Resources, Conflict and Corruption - Global Witness 2001. 6 A case study The Ukranian Mafia and the...
Transcript of Resources, Conflict and Corruption - Global Witness 2001. 6 A case study The Ukranian Mafia and the...
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Our Mission
Global Witness campaigns to achieve real change by challenging established thinking on
seemingly intractable global issues. We work to highlight the links between the exploitation
of natural resources and human rights abuses, particularly where resources such as timber,
diamonds and oil are used to fund conflict.
In a speech at the Commonwealth Finance Ministers Meeting in London Chancellor of the
Exchequer Gordon Brown said:
“The recent proposal from George Soros and Global Witness to increase transparency in
extractive industries is an excellent example of how private sector companies can positively
contribute to development and poverty reduction - and following the formation of a
partnership to take this work forward at the recent world summit on sustainable
development, more governments, businesses and NGOs must sign up to this initiative and
make it work.”
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How we work
Global Witness works in countries devastated by conflict, massive corruption, and human
rights abuses. Global Witness raises issues central to these problems by carrying out our
own field investigations, often using covert techniques, revealing information that is not
available to others. Global Witness then publishes reports and lobbies policy makers for
significant and lasting change. Our experiences have shown that campaigning work such as
this creates critical “space” for citizens to begin to operate in a democratic manner, for a
civil society to grow.
Global Witness has gained the reputation of an organization with expertise in accountability
and corporate transparency in natural resource management. Our work in Angola has set a
precedent; through identifying a conflict that was made possible by the control and profit
from resources, not about a conflict of ideologies.
Global Witness has been joint nominated for the 2003 Nobel Peace Prize for this work in
Angola and other countries globally, specifically for the pioneering and groundbreaking work
on conflict diamonds.
In the article “Catching The Timber Smugglers On Camera” from Time Magazine in November
1997, Mairi Brahim said that Global Witness were
“…undercover sleuths as daring as James Bond and as tenacious as Sherlock Holmes.”
“The diamond wars were the secret of the diamond trade until, quite suddenly, they were
not. It seemed to happen in an instant, as if a curtain had been ripped aside and there was
the diamond business, spattered with blood, sorting through the goods. Its accuser was a
little-known group called Global Witness.”
Diamond: The History of a Cold-Blooded Love Affair. Matthew Hart. Fourth Estate, London. 2002.
Illegal logging operations on the Thai/Cambodia
border. Global Witness covert operation 1995.
Eighty log-truck traffic jam in Vietnam, fully loaded with
Cambodian logs probably sourced from Snuol Wildlife
Sanctuary. Global Witness investigation 1998.
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Our successes: conflict timber and illegal logging
The Khmer Rouge took control of Cambodia in 1975. Under their
rule, between 1 and 2 million people were killed or died of
exhaustion and starvation. They were ousted from power in
1979 and took to the forests, from where they fought their civil
war with the then government. During this war, which ran from
1979 to 1998, and following the depletion of gems as a source
of revenue, the Khmer Rouge used timber logged from
Cambodia’s only remaining economically valuable natural
resource, its forests, to fund their war effort. Global Witness
calculated that this trade was earning the Khmer Rouge
between $10-20 million per month.
Global Witness, which then consisted of only two full-time and
one part-time staff members, carried out two field investigations
in January and May 1995, which yielded an enormous quantity
of information. This was followed by lobbying trips throughout
Europe and the US, and a release of information to the South
East Asian press. On 26 May 1995 the Thai government bowed
to the international pressure that had been generated and
closed the Thai/Cambodia border to the timber trade, the
principal route of the Khmer Rouge trade. Within one year the
bankrupted Khmer Rouge defected to the government side; we
were told by the intelligence services that the single biggest
contributory factor was that they could not economically
maintain their people or their war.
Global Witness continues its work in Cambodia, now
investigating the continued destruction of its forests and the
diversion of revenues away from the population at large towards
a corrupt elite. We are also the official monitor of a project set
up by the Royal Government of Cambodia and Cambodia’s
international donors (The UN Development Program and the Food and Agriculture
Organisation), charged with investigating instances of illegal logging in Cambodia’s forest
sector. In June 2002, Global Witness succeeded in getting the Cambodian Government to
cancel the logging contract of a prominent logging company long guilty of illegal logging.
