The Secret World of Oil book exposes the dark side of oil
The new book tries to shed light on some of the industry's darker corners. Review by Derek Brower
Oil is the world's most traded commodity. Getting it out of the ground, shipping it around the world and making money from the process is a dirty business, in which middlemen grease the palms of tyrants and lobbyists work behind the scenes to win political protection for the bad guys. If you want to trade oil, you need to leave your morals out of it.
That, at least, is the premise of The Secret World of Oil, a new book by journalist Ken Silverstein, a fellow at the Edmond J Safra Center for Ethics at Harvard University. Corruption is a 'constant' in the energy business, writes Silverstein. "Fixers funnel money to dictators to obtain concessions for oil companies, set up shell firms and front companies to move money, and line up firms to explore for oil," he says.
When they can't do that, they buy influence for their miscreant masters by funding think tanks and greedy politicians, he claims.
If you're an honest man or woman working for an oil company, you might find this hard to take. But Silverstein's oil industry isn't a big place. He quotes one fixer, Friedhelm Eronat, who tells him that the oil-trading business used to be run by 40 people."The world got bigger, especially when the oil market boomed and the hedge funds came in, but it's still a pretty small group of people."
The book is a rogue's gallery of such middlemen and shady deal-makers - though Silverstein seems to have a grudging admiration for some of them who "flourished on the basis of intelligence, enterprise, charm or a combination of such traits".
Eronat appears in a chapter about Ely Calil, the Nigerian-born Anglo-Lebanese businessman who was linked to the attempted 2004 coup against Teodor Obiang, Equatorial Guinea's brutal dictator. Calil, who denies any involvement in the coup, fits Silverstein's description of the qualities needed in a fixer.
Strangely, given Obiang and his odious son Teodorin are the subject of another chapter of his book, Silverstein devotes little time to the attempted coup itself.
Instead, Calil, a personal friend of Silverstein, emerges in the book as a supremely connected and gifted man of intrigue, and profoundly cynical. "There's no way to do business in the Third World without enriching government leaders," Calil tells Silverstein. "You used to give a dictator a suitcase of dollars; now you give a tip on your stock shares, or buy a housing estate from his uncle or mother for 10 times its worth."
Tony Blair is the subject of another chapter. It's worth being reminded how flagrantly the former UK prime minister has pursued personal wealth since leaving office, often by spouting platitudes at dictators in exchange for speaker fees - while at the same time working as a Middle East peace envoy and running foundations to promote good governance.
But Blair's finances are hardly news, and his role in the oil world is minimal by Silverstein's telling. Readers looking for fresh details of Blair's infamous meeting with Muammar Qadhafi in a tent in Libya in 2007, or his help in pushing through a big upstream deal between the regime and BP - and whether the UK promised in exchange to release Abdel Basset Ali Al-Megrahi, the man convicted for the Lockerbie bomb - will be disappointed. Silverstein doesn't even mention it.
Other chapters will frustrate readers familiar with the subject matter. One on oil traders focuses not on the companies that operate deep in the shadows, but on Glencore, which went public in 2011, opening its books in the process. This allows Silverstein to synthesise much older reporting on Marc Rich, the company's founder, and his many nefarious dealings. But other shots miss their target.
He cites Trafigura for selling oil to Syria, for example, when the practice was legal. Nor was Vitol 'secretly' selling oil to Libya's rebels during the civil war. (Petroleum Economist reported on it at the time.) Unless the global economy is to stop dealing altogether with corrupt countries like mineral-rich Congo, meanwhile, traders will have to maintain contacts with them.
Silverstein is right to say that the trading industry remains 'one of the world's most opaque, secretive, corrupt - and globally consequential - industries'.
But many of the darker arts of the trading world have been made more difficult thanks to anti-bribery and corruption laws in the US and EU. It is frustrating that Silverstein chose Glencore as his main target, too. It leaves many of the smaller firms beyond his gaze.
Two other Silverstein targets are Bretton Sciaroni and Neil Bush. Sciaroni is a former official from the Ronald Reagan administration who, after involvement in the Iran-Contra affair, washed up in Cambodia. Silverstein describes him as a 'gatekeeper' for the country's unpleasant rulers, who eases passage for foreign investors.
But it's hard to make a case that Sciaroni is a major figure in the secret world of oil, given Cambodia's peripheral place in it. The same can be said of Bush, son of one president and brother of another. Neil Bush's greatest talent, to judge from the chapter on him, is to make George W look like the brother with brains and business acumen.
Silverstein's account of Neil, which lists his many failures to deploy family connections for profit, is funny. It tells the reader something of Texas's old boy network (and its limitations) - but not much about how the real world of big oil operates.
A chapter on the industry's manipulation of Louisiana politics, however, is another story - and a depressing one. The political history of the state is notorious and Silverstein's account of the environmental degradation wrought by lobbyists, all-too-light regulation, and ineffectual politicians is excellent.
The only opposition to all, Silverstein shows, comes from ambulance-chasing trial lawyers and their class actions: a sorry state. Corporations, writes Silverstein, "have so much power at the state and federal level that trial lawyers, whatever their personal and collective flaws, are the only force left in America to challenge and hold them accountable".