masterwordsmith-unplugged

This afternoon, I came across this excellent article in Malaysiakini which I am reposting for the benefit of those who have yet to subscribe to the site.

Petronas found wanting in global transparency study by Kuek Ser Kuang Keng



The national oil and gas company Petronas has scored below average in an international study on revenue transparency and public disclosure, which covered 44 oil and gas companies worldwide.

According to the 2011 Report on Promoting Revenue Transparency in Oil & Gas companies published by Transparency International (TI) and Revenue Watch Institute (RWI) today, Petronas performed badly in all three key sections.

These are 'Reporting on Anti-Corruption Programme', 'Organisational Disclosure' and 'Country-Level Disclosure for International Operations'.

Petronas' respective scores were 30, 38 and zero percent, compared to the average scores of 43, 65 and 16 percent.

UK's BG Group, India's Oil and Natural Gas Corporation and Norway's Organisational Disclosure and Statoil, top the three sections respectively with scores of 93, 100 and 69 percent.

Petronas was ranked in the bottom 25 percent of the 20 international and 24 national oil companies surveyed.

'Reporting on Anti-Corruption Programmes' refers to companies reporting their anti-corruption programmes according to the TI-UN Global Compact Reporting Guidance on the 10th Principle against Corruption.

'Organisational Disclosure' measures reporting of a company's organisational structure, operations, partnerships and standards used for published financial accounts.

'Country-level Disclosure for International Operations' refers to companies' reporting on meaningful country-level financial and technical data relating to their international operations.

"The report aims to promote accountability in resource-rich countries by improving awareness of the importance of revenue transparency of major oil and gas companies," said TI Malaysia chapter chairperson Paul Low in a statement.

"Oil and gas producers generate and transfer considerable funds to national and host governments. Natural resources wealth can fuel large-scale corruption and mismanagement, if not properly managed.

"Transparent and accountable management of resources and revenues is fundamental to economic development and the public good.”

Low said the report has highlighted the need for Petronas to significantly improve transparency and public disclosure.

"TI-Malaysia calls on Petronas to promptly heed and remedy the highlighted weaknesses.

"This is necessary to assure the public that national and international resources of which Petronas is custodian, are being managed with transparency, integrity and good governance in the interests of Malaysia and its citizens.”

Problematic aspects

Data for the study was based exclusively on publicly available information or documents.

The report finds that Petronas is not transparent in terms of the supply of goods and services to governments, and in procurement procedures.

It also reveals that Petronas is not a supporter of Extractive Industries Transparency Initiative (EITI), a coalition of governments, companies, civil society groups, investors and international organisations that sets a global standard for transparency in oil, gas and mining.

"The EITI offers a simple mechanism to ensure the systematic disclosure and dissemination of information on payments and revenue from mining and oil and gas. Therefore companies should join the EITI as a way to promote both corporate and government transparency," reads the report.

However, the report observes that, compared to its study in 2008, many companies have begun publishing corporate documents relevant to their anti-corruption programmes. They include Petronas which has published a new sustainability report.

"There are positive transparency trends in the oil and gas sector, although the overall
level of reporting remains unsatisfactory," concludes the report.

In a study by TI and RWI released last October which referred to governments, Malaysia, by way of Petronas, also scored below average on transparency of revenue management.