Select Committee on International Development Minutes of Evidence

Examination of Witness (Questions 560 - 579)



Mr Khabra

  560. What is the attitude of the Angolan Government, is it co-operating, reluctant, or opposed to any investigation?
  (Mr Taylor) To give them credit, they have agreed to the current IMF programme, which, I think one would have to say, is far better than what we had before, which was absolutely nothing. It is very hard to say; but I suspect an IMF programme that does not get to the bottom of the real nitty-gritty stuff is not really a big challenge. The political decisions as to whether we are going to go for this or not are simply not there, if the programme is not going to look at the real nitty-gritty of what is going on. So it is easy to say yes to that. I am being very cynical there. Half of me is congratulatory, in a sense, because they did it, but the other half is, well, where does this get us, and where does it get them. Does that answer your question?

  Mr Khabra: Yes; thank you.

Mr Colman

  561. You have obviously talked about there is no significant transparency by the oil companies in Angola, and I just wanted to widen this out beyond oil and, in a sense, beyond Angola. We had evidence from five multinationals last week, we have had written evidence in terms of codes of conduct, in terms of what is happening, what their corporate values are, what the standards are they lay down wherever they trade; is that sort of sheer bunkum, and, frankly, what is going on is, in fact, corrupt practices which are riddling a whole range of particularly British multinationals?
  (Mr Taylor) I think you have to look at each company in turn, to see how much, as you say, bunkum it might be.

  562. Unilever in Angola, for instance?
  (Mr Taylor) I do not know anything about Unilever in Angola, but BP in Angola.

  563. I was steering clear of oil, into other areas?
  (Mr Taylor) I have no idea what Unilever does in Angola, so I do not know if I can comment on that at all. They are there; that is news to me.

  564. But non-oil companies?
  (Mr Taylor) We have not focused on non-oil companies, simply because roughly 92 per cent of state income is coming from oil, so that is by far the significant issue, from our perspective. Bear in mind, the Cambodian situation, for us, we started in 1995, and as of the year 2000, so five years later, we became the official independent monitors of the forestry reform process; it took us five years.

  565. I am coming on to that in a moment.
  (Mr Taylor) Sure; but I am using that as an example. It took us five years to get there, and in the Angolan scenario we are one year down. So I think we are far from looking, from our perspective, at least, at these other sectors.

  566. You mentioned the diamonds conflict, so you are looking at obviously a number of countries; do you believe that there is a similar need for, let us say, De Beers, or other multinationals, who are working in many other countries, particularly in Africa, you looked at, actually to see where the purchase money, money they have used, where that ultimately is going to reside? Do you believe there is a role for companies to go, in a sense, back upstream; you talked about there was no provision for retrospective analysis of the oil accounts in Angola, do you believe that multinational companies have a responsibility actually to track, where they make payments to governments, as to how that money, in fact, is used?
  (Mr Taylor) I think what we have tried to define, in this context, but I think has the wider ramification, as you suggest, is that, if you are a company, in an industrial sector, it does not really matter what it is, in Angola it is oil, but, as you say, it could be diamonds as well, and you contribute a significant proportion of a national income, perhaps it is easier to think of it in those terms initially, then I think there are special responsibilities that befall on the company, and one of those should be transparency. And what I fail to understand, from the companies, and I do understand that they do not want to stick their head on the block, absolutely I understand that, but I think the bottom line is they are more or less transparent where we are, where we live, and obviously at some point in the past there was a legal requirement to make companies transparent about various things, and obviously there was a good reason for doing that; and surely if that reason applies here it should apply everywhere. And it seems to me, just looking at this example, that companies tend to do things if they are legally obligated to do so, and in the absence of the legal obligation they do not do anything at all.

  567. So, the codes of conduct that have been told to us as being, if you like, having almost the force of law within a company, "You will be dismissed if you do not follow it through," are you saying that, your experience, your analysis, this is ignored?
  (Mr Taylor) It is hard to be quite so specific. I think I would say that, of the main companies that you have talked to, let us go back to oil for a second, BP and Shell, they both say publicly that they are for transparency; so my question to them is, "Okay, be transparent then; you are either for transparency or you are not, and I do not see how you can be for transparency here and not for transparency here, bearing in mind all the political nuances of getting your head on the block." So I think our challenge to them, for a year, which has not been, really, I think, very satisfactorily answered by anybody, is that, "If you state you are for transparency let us see a movement on this, let us see some imagination, let us see some really proactive, some gutsy reaction to this, and let us see if we can work out a strategy whereby you can all move together," bearing in mind there are problems with other companies, such as Elf, who have been involved obviously in other things and perhaps might not want to be transparent. And the only other reason I can see why a company would not want to be transparent about this is that it might uncover some dodgy payment that has been made.

