Chevron should consider reputational risk

The Phnom Penh Post
http://www.phnompenhpost.com

Written by Gavin Hayman, Global Witness
Monday, 25 May 2009

Dear Editor,

Your article "Chevron deal still unresolved as crisis impacts exploration" (May 20, 2009) cites the economic crisis as the reason for delays in renewing Chevron's oil exploration agreement with Cambodia. Chevron should consider other factors in negotiations with the government - not least of which is reputational risk.

Earlier this year, Global Witness exposed major governance failings in Cambodia's emerging oil sector. Our report, "Country for Sale", revealed that the institution in charge of Cambodia's oil industry - the Cambodian National Petroleum Authority (CNPA) - is a constitutionally dubious body under the direct control of Prime Minister Hun Sen and his deputy Sok An.

Centralisation and politicisation of power within the CNPA has created a dysfunctional organisation over which the Cambodian parliament has no oversight. A setup like this leaves the industry wide open to corruption and exploitation.

Companies such as Chevron have a role to play in improving the governance of the country's extractive industries to help reduce poverty. As a key member of the Extractive Industries Transparency Initiative, Chevron should lead by example. To start, it should disclose any payments it makes to the Cambodian government.

Given recent events in Ecuador, reputational risk should be at the core of Chevron's approach to Cambodia.

Gavin Hayman, Global Witness
London


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