Thursday, May 22, 2008

Transparency International's gang in Caracas 

When I posted we were looking at how a recent report by Transparency International ranking oil companies on transparency was flawed by virtue of very basic information on Venezuela's PDVSA was wildly off the mark. Whoever put the report together couldn't even do things your average school child could probably do these days such as Google "Gestion y Resultados PDVSA 2006" and find this - a report loaded with information that the bright lights at T.I. claim doesn't exist.

Of course, that information and more does exist in the public domain and was readily available when Transparency International wrote their bogus report.

So how could Transparency International have gotten it so wrong? Recall, the farmed out the actual data collection to "consultants". These consultants were really just the local T.I. branch in the country where the data was being collected - i.e. in the case of PDVSA it was the Venezuelan branch of T.I. that was responsible for the research. That rules out the idea that it was some idiot in Germany who just couldn't read spanish who didn't find PDVSA's financial statements.

But some first rate digging by Calvin Tucker over at the Guardian turned up some stunning information that sheds some light on what is likely the real problem:

Transparency International denies that they pursue an anti-Chavez agenda. "We are not a political organisation", their spokesperson told me. Despite this denial, TI's Venezuela bureau is staffed by opponents of the Venezuelan government (pdf). The directors include Robert Bottome, the publisher of Veneconomia, a strident opposition journal, and Aurelio Concheso of the Centre for the Dissemination of Economic Knowledge, a conservative thinktank funded by the US government. Concheso was previously a director of the employers' organisation, Fedecamaras. The president of Fedecamaras, Pedro Carmo, led the failed 2002 coup and was briefly installed as Venezuela's dictator.

The data in TI's report was gathered by Mercedes de Freitas, the head of their Caracas bureau and a longtime opponent of President Chávez. De Freitas' previous job was running a US government funded opposition "civil society" group. The Nation reported on her response to the 2002 military coup: "... on the night of April 12 - after Carmona suspended the assembly - Mercedes de Freitas, a director of the Fundacion Momento de la Gente, a legislative monitoring project subsidized by NED [National Endowment for Democracy, a US government agency], emailed the endowment defending the military and Carmona, claiming the takeover was not a military coup."

Yup, having a bunch of coup mongering, stridently anti-Chavez people put in charge of looking for information on PDVSA could be a problem. After all, they probably WANTED PDVSA to look bad and nontransparent, and hence they simply didn't find what the opposition doesn't like to even acknowledge exists - audited financial statements on PDVSA.

Now, there is no problem with people opposing Chavez. Many people oppose him honestly and for very valid reasons. Many honestly believe that he is one of the worst things to ever happen to Venezuela.

Fine. No problem. It is entirely legitimate for people to think that way.

But if you are an international organization that wants to put together a thorough, accurate, and authoritative account of how different oil companies are functioning would you choose people with such obvious biases to do your research?? I know I wouldn't.

In fact, no sane person would.

For data to be collected across many different countries in a fair and CONSISTENT way it has to be done by people without obvious biases. And lets be real, even if Mercedes de Freitas was the most honest and well meaning person in the world it is hard to believe that a person with such clear biases could manage to set them aside while carrying out this project and give PDVSA a fair shake.

And obviously, based and the incomplete and FALSE data that she came up with, she couldn't.

The more one thinks about it, the more you are likely to realize this whole research method put in place by Transparency International was hopelessly flawed. By letting local affiliates be put in charge of collecting data there was almost certainly no way to ensure a consistent standard of effort in the data collection.

And we saw that clearly in the T.I. data collection table from the original post where for almost other countries they checked not only corporate web sites but newspapers, business journals, SEC filings, audited financial statements, etc. in an effort to collect data whereas for PDVSA they looked at nothing more than the PDVSA web-site (and didn't even find information that was clearly on that site too).

T.I. really would have been much better off, assuming they really wanted to do an objective report - something that is looking increasingly doubtful, using some bureaucrats sitting in offices in Germany to collect this data. As long as they could read all the required languages they could at least use one consistent set of standards and techniques in collecting the data.

Transparency International's problems don't stop there. It turns out that Transparency International and some of its affiliates receive funding from some of the very countries ranked in this report. However, I can't recall seeing in the report and disclosure of that fact by T.I. Not disclosing such basic conflicts of interest is the sort of thing that gets newspaper reporters and columnists put out to pasture. And I am sure allowing blatant conflicts of interests gets countries knocked down several notches on T.I.'s famed corruption ranking.

Yet T.I. apparently can't be bothered to practice what it preaches. This too, serves to call into question T.I.'s integrity as an organization.

Last but not least, even when informed of the blatant and obvious errors contained in this report Transparency International's response isn't to investigate and to dialogue with those pointing out the error but to obfuscate and stonewall.

If you were an honest and well meaning organization wouldn't you WANT people to point out your mistakes. Hell, I am just a blogger, but I do appreciate it when readers point out mistake that I make. Why shouldn't T.I. be equally appreciative - don't they WANT to make sure they are presenting ACCURATE, FAIR and UNBIASED information??

Ironically, one of the things that T.I. harped on in its report was the need for all companies to have protocols and independent committees that could help deal with instances of wrongdoing and corruption.

In theory, T.I. has something along those lines itself - a so-called ethics committee.

Does it work and is it capable of thoroughly and honestly looking into allegations of errors in Transparency International's own work?

Stay tuned.


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