Oil and gas industry has the most bribery prosecutions

"I am convinced that the SFO must focus on top level fraud," says David Green, the director of the Serious Fraud Office.

The oil and gas industry has had the highest number of prosecutions for bribery in the UK compared to any other sector in recent years.

Five (almost 20%) of the 26 cases of bribery and graft prosecuted since 2008 were in the oil and gas sector. Other top offending sectors were construction, medical goods and insurance companies, which each experienced three prosecutions.

In one case, involving Andrew Rybak, Ronald Saunders, Philip Hammond and Barry Smith, confidential information was supplied to bidders and held by companies who were acting as procurement agents for the projects in the oil and gas sector. Some defendants were engaged by the procurement agents and had access to information which they then passed on to targeted bidding companies, who either made, or agreed to make, corrupt payments for the information, disguised as “consultancy services".

These are established UK-based companies, dealing with some of the larger projects in the sector. The procurement companies are not implicated. The SFO says these were “appalled" at the “apparent blatant disregard shown by the defendants" for the confidentiality of the information.

The figures come out of research published in Ernst and Young's UK Bribery Digest July update.

Another case involved operations in Nigeria, where Shell, Total and ENI operate, an area ranked 143 out of 182 in Transparency International's corruption perception index. Another area implicated is BP's patch in Angola, ranked 168.

Other names mentioned are: Aftab Noor al-Hassan, Riad El-Taher, MW Kellogg Limited (MWKL) and the Weir Group plc.

The SFO report shows that many cases rely on whistleblowers in order to come to light. Others, involving the Iraq oil-for-food scandal, relied on a United Nations independent enquiry committee.

Jonathan Middup, UK Head of Ernst & Young’s Anti-Bribery Corruption team, criticises the Serious Fraud Office in the report, for its low “appetite for enforcement".

There have been no prosecutions under the Bribery Act since it came into force just over a year ago, as an attempt to ban what are called “facilitation payments", although there have been five completed cases of bribery and corruption against UK companies under the old laws since the beginning of the year.

A survey published in May by Ernst & Young found that “more than half of UK executives would not rule out unethical activities to survive a downturn despite stricter bribery laws". These astonishing confessions were obtained voluntarily and anonymously.

In this worrying climate, the response of David Green, the director of the SFO, was to tell members of the 6th Annual European Forum on Anti-Corruption in June that “the SFO’s current role and purpose is unclear to some and needs restating". He added: "I am convinced that the SFO must focus on top level fraud."

While the permanent staff of British oil companies have not themselves been implicated in the enquiries and prosecutions, it is third parties in developing countries and temporary staff who have found themselves cast as defendants. Most oil companies have procedures to identify and eradicate corrupt practices, but they are sometimes notoriously hard to spot, as testified to by the case of Andrew Rybak, Ronald Saunders, Philip Hammond and Barry Smith.

The Government fails to stand up for the Arctic environment

On Friday Greenpeace's director Kumi Naidoo was apprehended while trying to board a drilling rig off the coast of Greenland, in order to stop Cairn Energy drilling for oil and gas in this critically sensitive environment.

Speaking before he set out to scale the platform, Mr Naidoo, said: "The Arctic oil rush is such a serious threat to the climate and to this beautiful fragile environment that I felt Greenpeace had no choice to return, so I volunteered to do it myself."

Greenpeace feels compelled to act because the UK Government won't.

Last week, Energy Minister Charles Hendry said in public for the first time what had thus far only been said in private - that it is UK policy to support drilling for oil and gas in the Arctic.

Since when did this become UK policy? And why has the House of Commons never debated it?

Hendry told an energy conference that Arctic drilling is "entirely legitimate" and that, "given the ability to carry out this work safely, this should be part of the work of the industry".

Energy and mineral companies are taking a great deal of interest in the area now that climate change has caused the ice cap over the Arctic Ocean to melt during the summer months more than ever before in recent history, thereby easing access to the seabed.

A report issued by the US Geological Survey in 2009 estimated that the Arctic contains as much as 13% of the world's remaining undiscovered oil and 30% of its undiscovered gas.

Of course, this is just speculation, but the melting ice has exposed something else: an absence of regulation to protect this fragile and beautiful environment.

Britain, not being an Arctic state, nevertheless has clear interests in the region. It is an observer on the Arctic Council, along with France, Germany, Netherlands, Poland and Spain.