  568. It was put to us by, I think, both Shell and BP, correct me if I am wrong, Chair, that they have an audit committee within their company which looks at evidence of what is going on. Have you sought to give evidence to the audit committees of either of those companies, and I choose them merely because they are domiciled in the UK, obviously Exxon is not, and Elf is not, have you sought to give evidence to them and, in fact, have they rejected your wish to give such evidence to them?
  (Mr Taylor) In answer to your question, I have never heard of the audit committee within those companies; so that is news for me, so I will attempt to do that. I have had a dialogue with them, pretty regularly, and I would say that, in general, both companies have been quite open and quite positive about what we are talking about. I think, for them, it is the problem of how physically to do it, but I would say that is in marked contrast to a company like Exxon, who is, to be frank, like talking to a brick wall, you get zero response from anything, just no feedback. Now I understand, from Exxon's perspective, that they are probably quite concerned about NGOs, but I would hope that their analysis of us would have gone so far as to recognise that what we are trying to do here is something constructive, and that we are not in the business of sort of inflating things beyond what they are. I think we try to be very objective about how bad something is and try to move something forward in a constructive way. So, I suppose, talking about Exxon, I would be quite concerned about their complete lack of communication, and I understand that is very standard. I have heard of all sorts of examples where you have meetings with oil companies present, and if an NGO turns up Exxon says precisely nothing, and I just think that is not a very mature way forward, quite honestly.


  569. Can you help us on KPMG, who, I understand, from your evidence, has been appointed to undertake work as a contractor to IMF, and you suggest that there is a dispute between what they are supposed to be doing, some observers want to call it an audit, but those in KPMG, the staff of KPMG, have been keen, you say, to stress that this work does not constitute an audit? So what exactly are they doing, and have you spoken to them, and what are their terms of reference, and are they part of the cover-up, do you think?
  (Mr Taylor) I would not say that. I think they are stuck with the remit they have been given, so they are obliged to follow whatever it is that has been set up.

  570. Have you asked them what that is?
  (Mr Taylor) I have seen the IMF Staff Monitoring Programme report, that sort of outlines what is supposed to be going on. I think the comment we are seeking to say there is that the international community, at various stages, if you look at the different comments that have been coming out, they have been sort of akin to suggesting, "Well, here we are now, we have got the IMF programme in place, this will be an audit." It has been really pushed as an audit, or it has been, and in response to questions, from journalists to a spokesman from KPMG, there have been a number, well, in fact, two quotes that I have read recently, one of which said, "This should not be considered as an audit," and, the second point that was asked, in response to, "Do you think this will lead to more transparency in Angola?" the response was, "I can't answer that yet," or words to the effect. In terms of talking with them, I do want to talk to them but have not yet had the time to do it. I know who to talk to but I have been travelling a bit, so it has not been possible. So I can report back to you on that.

  Chairman: I think we may have to talk to them. Can we move on, to a brief question on your work in Cambodia, which, of course, was published in December 1999, entitled, `A Crude Awakening'.

  Mr Worthington: That was the Angolan one.

  Chairman: I beg your pardon, yes. I am sorry, I have got the wrong report. But you did work in Cambodia, monitoring the Cambodia forestry section, that is right. Piara Khabra is going to ask our questions.

Mr Khabra

  571. What are the main similarities with and differences between corruption in Cambodia associated with forestry and the corruption in Angola associated with diamonds and oil?
  (Mr Taylor) Now there is a big question. Would it be easier very briefly to run through what we have done in Cambodia, like in two seconds?


