Gavin Hayman, campaigner with Global Witness, considers some of the lessons from the organisation's report on the exploitation of the Angolan civil war to loot state revenues from the oil industry. The missing money appears to be more than the entire international humanitarian relief effort and he argues that in countries such as Angola, transparency is necessary if international relief efforts are not to be endlessly undermined.

Global Witness’ recent report on revenue misappropriation in the Angolan oil sector, entitled "All the Presidents’ Men", argues that the political and economic disorder from the Angolan civil war has been deliberately exploited by an international elite to loot the state of its lucrative oil revenues.

The facts present a relatively stark case to the international community: at least $1 billion -- about a third of Angola’s total budget -- went missing last year. This missing money is about five times the $200 million that the United Nations barely managed to scrape together that year to feed one million internally displaced people dependent on international food aid.

Revenues from oil make up an estimated 90 percent of Angolan state income, yet they remain opaque. The government issues no clear figures and state oil companies remain unaudited and unaccountable.

This lack of fiscal probity is aided and abetted by major international oil companies -- principally Chevron-Texaco and TotalFinaElf -- which refuse to publish any information on their own payments to the state, which constitute the majority of the government’s income.

This total absence of information means that ordinary Angolan citizens are deliberately prevented from calling their government to account over the management of oil revenues.

As a result, state funds are easily misappropriated. One of the main methods detailed in the report are over-priced arms deals which involve enormous kickbacks to top officials, such as those uncovered in France in the Angolagate arms-to-Angola scandal at the end of 2000.

Computer records connected to the case suggest that the Paris-based Angolan ambassador without portfolio, Elísio de Figueiredo, earned $18 million in commission from such deals.

These payments were subsequently described as being due to the "operational logic" in Angola.

Such "operational logic" was then extended to a virtually privatised military procurement process, which meant that every item consumed in the war against UNITA rebels served to earn profits for top government officials.

Not only is Angola’s current oil wealth being embezzled, but much of the government’s future income is also being mortgaged through a policy of arranging oil-backed loans, in which up-front payments at high rates are arranged to be paid for by future oil cargoes.

A trawl through a number of international financial databases suggests that the cash advanced amounted to about $3 billion in 2001. As the money is arranged and disbursed offshore, these loans have allowed the ruling elite create a parallel set of finances to be arranged outside of any scrutiny by the people of Angola.

As long as the interest is paid, it appears that the banking syndicates involved -- including several members of the Wolfsberg anti-money laundering group -- are not interested in where this money goes or what it is spent on. It is, of course, impossible to find this information out in Angola.

In short, Global Witness would argue that transparency over the government oil revenues is now essential for the reconstruction and development of Angola and to deliver economic benefits from oil to its real owners, ordinary Angolan citizens. If oil earns the Angolan government some $3-5 billion each year, why can’t it feed, shelter and educate its own people?

Simply blaming the failures of the state on the conflict is simplistic because the conflict itself became an excuse for massive public losses and private gains.

Thus, transparency over natural resource revenues is necessary wherever natural resources provide a major proportion of state income, where corruption associated with state income is of concern, and where companies are not fully transparent about their payments to national governments, such as in Azerbaijan, Burma, Chad, Cambodia, Congo Republic, Democratic Republic of Congo, Equatorial Guinea, Gabon, Indonesia, Kazakhstan, Nigeria, Sudan and Venezuela.

However, the Angolan government and most oil companies have generally reacted badly to this request. Oil companies have sought to argue, as Exxon-Mobil boss Lee Raymond did in an interview with the Financial Times, that it is not their duty to tell a government how to spend its money and that such payments are commercially confidential.

Such statements are disingenuous and, perhaps, a deliberate misunderstanding of the issues involved. Transparent companies are not telling the government what to spend their money on, they are merely telling the real owners (the people, for whom the state holds those resources in trust) what they are paying for their resources.

Additionally, relationships between companies may be commercially confidential in law but payments to the state would not be covered by this formula. Oil companies routinely provide information on such payments in Britain, the United States and every developed country in the world, so why should payments to Angola, or any other developing country, be any different or be confidential?

Clearly, top government officials have a lot to lose. The rabid response by Sonangol’s director to BP’s announcement that it will publish what it pays to the Angolan government was ample demonstration of the vested interests concerned.

Sonangol’s threats to BP show that relying on companies to become voluntarily transparent -- despite their high-sounding mission corporate statements -- is clearly problematic. Any company doing the right thing may face having its concession terminated and reassigned to a less scrupulous competitor.

Fortunately, there is a simple way to level the playing field: publicly-traded resource companies should be required by the national securities regulators to publish a breakdown of all royalties, fees and other payments made for the products of every country in which they operate.

Most securities regulators such as the U.S. Securities and Exchange Commission or Britain's Listing Authority appear to have powers to force disclosure of information in the public interest, so there seems little reason for delay.

While the Angolan government and the majority of the oil companies stall on transparency, one Angolan child dies every three minutes from preventable causes.

Further, it is vital that international policy as developed by the Group of Eight, the Organisation for economic Co-operation and Development the World Summit for Sustainable Development and the New Economic Partnership for African Development all move to end the practice of secret deals between resource companies and unaccountable governments by setting clear rules for fiscal transparency and probity.

British Prime Minister Tony Blair's announcement at the World Summit on Sustainable Development in South Africa in September that the UK would convene a focussed international dialogue between governments, companies and NGOs on this issue was a very welcome development. The challenge to the UK Government is now to convene an effective coalition for change.

These rules should be given teeth by making risk insurance and export credit financing conditional on compliance.

Only when we see transparent and accountable corporate engagement will we see resource exploitation in such countries benefiting their true owners rather than unaccountable elites.

• "All the Presidents’ Men. The Devastating Story of Oil and Banking in Angola’s Privatised War" is available at www.globalwitness.org in English, Portuguese and French.

• Global Witness is a member of the Publish What You Pay coalition of NGOs pushing for regulations to promote revenue transparency by transnational resource extraction companies. See www.publishwhatyoupay.org.