Government,
in other words, the President; and I do not think the President
is any hurry to see a real, thorough, retrospective analysis of
what has been going on because certain key people are going to
get implicated. I also think, knowing what I know about the Mitterand
affair, that it is not in France's interest either to have a full,
retrospective analysis, because, if they did do one, they would
find all sorts of interesting payments going back in the direction
of Paris, to some very influential individuals, some of whom have
been named in the French press over the last few weeks, and some
of whom are probably going to be questioned further by the investigating
judges. So certainly I have a sense that, certainly in two senses,
on the one side the Government side and on the other side, certainly
France's side, there is no interest in a decent, proper audit
process, going into what has been going on. Now you might think,
well, let bygones be bygones and let us move forward, and I can
understand that position, but, the fact is, a lot of the structures
that were set up to do everything that I have been talking about
were set up during this period. And if we do not get to the bottom
of what those structures are and how they work then I think what
we are worried about is that the IMF will complete its programme
in the next six to nine months, they will then move into a stage
where they come up with some money, through a proper financed
programme, that is what they are freely talking about, and it
is an issue that, for example, the US Treasury is quite concerned
about, they are talking about the next stage being a process where
they will pay money; now if that happens then you could see the
Paris club coming in and also providing money. And in the absence
of cleaning up all these offshore things, some of which may happen
through the exposures going on in Paris, but I do not think we
should hold our breath, then I could see some area where hundreds
of millions of dollars are going into Angola, at the same time
hundreds of millions of dollars are going out of Angola. So I
have to ask the question, what is the point?
Chairman
556. There is no point, is there; if the country
has the money from the oil then they do not need the IMF, do they?
(Mr Taylor) If they get the IMF they get more preferential
loan rates, and, I think, at the moment, the country has been
floating off the back of a higher oil price, which has provided
the capacity to get yet more loans against future oil production,
so a constant process of mortgaging future oil production, so
that not yet extracted. There are lots of estimates about how
much has been done, and so on.
557. Yes, but I have never seen in the IMF constitution,
which I did once read, that they should be complicit in arms purchase,
by providing money of a structural, economic, financial nature
to a government such as Angola?
(Mr Taylor) I suppose they would argue, "It's
not our money going to that."
558. How could they prevent it?
(Mr Taylor) It is a very good question. I do not know.
I think they would probably pay it through the National Bank,
if they did come to that point, and then they would have someone
in place who would monitor it, one would hope. But the money that
is being utilised for the procurement process I have been describing
has come in part from signature bonuses, as we described in the
Block 31 to 33 scenario, but, in addition, it has come from these
oil-backed loans, the loans that our characters who are in trouble
right now have had an instrumental role in putting together, with
high-level political support from France, and it is that money
that has been disappearing through the process of kickbacks. I
think my question really is that, in the absence of a retrospective
analysis, and in the absence of a real analysis of where money
goes after it comes in, which they are also not doing in the current
programme, my question to the IMF is, how are they going to get
to the bottom of the offshore structures that are in place, which
are being deployed for the very things we are talking about, and
I cannot see it.
559. But if you do not have a retrospective,
an examination, as you have suggested, it seems to me that you
will not be able to find the terms on which these loans have been
made. As I understand from your evidence, they actually mortgage
the future oil supplies thought to be coming from Angola, and,
therefore, the retrospection is necessary, because why did not
the current oil supply, why was that insufficient to fund any
fighting or weapons supply, or whatever, in Angola? That is the
question that we must ask, is it not?
(Mr Taylor) I think so, I think you are right. But,
as of yet, I have had pretty, I would say, paltry explanations
coming out of the IMF. I think part of the problem is that we
have worked very well with the IMF in Cambodia, and they have
seen a situation come about where we had a serious go at the Asian
Development Bank over their inadequacies with regard to Cambodian
forestry reform, and I think there is an element of concern about
communicating with us, over such a contentious issue, in case
we have a go at them. So it may be that there is a bit of temperance
there about how free and frank they are being. But I think my
concern really is that I have met with the key people involved
in the IMF programme, I think, three occasions, before the deal
was signed; now I am not suggesting that they have to listen to
everything we say, but I think we had a serious point to make
about the retrospective analysis, and so on. Whammo, we get, in
April last year, a deal, which did not really seem to look at
any of the key things that it really needs to do.
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