Global Policy Forum

By Charlotte Denny

Clare Short yesterday warned the oil industry there is the risk of more Brent Spar-style consumer boycotts if companies fail to join a global drive to stamp out corruption in the developing world by disclosing the payments they make to governments. Oil companies are meeting in London this week to discuss a British plan intended to promote more transparency in the industry.

The international development secretary told the Guardian that for many African countries mineral wealth had been a curse not a blessing. "If you look at the countries in Africa which have been misgoverned, corrupted and ravaged, they are almost always the ones rich in natural resources," Ms Short said.

Aid agencies estimate that billions of dollars in royalty payments have been stolen from the public coffers by corrupt government officials. In Angola, the London-based corporate watchdog Global Witness estimates, $1bn (£613m) a year has gone missing since 1997 - about one third of the government's total revenues.

Ms Short said companies operating in these countries had a responsibility to join international efforts to stamp out corruption. They should publish payments so that voters could hold their governments to account.

"There is a mounting sense since Brent Spar that powerful transnational corporations are recognising that their vulnerability lies in their reputation," she said. "Both their reputation and the quality of their investment is at stake when they work in unstable countries."

The British initiative stops short of making publishing payments a requirement for companies listed on western stock exchanges, as some campaigners have called for. However, Ms Short made it clear governments might consider enforcing compliance if companies failed to join the initiative. "We are not ruling out mandatory requirements," she said. "Many oil companies would prefer something binding so that the best are protected from being undercut by the laggards."

With a new oil rush sweeping west Africa as the US seeks alternatives to the Middle East for its energy needs, aid agencies believe increased transparency is vital to prevent more countries following Angola into an oil-fuelled spiral of conflict and corruption.

France wants the Group of Eight industrialised countries to discuss the drive for more transparency at their annual summit in Evian in July. Tony Blair and President Jacques Chirac discussed the issue at their meeting last week.

Opposition from the US, which is reluctant to rein in its powerful oil industry, is believed to have discouraged Britain and France from taking a harder line by forcing companies to comply. Yesterday Ms Short acknowledged that without US support, the initiative would founder. "We have to move multilaterally," she said.

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