This was an extraordinary windfall: B.S.G.R. had paid nothing up front, as is customary with exploration licenses, and at that point had invested only a hundred and sixty million dollars. In less than five years, B.S.G.R.’s investment in Simandou had become a five-billion-dollar asset. At that time, the annual budget of the government of Guinea amounted to just $1.2 billion. Mo Ibrahim, the Sudanese telecom billionaire, captured the reaction of many observers when he asked, at a forum in Dakar, “Are the Guineans who did that deal idiots, or criminals, or both?”

Source: WSJ Online

That is Patrick Keefe in a long but fantastic piece in the New Yorker detailing the web of corruption that characterizes resource sector deals on the Continent. It is an account of mining executives so daring that they even sign contracts on kickback.

The villains the piece are not just the mining executives but also government officials who are too lazy to even do the required due diligence to ensure that, at the very minimum, they get a “fair value” in kickbacks from the companies to which they readily mortgage their countries.

The answer to Mo Ibrahim’s question above lies in the quote below:

During our meeting in the whitewashed building, I asked Touré how it made him feel to learn of such allegations about former colleagues. He paused. “The feeling of shame,” he said at last. “Because, finally, what they have got personally—let’s say ten million U.S. dollars, twelve million U.S. dollars—what does that amount to? Compared with the lives of the whole country?” The lights in the room suddenly shut off, and the air-conditioner powered down. He didn’t seem to notice. “I don’t think that it is tolerable or acceptable from the investors,” he continued. “But I’m more shocked by the attitude and the behavior of the national decision-makers” [Note: the new president of Guinea has been waging a war against shady deals from past administrations]

As I have complained before, something needs to be done about the way African states deal with multinationals in the resources sector (beginning with getting the skill set of government workers in the responsible ministries to match those of the oil company reps).

Also, every time I read such stories I can’t help but think, where are the African Beny Steinmetz’s? When will the African political class transition from being petty brokers to actual investors in their own resources?