The Council's full members are Canada, Denmark (representing also Greenland and Faroe Islands), Finland, Iceland, Norway, Russia, Sweden and the USA. It has several working groups which investigate the environmental and social aspects of developing the area.

But the Council is not a legally empowered body. It does not have the muscle to veto the actions of members, who in turn are not obliged to act in accordance with its deliberations.

In fact, it is a talk shop, which gives the appearance of collaboration between interested parties, while behind the scenes they frantically scurry to gain competitive advantage over access to the trillions of dollars of riches on the continental shelves surrounding the ocean. "There is in fact no strong consensus between the states," comments Anna Galkina, a researcher on this issue at think-tank Platform.

British companies BP, Shell and Cairn Energy are amongst those behind this struggle, which has recently seen BP spectacularly falling out with Russian giant Rosneft despite heavy UK government lobbying on its behalf.

BP's troubles seem all the more ironic when you know that on 14 January 2011 BP CEO Bob Dudley and Eduard Khudainatov, CEO of the Russian state oil giant Rosneft, following a meeting with Vladimir Putin, signed their original agreement in the presence of our Energy and Climate Change Secretary Chris Huhne.

In the absence of any regulatory body capable of controlling this oil and gas rush, it has fallen to NGOs to try and put a brake on exploration.

Cairn Energy is at the forefront of the rush and is about to commence drilling off the Greenland coast. Twice this year Greenpeace has attempted to stop them with direct action, and in response Cairn has just obtained an injunction preventing them from boarding their rigs.

Hendry's phrase, "the ability to carry out this work safely", cannot be tested in public because Cairn refuses to publish its Oil Spill Response Plan despite a petition signed by almost 50,000 people and a highly unusual admonition by a judge in Amsterdam, who said that doing so would make absolute sense, even to the company concerned, if it really wanted to maximise the chances of preventing an accident.

I am putting in an FOI request to find out if Hendry, or anyone at DECC, had been shown Cairn's Oil Spill Response Plan for its Greenland operation before coming out with such unequivocal support. Because if he has seen it, why can't we all? And if he hasn't, how can he so confidently support the company?

Or has he forgotten BP's rather costly adventure in the Gulf of Mexico last year?

The US National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling concluded in its final report in January 2011 that "detailed geological and environmental information does not exist for the Arctic exploration areas and industry and support infrastructures are least developed, or absent

Lord Howell, at the Foreign and Commonwealth Office, is one minister heavily responsible for UK policy on the Arctic, and is involved in lobbying to support British oil companies' commercial interests abroad.

Yet the British Parliament has not had a chance to debate and decide this policy. The only time it has come remotely near to being discussed was in a poorly attended and very short debate in the House of Lords on the 6th December 2010, led at 8.02pm by Lord Jay.

There, Howell admitted that besides ostensibly protecting the Arctic environment, "our second aim is to protect crucial UK energy supplies from the region and promote UK business interests. Thirdly, we want to ensure access to fisheries and transport routes in the region, including the ones that may open up in the future-not just in summer but in winter."

Only then did he say that a fourth aim is "to promote wider UK Government objectives with regard to sustainable development, environmental protection and climate change".

It's not that he is unaware of the fact that all of this exploration is only possible because of climate change. He even commented on "the irony that the melting of the ice means that all sorts of possibilities open up for access to the huge hydrocarbon resources in the region." But he only talked of "how" - not whether - these "colossal reserves" might "be got out economically and in line with all the other restraints that the world wants."

I asked the Department for Energy and Climate Change if they would clarify their position. This is what I received in response: "regulation of Cairn's drilling proposals in the Arctic is a matter for the Greenland Government. As an observer in the Arctic Council, the UK has contributed to the development of the guidelines recently agreed by the Council on oil and gas, and supports robust provisions on environmental protection and sustainability in Arctic waters.

“More generally, the UK is participating in the G20 initiative to promote best practice and regulatory standards, to ensure that oil and gas activities carried out anywhere in the world align with industry best practice and are managed so as to ensure minimum impacts to the environment.”

Nothing about climate change.

The Arctic Council's guidelines on exploration were in fact agreed in 2009. They include acknowledgement of the principles of "polluter pays" and "the precautionary principle", and they recognise that the area "has high sensitivity to oil spill impacts and the least capacity for natural recovery".

Given the overwhelming threat of climate change, many NGOs, including Greenpeace and WWF, are demanding that no fossil fuels be extracted from the area. They are calling for the Arctic to become a scientific reserve, as the Antarctic is, and left alone.