“A small British pressure group that almost single-handedly took on the apparently
intractable problem of Cambodia’s disappearing forests appears to have come very close to
achieving that aim”
Bristow J., 1996, Mighty Mouse, BBC Wildlife Magazine Vol14, No. 9, pp60.
Soldier at Koh Kong Log Rest Area, Cambodia.
Global Witness Investigation 1997.
Evidence of illegally felled logs, Dong Mar log
rest area, Cambodia January 2001.
In an attempt to prevent Global Witness from
documenting illegal logging, a bridge is destroyed
by loggers. This bridge was also used by local
communities. Cameroon 2001.
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A case study The Ukranian Mafia and the links between timber and arms
The Global Witness Liberia Campaign investigates and exposes the role of the Liberian
logging industry in financing and facilitating Liberia’s humanitarian disaster and West
African regional destabilization. Having funded the notoriously brutal Revolutionary United
Front (RUF) rebels during Sierra Leone’s civil war, Liberian President Charles Taylor and
many Liberian logging companies continue to violate UN sanctions by financing illegal arms
shipments, funding parastatal militias and threatening the security of neighbouring states.
Businesses involved in extracting natural resources from developing countries are often
found to be closely linked to the funding of conflicts and terrorists and the provision of arms
to governments or rebel groups in the countries in which they operate.
This chart on page 7 shows how the timber and diamond trades in Liberia are closely
associated with money laundering, state looting and the provision of arms to Liberia, in
contravention of a UN arms embargo, and terrorist groups such as al Qaeda.
Leonid Minin, purported head of
Ukranian Mafia on his arrest for
illegal arms trafficking to West Africa.
Italy 2000.
Oriental Timber Company (OTC) logging road, Gerbia County, Liberia July 2001.
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Involved in conflict diamonds trade
Negotiating in arms dealDiamonds
Diamonds
Diamonds
Arms
Arms
International arrest
warrant for
Money laundering
Drugsal Qaeda
Leased airplanes to
Taliban
Sold airplanes to
Victor BoutDiamonds and arms dealer
Business partnerChairman
Chairman
Close associateprovides hardware for
Gus Kouwenhoven, one of the most influential businessmen in Liberia
Dutch
Timber companies
Arranged payment for $500,000of arms of Liberia
Arranged arms deal to Liberia(and RUF, Sudan, Burkino Faso, DRC)
Borneo Java Pts LtdSingapore
Oriental Timber CompanyLiberia
Subsidiary of
Exotic Tropical Timber Enterprise
Liberian
Involved in State looting
President Charles TaylorLiberia
Sanjivan RuprahDiamonds dealer
Imprisoned for drugspossession
Limad AGSwiss
Owner
Evidence of directpayments to
Business associate
Leonid MininReputed head of Ukranian Mafia
Involved in diamonds trade$500,000 of diamonds in
possession when arrested
China Aerospace Science and Technology Corporation
Arranged and financed armsdeal to Côte d’Ivoire. Arms then
transported to Liberia
Other companies
As with much resource extraction in conflict and post conflict areas, the tropical timber
trade has been the focus of criminal gangs. The complex analysis of inter-relationships in
our campaigns, detailed in the above graph, is based on results from Global Witness’ use of
i2 Limited’s award-winning software, which is used as standard by law enforcement and
intelligence agencies worldwide. The software allows organisations to undertake complex
investigations involving huge and varied datasets, providing visualisation and analysis tools,
which are used by 1500 organisations in 90 countries. i2 Limited has very generously
supplied this software to Global Witness, along with intensive support and consultancy.
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Our successes: oil and transparency
Central to the issue of state looting in countries like Angola is a glaring discrepancy:
the progressive impoverishment of a country that has gone hand-in-hand with rising
oil revenues.
The “paradox of plenty” means that although Angola contains natural resources of
potentially enormous value, it is the worst place in the world to be a child. Despite earning
around US$3-5 billon from oil last year (an estimated 87% of state revenue), social and
economic development in Angola has continued to deteriorate. One child now dies of
preventable diseases and malnutrition every three minutes, that is 480 every day. Three-
quarters of the population are forced to survive in absolute poverty on less than one dollar
a day; one in three Angolan children die before the age of five. Life expectancy is a mere
45 years; and about 3.1 million civilians have had to flee their homes since the war resumed
in January 1998.
