In four out of six petroleum agreements recently approved by Ghana’s Parliament, the government required oil and gas producers to certify compliance with the Foreign Corrupt Practices Act (FCPA), UK Bribery Act, and OECD Anti-Bribery Convention. At an event in June sponsored by the Ghana government, the FCPA was referred to as model legislation for fighting abuses in the oil and gas industry. This new standard highlights the importance of anti-corruption compliance for companies and businesses seeking to do business in global markets.
Paul Kitson, a former compliance officer for British Petroleum (BP) and TNK-BP, commented, “As a compliance officer, I would welcome such a clause. It supports maintaining the highest standards in compliance, and it is something that I could use to reinforce my own in-house program.” In particular, he said that it would help managers and employees who interact with Ghanaian officers to fend off attempts at a shake-down from local officials.
The clause only requires compliance with U.S. and UK law “to the extent applicable to such party.” Kitson notes, “Without the caveat, a requirement to comply with foreign law could be seen as anti-competitive.” He referred to the case of the pharmaceutical company, Norddisk, which required all bidders under a Russian contract to be executed in Russia, ostensibly to comply with the FCPA. However, the Anti-Competition Ministry found this to be a ruse to disqualify perfectly capable suppliers.
While Ghana’s new certification requirement has been praised as a positive step toward fighting corruption, doubts remain about effective implementation and enforcement. The Africa Center for Energy Policy (ACEP), which has campaigned for the inclusion of anti-corruption clauses in all petroleum agreements, expressed concern that the government was rushing the new petroleum agreements through Parliament without enough time for effective scrutiny, while delaying the passing of the new Petroleum (Exploration and Production) Bill.
Six petroleum agreements were approved by Parliament in two days, while the Petroleum Bill awaits approval. The regulations in the Petroleum Bill contain a more comprehensive governance regime than the petroleum agreements, for instance by requiring an open and competitive process for licensing oil blocks, rather than the administrative process that leaves more room for corruption.
Furthermore, ACEP called on the government to strengthen the state’s anti-corruption agencies to identify, investigate, and expose corruption in the oil and gas industry. Insufficient capacity to monitor compliance remains a primary challenge for initiatives seeking to increase transparency in extractive industries. Many governments lack effective enforcement mechanisms or penalties and have little or no experience in monitoring natural resource governance, and local communities and civil society groups are often even less prepared to track compliance.
In the absence of effective local enforcement mechanisms, one way of increasing compliance with global anti-corruption laws is through the private sector. Drago Kos, Chair of the Organisation for Economic Cooperation and Development Working Group of Bribery, is in agreement. Commenting on a recent CIPE publication that outlines how mid-sized businesses can put in place compliance measures, Kos noted, “Public institutions cannot fight corruption and enhance integrity alone. We need the active involvement of the private sector if we want to ensure a level playing field for all companies from all markets around the globe.”
In countries where anti-corruption rules and regulations are weak or unevenly enforced, businesses can improve their own safeguards against corruption and act together to create a culture of integrity. Laws with extraterritorial reach, such as the FCPA and U.K. Bribery Act, encourage companies to unilaterally improve their compliance programs in order to avoid liability. While Ghana could still go further to improve its anti-corruption enforcement, the new clauses in the petroleum agreements offer companies in the extractive industries an added incentive to resist corrupt practices and make clean business conduct the norm.
Peako Jenkins is a Program Assistant for the Middle East & North Africa at CIPE.