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Judicial Watch, Inc. is a conservative, non-partisan educational foundation, which promotes transparency, accountability and integrity in government, politics and the law.

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Investigative Bulletin

Rex & The Resource Curse

The Trump Presidency has opened with a bang. Death to ObamaCare, a new SCOTUS nominee, a Muslim ban, a Mexican wall, various conspiracies—the Russians and the dossier, the electoral tally, the inauguration crowd size—attacks on the media, on Boeing, Lockheed Martin, General Motors, Toyota, Hollywood actors, John Lewis, John Brennan, alternative facts, the global gag rule, the death of the Trans-Pacific Partnership, the rebirth of the Keystone and Dakota Access pipelines. The president is tweeting. The president has kept his campaign promises. The president has lost his mind. The town is in tumult. The opposition is aghast. Critics have assigned the president his own Robespierre. Grievances mount. “I haven’t slept in a month,” Kellyanne Conway tells Fox News Sunday. “If you are part of Team Trump, you walk around with these gaping, seeping wounds every single day, and that’s fine.”

Thirteen days into the new administration, the spectacle continues, delicious and appalling and mesmerizing. But in Congress real business is starting to get done. Follow the money. Cui bono? Who benefits? The answers to that timeless investigative question will tell us a lot about Mr. Trump’s Washington.

Last week, we flagged rule changes coming before Congress to reform the controversial EB-5 visa program. Critics of EB-5 say it’s a magnet for fraud, a national security risk and a vehicle for rich foreigners to purchase U.S. citizenship. The Trump and Kushner families, among others, have profited from the EB-5 cash flow. The powerful real estate industry opposes the reform measures. President Trump could swing the vote any way he wants.

This week, Congress put another anti-corruption measure into play. House Republicans introduced a resolution to repeal an SEC rule known as the Cardin-Lugar provision. It requires that extractive industries—oil, gas and minerals—listed on U.S. stock exchanges disclose payments to foreign governments. Such payments might include consulting fees, royalties, bonuses, and taxes. It’s a well-greased avenue for payoffs and bribes and Cardin-Lugar is a classic “follow the money” transparency measure.

House Majority Leader Kevin McCarthy wrote in the Wall Street Journal that Congress will “take the ax” to the rule because it places an “unreasonable compliance burden on American energy companies that isn’t applied to their foreign competitors.” Mr. McCarthy added that the regulation puts “American businesses at a competitive disadvantage.” He neglected to mention that those foreign competitors are already complying with similar disclosure laws introduced in Europe and Canada.

President Trump can work his will with this one too. He wants to give American business a competitive advantage. He also wants to “drain the swamp” of corruption. One tweet, and Cardin-Lugar remains law.

Cardin-Lugar and similar measures are aimed at the so-called “resource curse.” The resource curse has been observed in many countries and is the subject of a lot of esoteric studies, but it’s not rocket science. Resource-rich developing countries are often “cursed” with failing economies. Corruption is one culprit. Wealth generated from extractive resources—oil, gas, timber, minerals, etc.—flows to the ruling class. The powerful, often abetted by large corporations, pillage the resources and throw crumbs to the hoi polloi.

Nigeria is a casebook example. Nigeria is the sixth largest oil producing country in the world and has vast mineral wealth. Yet its people live in crushing poverty. According to the activist group Global Witness, more than $400 billion in oil revenues have been lost to corruption and mismanagement since 1960. Last week, oil giants Dutch-British Shell and the Italian Eni company ceded control of a lucrative oil tract back to the Nigerian government after a $1.2 billion bribe to a former Nigerian oil minister and cronies was revealed. It’s precisely the sort of corrupt transaction that Cardin-Lugar is designed to counter.

One of the strongest opponents of Cardin-Lugar has been ExxonMobil CEO Rex Tillerson, President Trump’s secretary of state-designate. Mr. Tillerson is scheduled for a confirmation vote today. As CEO of ExxonMobil and head of the industry’s trade group, the American Petroleum Institute, Mr. Tillerson lobbied against Cardin-Lugar. Later, API successfully sued to overturn the provision—a newly crafted version is now before Congress. Sources on Capitol Hill say that Mr. Tillerson, lobbying against the bill in 2010, personally made the case to senators that successful passage of the measure would doom ExxonMobil’s chances to do business in Russia.

At his confirmation hearings, Mr. Tillerson offered up a whole lot of nothing when questioned about the resource curse and Cardin-Lugar. He said there would be “a lot of opportunity” through U.S. programs to “strengthen the institutional capacities and set standards of expectation in the developing part of the world, including those that have resource wealth.”

Former Senator Richard Lugar takes a particular interest in the issue and his Lugar Center in Washington closely followed the Tillerson hearings. Reporting for the Lugar Center, senior fellow Jay Branegan made it clear that Mr. Tillerson was not going to be an apostle of transparency and accountability.

ExxonMobil, by the way, reportedly is under investigation in Nigeria. The country’s Economic and Financial Crimes Commission is examining ExxonMobil’s successful $1.5 billion bid for oil rights to four lucrative Nigerian fields. According to an investigative report in the Guardian, based on documents provided by Global Witness, ExxonMobil beat out the Chinese oil company CNOOC in 2009 in the deal. The only trouble? China bid $3.75 billion for the same oil rights.

How did ExxonMobil win Nigerian oil rights despite bidding $2.25 billion less than its rival? Golly, no one seems to know. But one former Nigerian oil minister is under investigation in London and Lagos for corruption involving billions in missing oil funds, and the inquiry is expanding. The minister denies any wrongdoing. So does ExxonMobil.


Micah Morrison is chief investigative reporter for Judicial Watch. Follow him on Twitter @micah_morrison. Tips: [email protected]

Investigative Bulletin is published weekly by Judicial Watch. Reprints and media inquiries: [email protected].


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