In December 1999, Global Witness published “A Crude Awakening” - an exposé of
corruption in Angola and an examination of the complicity of the oil and banking industries
in the plundering of state assets. The report sought to challenge the common perception
that the war was solely responsible for all the ills to be found in Angola and provided
one of the first significant insights into those responsible for the mismanagement of
Angola’s wealth.
Meanwhile, the failure of the Angolan state to provide for its citizens has been blamed on
the then state of emergency. The death of the rebel group National Union for the Total
Independence of Angola (UNITA) leader Jonas Savimbi in March 2002 may have heralded
What could the billions in missing
revenues do for war ravaged Angolan
cities like Kuito?
Ordinary Angolans suffer absolute poverty despite the county’s massive
oil revenues.
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the end to that excuse; the international community now has this opportunity to call the
Angolan Government to account over its use of oil revenues. Rising oil revenues have been
diverted straight into parallel budgets of the shadow state. Information emerging from
economists involved in analysis of Angola’s oil sector suggests that up to US$1.4 billion in
revenues - comprising almost a third of state revenue - was unaccounted for in 2001. By
contrast, the UN barely managed to scrape together US$200 million to feed the one million
internally displaced Angolans dependent on international food aid.
Relying on companies to disclose specific information voluntarily has so far failed because
they fear being undermined by less scrupulous competitors and government pressure. The
Global Witness oil campaign calls for mandatory disclosure so that citizens in developing
countries are able to call their governments to account over management of resource
revenue. The “Publish What You Pay” campaign, launched by George Soros and others in
June 2002, has moved the debate on apace, leading to a dialogue within the United
Kingdom between Global Witness, other NGOs, and the leaders of the British Government
who are keen to champion this initiative globally. Global Witness will be extending this
campaign beyond Angola, detailing other failures of transparency, to increase the pressure
on international policy makers and regulators.
“London-based Global Witness, which launched the influential campaign against the trade in
conflict diamonds in 1998, builds on information exposed in the “Angolagate” arms-for-oil
and influence-peddling scandal in France to describe a hidden world of money and
influence that reaches across Europe to the US, Israel and Russia.”
Report on the Angolan oil industry urges freezing of stolen assets. Financial Times.
25 March 2002.
Kibumba refugee camp in Goma, Democratic Republic of Congo.
Martin Adler, Panos Pictures.
A government held enclave in a rebel
controlled territory is deluged by
refugees, Kuito, Angola. Teun Voeten,
Panos Pictures.
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Our successes:conflict diamonds
Diamonds have played a destructive role in several of the most devastating wars in Africa. In
Angola during the 1990s, the civil war was primarily financed by natural resources - oil (on
the government side) and diamonds (the rebel group UNITA). The war cost the lives of at
least 500,000 Angolans, with thousands more maimed due to land mines - a continuing
blight for the population. Economic chaos suffered by the majority of the population has
resulted in the country’s steep decline as defined by all internationally accepted social
indicators.
Diamonds have helped finance, train and equip the Revolutionary United Front in Sierra
Leone, have helped fund the dictatorial regime in Liberia, perpetuated the conflict in the
Democratic Republic of the Congo, financed UNITA rebels in Angola to the sum of US$3.7
billion, and have helped finance political instability and repression in Zimbabwe. The trade in
diamonds is also now being investigated by Global Witness to determine their role in the
financing of terrorism and organized crime, along with governments around the world.
In December 1998, Global Witness published the report “A Rough Trade: The Role of
Companies and Governments in the Angolan Conflict”. The report exposed the role of
diamonds in funding and perpetuating the civil war in Angola. It also established that the
global diamond industry, trading and marketing system, perpetuated conflicts through the
sale of rough diamonds. This was also exacerbated by the failure of UN member states to
implement UN Security Council resolutions banning the trade in diamonds out of countries
suffering conflict (a criticism also communicated by Global Witness during an unofficial
briefing of the United Nations Security Council). The report helped to prompt the setting up
of expert panels to prevent this failure from being repeated elsewhere. The report, and the
Angolan security forces guarding a government controlled diamond
mine at Saurimo. Global Witness investigation 2001.
