Alfian, Jakarta – Most of the countries rich in oil, gas and mineral resources ironically suffer from poverty and other social problems caused by corruption, an international anti-graft campaigner said Thursday.
Peter Eigen, founder of Transparency International and chairman of the Extractive Industries Transparency Initiative (EITI), said the extractive industry, defined as the oil, gas and mining industries, is especially prone to corruption.
"The amounts involved are extremely high. We're talking about billions of dollars," Eigen said in a lecture at the University of Indonesia.
He added that the most vulnerable areas for corruption are those involving complicated processes like production sharing agreements.
Since the extractive industries are important commodities in more than 50 developing countries, fighting corruption in this field is of the utmost importance. "One third of the developing countries' foreign debts has been caused by corruption," said Eigen.
He added that corruption also involved companies from developed countries, citing bribery as an example.
"Germany allowed its companies to commit bribery abroad. They even got tax reductions from it," said Eigen, adding that the same practice occurred in other wealthy countries. Such bribery practices, however, have been illegal in Germany since 1999.
"But it seems difficult to stop such practices. Many foreign bribery cases have not been prosecuted yet."
That reality, according to Eigen, shows that governments have lost the capacity to regulate enterprises in a globalized economy. He offered a new paradigm in which civil society could monitor business practices and hold them more accountable, particularly in extractive industries.
The lecture, titled "Transparency in Extractive Industries – The role of civil society organizations in strengthening global governance," was part of Eigen's four-day visit to Indonesia.
He also met with high-ranking officials from the Finance Ministry and the House of Representatives. The purpose of his visit was to urge the Indonesian government to adopt EITI principles to reduce corruption in extractive industries.
EITI describes itself as a coalition of governments, companies, civil society groups, investors and international organizations that support improved governance in resource-rich countries.
To implement EITI, a country must meet EITI criteria such as making transparent all payment and revenue transactions between governments and oil, gas and mining companies. Such publications must be made publicly accessible and comprehensible.
Eigen said he won support from Indonesian officials for the anti-corruption initiative. "I hope Indonesia will adopt this global initiative soon."