  572. Yes.
  (Mr Taylor) When we turned up in Cambodia—first of all, I should say, we set up Global Witness in 1993 to look at pretty much the role of matched resources in the funding of conflict, and I was one of the people who set up Global Witness, together with a couple of colleagues, and the three of us were interested in Cambodia because there was still a war going on. At that stage, we had the biggest UN mission in history, I think they spent nearly three billion dollars in putting together UNTAC, and the election process, and what have you, and that was very much being pushed around by the international community as the deliverance of peace, and yet, for some strange reason, we kept seeing in the press dry season offensives going on. I am being very cynical about it, but it was very much pushed as a peace process, and yet every year we had major conflagration going on around the border, between the Khmer Rouge, who had jumped out of the election process, and the newly-elected Government, once it came in. And, against that backdrop, in about 1991 or 1992, I forget, Resolution 792 was passed, which prohibited the export of timber from Cambodia; and yet, if you scanned the Thai press, almost daily, you could see photographs of enormous log-trucks, at various border checkpoints, which if you checked on the map were very clearly opposite Khmer Rouge zones, with pictures of Thai military in it. And our view really was, at a time when the Thai official position was, "We have no business or other relationship with the Khmer Rouge," this was clearly false and maybe we could do something about sorting that out. So our initial approach in Cambodia was to expose the key players in the trade with the Khmer Rouge. And so what we did was to travel around the border and we visited all the timber companies, and we had a secret camera and we had stills cameras, and we had a GPS with us. And so we plotted on a map precisely where all the companies were located, we filmed and photographed them and we interviewed all the bosses of the companies with a secret camera, on the basis of approaching them as a business. And what we got out of that was a very clear idea of who traded with whom, how they did it, who they made deals with, they showed us contracts, signed by, in certain circumstances, the Thai Interior Minister at the time. And what was also very clear was the full extent of the involvement of the Thai military at various stages, because, as you might imagine, it is very hard to drive an 18-wheeler truck through a checkpoint, let alone hundreds of 18-wheeler trucks through several checkpoints. So for us it was a very clear-cut case that the Thai policy was, quite frankly, not worth the piece of paper it was written on. So we collated this evidence together, and by May 1995 we held a press conference in Bangkok and exposed the involvement of the whole thing; which led, we found out later, to the Thai Government, under then Prime Minister Chuan Leekpai, who has just lost the election, just now, closing the border two days later, which cut off the Khmer Rouge from about 10 million dollars to 20 million dollars they were earning per month during the dry season. And just over a year later around 60 per cent of the Khmer Rouge defected on the western border, those allied to Ieng Sary, and we think there were two reasons for that. One was, they were being harassed, shall we say, by Pol Pot, who was in the north, and also they could not finance anything, they virtually could not feed themselves at that stage any more, let alone continue a war. At that stage, we then started to focus on the involvement of the Government and key players within the Government in the facilitation of the trade.

  573. This is the Thai Government?
  (Mr Taylor) This is the Cambodian Government. Because one of the peculiarities of that situation, at that stage, was that most of the timber going to Thailand was coming out of Khmer Rouge zones, but the Thais required official Government permits, so you had the two Prime Ministers, at that stage, in Phnom Penh, signing official documentation to allow log companies in Thailand, just across the border, to export timber from Khmer Rouge zones for a cut. So the Prime Ministers got their cut, as did the companies, as did the Khmer Rouge. So the two Prime Ministers effectively were fund-raising for their enemy, at the stage when all their soldiers were doing the dying, attacking them. We had all the documentation leaked, we had everything. So we exposed that. And that really began the process of accurately collating who was doing what, where they were doing it, how they were doing it, and we started a process of feeding that into the donor process. And, in terms of a parallel to Angola, in Cambodia we had a donor process, it was just starting, so what we were seeking to do was to get the donors to recognise that timber was absolutely fundamental to the continuation of the war, and there were also personal kickbacks going on. And this was also a process whereby the two Prime Ministers together, once they got to a process where they did not co-operate very much, which was probably by about 1995, 1996, the one area they did co-operate on, and we had the documentation to prove it, was the signing of timber contracts for different companies all over the place. And they used the kickback process, which was clearly illustrated in the documentation, to fund their own military build-up, which led directly to the coup in 1997, or, shall I say, it led to the capacity for the coup to happen, so we had a sort of re-armament process on both sides, financed out of timber. After the coup, you had basically the international community more or less cut off the Government, and that in turn escalated the need for revenue from timber; at the same time, Hun Sen, the victor in the coup, I suppose he needed to settle scores and pay back those who had supported him at the key point in time when the coup happened. And so we saw an escalation of logging, this time across the Vietnamese border, with a lot of the timber ending up in Vietnamese factories, on the Vietnam side, which we later visited, and in turn being turned into garden furniture and imported into Europe, Europe was the main market, with very interesting—