Washing gravel for diamonds in the Makeni
River, Sierra Leone, Global Witness
investigation 2000.
continuation of war, led to the international movement to eradicate conflict diamonds,
known as the Kimberley Process; comprising of international NGOs, governments and
organisations such as the World Bank and the UN.
The Kimberley Process is a government run import and export control regime and will
launch on 1 January 2003. For the first time in its one thousand year history the diamond
trade will be subject to an international control mechanism. In just over 3 years a US$56
billion a year industry has been forced to face up to its significant international
responsibilities or be prepared to face the significant consequences of non-compliance. In
that time UNITA have virtually disbanded, and Charles Taylor’s regime in Liberia is teetering
on the edge of survival.
On 19 March 2002, Global Witness was jointly nominated with Partnership Africa Canada
(PAC) for the 2003 Nobel Peace Prize. The nomination was made by United States
Congressmen Tony P Hall and Frank R Wolf, and by US Senator Patrick Leahy, for the
efforts devoted to ending the trade in conflict diamonds.
In the end, our work is not about an award, and it is not about agreements. It is about
putting an end to the horrific wars and regional instability fuelled by the quest for cheap and
exploitable natural resources. It is about ending cycles of endemic and systematic
corruption that helps contribute to humanitarian suffering, which are made possible by the
lack of transparency endemic within the diamond trade.
Land mine victims learn how to walk with artificial limbs. Refugee camp in Kuito, Angola. Teun Veoten, Panos Pictures.
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Our vision
We believe that it is possible for resource revenue to be used to help promote peaceful and
sustainable development, rather than being, as is too often the case, a driving force for
conflict and state looting. The widespread abuse of human rights, environmental
destruction, poverty and economic insecurity that are part of the landscape of modern day
conflict are, in many cases, intricately linked to resource extraction.
Far from being isolated examples, our current campaigns and exposés in the oil, diamond
and timber business have highlighted a much wider problem, where political and economic
disorder brought about by conflict have provided the cover for the wholesale looting of state
assets by combatants and their economic allies. Perhaps the most shocking example of this
uncovered by Global Witness was the “Million Metre Deal”, negotiated by the battlefield
enemies in Cambodia (the Khmer Rouge and the Cambodian Government) to export over 1
million cubic metres of tropical timber (to yield an estimated US$ 90 million for the Khmer
Rouge) from rebel-held areas for their mutual enrichment under the “fog of war”. It is a
sobering thought that the elites of both sides in this civil war tried to enrich themselves
through this deal, whilst their troops were dying on the battlefield. Global Witness prevented
this deal by bringing evidence of it to Cambodia’s international donors; the International
Monetary Fund, the Asian Development Bank and the World Bank.
Natural resources that should be promoting equitable development, and income that should
help eradicate poverty are misappropriated and mismanaged. Rising revenues from
resource extraction have generally gone hand-in-hand with declining indicators of human
development. Recent analyses by the World Bank identify a clear statistical relationship
between states with dependency on primary extractive industries and unaccountable state
institutions that are linked to poverty and civil conflict. This “paradox of plenty” indicates,
for example, that states dependent on primary resource exports are over twenty times more
likely to suffer a civil war than non-dependent countries. Oil, gas and mining industries are
important in over 50 developing countries, which are home to some 3.5 billion people and
where 1.5 billion of those people live on less than $2 per day. Twelve of the world’s 25 most
mineral-dependent states and six of the world’s most oil-dependent states are classified by
the World Bank as Highly Indebted Poor Countries with amongst the world’s worst Human
Development Indicators.
At the moment, natural resources can be accessed and traded with almost no reference to
their link with instability and conflict. International businesses are often unable and
unwilling to make a stand. As British Petroleum found out to its cost in Angola, any
company prepared to tackle vested interests in a conflict area may be threatened with
having its concessions terminated and awarded to less scrupulous competitors. Political
leadership has also been lacking as northern governments have sought to appease the
ruling elite to avoid harming national business interests.
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Although there is no single solution to these problems, it is clear that a more joined-up
international approach to the way that companies access and manage the extraction of
resources worldwide is necessary. Our work driving the Kimberley Process (to eradicate
conflict and illicit diamonds from the world diamond trade) has indicated the enormous
institutional resources and time necessary to achieve effective international controls.