There is, sadly, little chance of this. An important discussion document published in Washington in January this year - The Shared Future: A Report of the Aspen Institute Commission On Arctic Climate Change - supposedly takes "a hard and new look at climate change in the Arctic".

But does it call for a moratorium and a ban on drilling in the area? No. Its main recommendation is that "governance in the Arctic marine environment, which is determined by domestic and international laws and agreements, including the Law of the Sea, should be sustained and strengthen by a new conservation and sustainable development plan using an ecosystem-based management approach".

Amongst its 10 principles of Arctic governance is number 4: "Avoid exacerbating changes that may be difficult or impossible to reverse in temperature, sea-ice extent, pH and other key physical, chemical and biological ecosystem parameters."

It's hard to see how any exploration can go on in such harsh conditions which do not contain the risk of doing so. But the document falls short of admitting this.

Instead, it says that Arctic governments should take immediate steps to begin developing an Arctic Marine Conservation and Sustainable Development Plan by 2012, which "should also open the door to a new model of natural resource governance in the Arctic that promotes an ethic of stewardship and multinational use of best management practices".

Fine words. But while energy companies can't even publish their safety plans there is fat chance of this happening.

Diana Wallis, Vice President of the European Parliament and MEP for Yorkshire and the Humber, and the Green Party's Caroline Lucas are alone amongst legislators in pushing for stronger regulation. Wallis' website allows people to vote on whether there should be a moratorium on oil exploration in the Arctic. Two thirds of voters there think there should be.

What she and I want to know is: why isn't the British Government standing up for the Arctic? Why is it caving into commercial interests?

And why can't there be a proper debate in the House of Commons on this crucial issue?

Energy companies spend $500 million to block climate legislation

Research from a Washington-based pressure group, The Center for American Progress Action Fund, has uncovered the extent to which energy companies and their supporters have lobbied to dissuade American politicians from pursuing climate change legislation.

It is the lack of progress in America which is having a knock on effect in the world's climate change negotiations.

The report, Dirty Money, says the $500 million figure is likely to be an underestimate, since company donations to trade associations are kept secret and a recent Supreme Court decision allows corporations to spend money to defeat electoral candidates without any disclosure or reporting requirements.

How is the money made up?

Since 2009, when the House of Representatives began debating the American Clean Energy and Security Bill, the entire electric utility industry spent over $264 million on lobbying alone through the first half of 2010.

Oil and gas interests spent a record $175 million lobbying in 2009, a 30% increase on the previous year, and have already spent $75 million in 2010.

The oil, gas and coal industries together have spent over $2 billion lobbying Congress since 1999. These three industries spent $543 million on lobbying in 2009 and the first half of 2010.

To put this in some perspective, alternative energy companies spent less than $32 million on lobbying in 2009 and $14.8 million this year.

Who are the biggest spenders? They are in order:

1. ExxonMobil
2. ConocoPhillips
3. Chevron
4. BP
5. Koch Industries – who also bankroll the right wing Tea Party
6. Shell
7. Southern Company, a major utility with significant coal-fired power generation.
8. American Electric Power.

The largest trade association working to defeat clean energy and global warming legislation is the Chamber of Commerce, which spent almost $190 million during the last year and a half.

The mystery is, why they spend so much money stopping the inevitable, when others in business are grasping the opportunities of the future.

On the other side...

These businesses who are embracing the future are not your usual tree huggers any more: recently, Marius Kloppers, the Australia-based BHP Billiton chief executive, called for a carbon tax. BHPBilliton, one of the largest mining companies in the world, with revenues of $10 billion in its coal business.

The World Wildlife Fund's Climate Saver program engages companies to make voluntary binding commitments to reduce their own emissions. It includes cement-maker LaFarge, IBM, Coca-Cola, and drug-maker Novo Nordisk.

The U.S. Climate Action Partnership calls for climate legislation with a membership that includes Duke Energy, PG&E, Johnson & Johnson, Dow Chemical, Ford Motor Company, DuPont, and General Electric.

Walmart's call to its supply chain to report and reduce their greenhouse gas emissions has catalyzed action in their 60,000-member supplier base. They have also, for example, just announced a project to cover the roofs of many of their stores with thin film PVs.

And there are plenty of examples in the UK, who are working in partnership with the Carbon Trust.

It's not surprising then, that environmental campaigners are increasingly targeting these few climate-change denying, oil-junkie, companies who are holding back progress and safety for the rest of the world.