  574. This is teak, is it?
  (Mr Taylor) Teak, similar type timbers, hardwoods, very valuable hardwoods; and it was coming into Europe as garden furniture, labelled up with eco-labels. So one of the things we then did was to track that all the way back, because we had the paper trail, we had the on-site filming, we had the transport across the border, we had the companies in Vietnam and we had the Customs here and across Europe. So that led to a process of, I suppose, attrition against the companies, because our view, and I think this is a relevant issue to the impact of timber trading and its negative effect on development, and that is, there is virtually no control over, and timber, in our experience, certainly, in the places we have been looking, has had such an enormous negative effect because it is controlled by, for want of a better word, timber barons with high-level political connections. And the scale of operation is so huge and some of the companies involved are so lacking in regard for the human rights and development prospects of people in the areas they operate in, I can give you numerous examples of those, that there is a real, major impact. And what do you have as a product; well, in the Thai case, with the Khmer Rouge, most of the timber was going to construction in Bangkok, which petered out, we were quite glad of that, in a sense, through the Asian financial melt-down, but the Vietnam stuff was coming to Europe dressed up with eco-labels. So all these people with a concern about deforestation were, in fact, going out and buying products for which there was no substantiation for the claim on the label. I am just raising that because I think that is a very key issue, which probably applies to a lot of different products.

  575. Including the import of organic foods, perhaps?
  (Mr Taylor) You are probably right. I do not know so much about that side. In that case, I think, you could absolutely make the case that the timber that was being sold in Europe, which was high-value stuff, with its eco-labels, had not only paid for a coup but it then paid for the continuation of control over the country by the very military who did all the murdering; and it was quite a hard thing to deal with, having been present at various places when the bodies were being dug up. It was a very, very clear link, all the way through. Suffice it to say, once Hun Sen won the election, he obtained de facto international recognition, which was something he had never done before. And then we had the prospect of the first donor meeting, which presented the prospect of the first re-engagement, because money had not been available since the donor meeting in 1996, because we were just at the point of the 1997 donor meeting when the coup happened, so all the pledges, effectively, evaporated. So the Government was quite desperate for money. And I would say thank goodness for the donors, in that sense, they finally recognised the need for the use of conditionality. I know people do not like this word conditionality, and we tried to call for conditionality back in 1996, but I think what we were trying to say was, let us look at this in a more positive way, we are not talking about big brother and people from outside, pointing and saying, "Do this, do that." But I think you can make a case, that is, why should donors, and therefore taxpayers, contribute revenue into a country for the development, if the head of state and key individuals around them are looting state revenue to the detriment of the national whole, which in turn will result in the taxpayer having to bail out the country at a later stage, or even at that stage. And, obviously, a paltry sum of donor money, in the Angolan case, in contrast to the huge revenue coming from the oil companies, is not much of an incentive to clean up your act, unless, of course, the oil price drops off, which it did in 1998, and the situation could change quite a lot. In the Cambodian example, I think that the sense of desperation and the need to look legit. created a sea-change in Hun Sen, and perhaps, I hope, because I am worried about the up-coming election, in two or three years, because we are already seeing an escalation in illegal logging, that maybe he recognises it cannot go on for that much longer. By January 1999, when we were just up to the next donor meeting, even the World Bank was saying that Cambodia's commercial forestry would be extinct by 2003. I think basically we would agree with that. So what came out of the donor meeting was an agreement by Government they needed to change, on the timber issue, because it had become so hot, we had seen the IMF walk out on the basis of illegal timber deals, we had seen them come back on the condition that there was a clean-up, the donors said, "If you want donor assistance," which prior to the coup was roughly 50 per cent of the national budget, "then you're going to have to clean up this issue." I think this country played a major role in that, as did Holland, as did Germany, and so on. So we got to a stage where the Government agreed to quarterly update meetings, in return for donor assistance that would go through two key areas; one was the forestry department, who would monitor the forestry estate, i.e. those concessionaires, the legal concessionaires, who had been given contracts within the country, and donor assistance would also go to the Ministry of Environment, who would, in theory, monitor and police the national parks, all of which had been logged illegally by the so-called legal concessionaires, and military, and so on. And the third string of the bow was the donors insisted on an independent monitor, and then various diplomats said to us, why do we not apply to be the independent monitor, and we thought about it, thinking can we do it, it was basically what we had been doing for the last four years, and basically we decided to go for it, because we are more cost-effective than anyone else. We now have an independent monitoring office in Cambodia, which now reports to something called the Forest Crime Monitoring Unit, which in turn goes straight through the Council of Ministers to the Prime Minister, and forestry and Ministry of Environment actively pursue arrests, investigations, and so on, as a direct response to forest crime reports that we and others file through this unit. So, I would say, between 1998 and now, we have seen probably an 85 or so per cent reduction in illegal logging. What we still have a problem with though is the so-called legal concessionaires, because out of the 21 companies there, and maybe one has left since then, I have not been working on Cambodia for about a year, there are two that have physical experience of forest management, two of them.