The need not to reinvent the wheel every time a resource is identified in funding conflict,
and the pressing time concerns - the Kimberley Process comes after three years of
gruelling negotiations and after billions of dollars in revenues funnelled to rebel groups -
argues for a move from targeting individual countries and commodity streams towards a
cohesive framework of measures that can act in a preventative rather than reactive way
to existing problems.
Global Witness is in a unique position to drive global dialogue on such issues and to lever
the individual lessons and specific policy recommendations from its existing in-country
campaigns; to promote the creation of a flexible international policy toolkit to address the
role of natural resources in funding conflict and corruption. Such a toolkit may involve smart
sanctions, chain-of-custody monitoring, appropriate disclosure regulations and registers of
interests as well as a series of strategic legal actions to identify and sanction malfeasants
and to enshrine the rule of law and good governance in the resource sector.
At a time when it is increasingly apparent that dysfunctional states can become havens for
terrorists and money laundering, this approach is an important and long-overdue first step
in addressing these global problems, as well as strengthening governance and combating
poverty in many of the world’s poorest and least developed countries.
In organisational terms this translates into a need to increase Global Witness’ capacity. We
believe that we have the opportunity and ability to begin to address the problems of
resource extraction in a systematic and effective manner. We have assembled a team of
researchers and campaigners to extend the case studies and lessons-learnt from our
existing campaigns towards building a coherent strategy to break the link between resource
exploitation, conflict and corruption. The sheer scale of revenues being diverted away from
the citizens of countries like Angola totals tens of billions of dollars; Global Witness’ annual
budget for 2001 was US$1.8 million.
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Press coverage
“Going Underground” By John Sweeney
The Observer (London) 26 March 2000
“The people who did for Pol Pot were not forces of law and order, still less the diplomats of
the international community. They were the tree detectives of Global Witness…”
“Global Witness closed down the illegal logging trade between western Cambodia…thanks
to its detailed and accurate reporting. The KR [Khmer Rouge] slowly began to run out of
money to fund its grisly guerrilla campaign against the Phnom Penh government.”
“How a little band of London activists forced the diamond trade to confront the blood on its
hands” By Mary Braid and Stephen Castle
The Independent (London) 24 July 2000
The diamond industry is facing obliteration by consumer power similar to that which
destroyed the fur trade. Last week the $7bn-a-year global industry, apparently persuaded
that it was on the edge of the abyss, capitulated to campaigners’ demands for fundamental
changes to end the trade in stones illegally mined in African war zones and then used to
bankroll conflicts in which children lose their limbs and tens of thousands die.”
“Global Witness has highlighted the fact that wars need to be paid for, and that in poverty-
ridden but mineral-rich countries, rebels and governments fight for control of diamond fields
because that can determine who wins the war.”
“It is estimated that the stones earned UNITA $3.7bn between 1992-1997, allowing it to
rearm while it spoke of peace, and eventually to wage war again.”
“Global Witness collected evidence to convince governments, the United Nations and the
public of what was going on. And then it lobbied ferociously. At the same time it was forging
alliances with other non-governmental organisations (NGOs) working in Angola. Very quickly
a global campaign force capable of taking on a global industry emerged.”
“Angola Urged to Trace Its Revenue From Oil” By Rachel L Swarns
The New York Times 14th May 2002
“Angola is sub-Saharan Africa’s second-largest oil producer and the seventh-largest
supplier of crude oil to the United States. Yet 70 percent of the people live in poverty and
the hardships have only worsened as oil exports have surged, according to the United
Nations and advocacy group Global Witness.”
“…Global Witness says that $770 million in tax revenue is missing. It cited the Ministry of
Petroleum as saying that the government was paid $3.8 billion in taxes in 2000 while the
Finance Ministry reported that only $3 billion was received.”
“…the growing interest in Angolan oil has made some Western officials reluctant to press for
greater accountability because they fear risking access to lucrative oil contracts.”
“To Prevent Conflicts, Look to Commodities Like Diamonds” By Tina Rosenberg
The New York Times 15 July 2002
“The diamond embargo is the most successful example to date of blocking a rebel group’s
financing. In 1998, Global Witness, a British nongovernmental group, began documenting
the billions of dollars that Mr. Savimbi made from diamonds, and pushing for global controls.”
global witness
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