Stopping the spill

Preventing corruption with new transparency laws

War is coming. The battles ahead will not be fought on land or sea. They will be waged in parliamentary sessions and cabinet meetings. Our enemy is readying for an invasion so our defenses must be impenetrable. As Lebanon slowly develops an oil and gas industry, we need weapons purpose-built to prevent the systemic corruption that is destroying this country from winning territory in this new sector. The law is our sword in this fight, so we must forge it well.

All too often, people living in Lebanon denounce the country’s perceived lawlessness, wishing it were more like Europe or the United States of America. There seems to be a notion that elected officials, corporate bigwigs and average citizens in the EU and US are more upstanding or less prone to corruption and dirty dealing. That, however, is simply false. If there is less corruption in the EU and US than there is in Lebanon, it is only because these jurisdictions implement and enforce their laws, not because people there are somehow morally superior. Building a clean hydrocarbon industry in Lebanon will not be easy, but it’s also not impossible.

To stop corruption from spoiling this sector will require the strict enforcement of well prepared and effective legislation. The evolving legal framework, as they say, looks good on paper, with the exception of a loophole that allowed two local businessmen to establish a company in Hong Kong, obscure their ownership and pre-qualify for a licensing round with no previous experience aside from finding a qualified partner. MP Joseph Maalouf’s oil and gas transparency law is welcome and should be fully approved and ready for implementation before the first exploratory wells are drilled. The challenge moving forward will be enforcement. Lebanon already has plenty of good laws, the problem is that nearly everyone (citizens, police officers, elected officials) ignores them. This cannot be allowed to happen with oil and gas. We need vicious and well-trained watchdogs both inside and outside the system.    

If hydrocarbons are found and exploitable, they will belong to every Lebanese. If and when the money comes, its management must be absolutely transparent. The government wants to create a sovereign wealth fund which is a potentially great idea. Drafting the law that will govern that fund must be a public process. Debates about how the fund should operate must be held in public, not behind closed doors. The fund law must also create an independent authority to monitor revenues in order to complement the parallel oversight work that local NGOs will be conducting. Transparency must be the cornerstone on which this industry is built. For a start, the public deserves to know why there is already a loophole allowing unqualified companies to bid for the exploitation of our potential resources. We must be prepared. We must be vigilant. We must win this time.

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