  576. Are they British companies?
  (Mr Taylor) No. One of them is a company called Samling, which is a Malaysian company, and I really do not mind naming them because we have named them umpteen times, and, certainly to our knowledge, the only place in the world where they actively pursue forest management techniques, which they have the skills to do, is in New Zealand, where they cannot get away with it; everywhere else, from Sarawak to Cambodia, to Central Africa, to South America, to various other places, they are perpetrators of human rights abuses. They have people beaten up, they log illegally where they are not allowed to, they cut under-size trees, they cut when they do not even have permission at all, etc.; and we have significantly documented their activities in Cambodia for the last six years, we know exactly what they do and where they have done it and how they have done it.

  577. What did you say the company's name was?
  (Mr Taylor) Samling; that is one of the companies. There is another one, and I am trying to think of the name, but I can probably give that to you when it comes back to me, that is also a Malaysian company, which until recently, I would say, about a year ago, we did not have much dirt on them, and now we have found quite a lot of dirt on them, including illegal log exports to Thailand, and various other things. All of the other 19 companies have no forestry experience at all, like zero, so they are given a parcel of land, "Okay, here's 800,000 hectares," 4 per cent of the country's land mass, "go ahead," and they are supposed to meet quite strict criteria, which they are supposed to follow, so they hire the military, or they hire workers from somewhere else, wherever; no controls, no experience, no management technique, zero. So these guys, basically, I think it is a bit like me handing the car over to my two-year-old daughter and saying, "Go on, drive down the motorway;" you would not do that, would you? So, given their past record, which is well documented, by us and others, and given the immense damage they have done, these guys, together with the military, and illegal payments, and all sorts of things, I think what we are trying to pursue with the Cambodian Government now, and this is where donors are very key, is to deal with this issue of impunity. And you have heard of impunity with regard to the Khmer Rouge, and so on, but it is systematic throughout the whole system. We caught this company Gat, Gat is the other company, we caught them red-handed, logging in the Cardamon Mountains Reserve, it is a national park, having also been logging in Samling's concession, which they did not have permission to do, at a time when they had no permission to log at all, we caught them red-handed. The forestry department goes down to investigate, they end up in a court process, the only outcome of the court process is, they were told to pay the royalty on the logs which they had illegally cut and then they could have them. So, no impact; zero.

Mr Robathan

  578. Chairman, may I just apologise for not being here at the beginning of your evidence. You have described this in quite a sort of bland way, but what danger are your people in for reporting the illegal logging, or is it just it is all so friendly that people just ignore them?
  (Mr Taylor) In Cambodia, I think it depends on the scenario. There are some companies that are very closely connected to Hun Sen, one is called Pheapimex, which, quite frankly, is the most unpleasant bunch of people I have ever come across, they log in other people's concessions. There is one example where they were logging in the concession of a company called Everbright, which is a Chinese national company. This company is connected to Taiwan, but it is run by a woman called Choeng So Pheap, who travels around the world with Hun Sen to all the international meetings, and when he was contesting the UN seat in New York she turned up, when his son graduated from West Point she turned up, and so on. She is well up there, I would not say in bed, but you know what I mean, and she is a serious operator. Her company was widely reported, and we managed to confirm it, it logs all over the place, with impunity, it does what it wants, there has never been a prosecution, we have caught them out loads of times, we have filmed it, photographed it, documented it, we have got illegal contracts they have been involved in, brokering, timber exports, deals with Khmer Rouge, back in 1996, which involved General Chavalilt, who was soon to become Prime Minister of Thailand, etc., etc. And, one particular example, they were logging in Everbright's concession, so not their own concession at all, and they ran into workers of Everbright, and out came the B40 rocket-launcher, and they blew up the pick-up van of the workers from Everbright, and nothing happened. So I think the point I am trying to say is that, if the donor community is interested in forestry reform, we have all the key features in place there to deal with it.


  579. Have you reported on this, in written form?
  (Mr Taylor) Loads of times, yes. If you look on our website, you can see all our documents, there are five years' worth. But my point, in saying that, is that the only way to have forestry reform in Cambodia is to kick all of these companies out, and the donors need to bite the bullet on that; that is not to say you cannot have other companies back in, but these guys have to go, otherwise there is an inconsistency between the two.

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