We should be suspicious of
parliamentary interventions in lucrative government contracts because
they often make a bad situation worse
Recently, President Yoweri Museveni
ordered government of Uganda officials to sign oil Production Sharing
Agreements with companies. This was in spite of a resolution by
parliament stopping all new agreements. Many Ugandans are rightfully
sick and tired of corruption and genuinely suspicious of the executive.
They support parliament in its self-proclaimed fight against the
problem. Yet I am much more inclined to side with Museveni on signing
PSAs.
The signing of oil agreements is important as a signal that investment in the sector can begin. This allows companies interested in investing in downstream and upstream activities feeding into and from the industry to bring in money. For many countries, this leads to increased employment and economic growth. In Ghana, upon signing the agreements, economic growth was 20 percent that year. In Equatorial Guinea, it was 30 percent. The challenge for Uganda actually is to examine the benefits against the costs of delaying these contracts through protracted parliamentary investigations.
I have been a journalist in Uganda for
almost 18 years now; my first major story was published in The Monitor
in January 1994 when I was a first year student at Makerere University.
This has been a fulfilling practical craft given my love of
storytelling. It has also been an intellectual journey; my interest in
the complexity of social phenomenon has taught me to reflect. So I see a
mismatch between the theory of democracy as presented in textbooks and
the reality of its outplay in the politics I cover as a journalist.
For instance, democratic theory teaches
us that when exercising its functions, parliament seeks to hold the
executive to account. It seems theoretically obvious that in passing a
resolution suspending signing oil contracts, the House was trying to
check any abuses the executive could have made. Yet from my experience,
such democratic contestations are often driven by more complex
motivations. Even when well-intentioned, they often produce results at
odds with the proclaimed purpose. In the case of most government
contracts I have covered, these contests undermine the state’s ability
to negotiate better deals for the country.
Many Ugandans genuinely believe this
parliamentary intervention will stop the corruption of the executive in
oil contracts. This faith is largely because many people want to have
hope in the destiny of Uganda. Yet my experience shows parliamentary
intervention is more likely to make the situation worse. The oil barons
who come to Uganda are not fools. They have worked in many other African
countries and beyond. They know that Uganda’s 9th parliament is not
simply made of selfless MPs tirelessly fighting for the public good.
They also know that even when MPs feel for their country – and many do –
they also have personal interests.
For example, oil companies know that
many MPs are today heavily indebted from last year’s campaigns. Many
more are looking for an opportunity to raise money for 2016 elections.
Just as many want to make money to supplement their income and improve
their lives. The companies probably know the cost of buying off
parliament. In 2005, it cost Museveni Shs 5m per MP to amend the
constitution and remove term limits – the worst political decision in 25
years. In 2010, it cost him only Shs 20m per MP to support the
Traditional Leaders’ Amendment Bill.
During the heated oil debate in October
last year, these same MPs claimed that Tullow had paid bribes worth Shs
24 million Euros; that is Shs 73 billion. If an oil company used it to
bribe MPs, each would get Shs 200 million. Anyone who knows our MPs
would tell you that few can resist such an amount if offered as a bribe.
Therefore, if Tullow can pay Shs 24 million Euros to only two ministers
as alleged but not proved, it can raise more to buy off the necessary
number of MPs to get its way. The only difference is that it would have
to negotiate a worse deal than what is on the table.
Of course there are MPs who would stand
on principle and refuse payoffs – whatever the amount. I know some of
them – and actually they are the least vocal and most thoughtful in
these debates. These are often flexible in their views and tend to be
pragmatic precisely because they understand the hidden motivations of
their colleagues. Those who make the most noise about graft are often
passionate in their beliefs but flexible in their morals. I have covered
their theatrics for the last 17 years and learnt many lessons. All too
often, the manifest efforts to hold the executive to account are
actually the mechanism to leverage the constitutional power of
parliament to force bidders to go bribe MPs too.
It is difficult to separate the cause
from the effect of parliamentary inquiries. For example, do MPs
deliberately summon bidders to the House in order to extort bribes i.e.
is it all premeditated? Or is that when a given parliamentary committee
summons bidders to appear before it, genuinely seeking to hold the
executive to account, it also ends up getting caught up in the same
position as the executive of being offered lucrative financial
inducements? It could be either or both depending on the circumstances.
However, whatever the subjective motivation, the outcome is always the
same – to shift the bribing from the executive to parliament. And often,
the deal for Uganda gets worse, not better whenever parliament
intervenes.
So the problem for oil companies is not
that they cannot get their way with our MPs. From a business point of
view, the problem is the time it takes for most investors to get their
way. This is because once matters go to parliament with its multiplicity
of players, the coordination costs of getting a deal escalate. For
example, it takes a lot of time to manipulate and then buy off the
diversity of legislators. And this creates uncertainty especially given
the early posturing by the MPs on such matters. Investors calculate all
these and build them in the contract price. Thus, rigorous parliamentary
intervention in such contracts does not improve the benefits to the
citizens. It largely lines up the pockets of MPs and worsens the deal
for Ugandans – or when there is parliamentary gridlock, the deal dies
completely.
To be continued next week.
No comments:
Post a Comment