everybody knows you. welcome back. when you were living there every day as bill did you know that city better than some of the residence. residents. it starts to become part of your own life for hometown in a weird way so it is part of just dealing with people fairly and honestly. that is an unusual characteristic in some of these places. ..

>> >> with the changes as of the population as the soldier evacuates. it seems to me that the of

military force is almost unfair and requires specialists and a culture is different because in middle east but the concept of honor and shame is much more powerful. and also they have to be schooled in psychological warfare. so with the united states and the middle east but to

come from this country to do the job to better enhance by the schiller -- the sheer military. >> u.s. army special forces is organized over different regions of those that focus on that type of -- in that part of the world get that type of training and talk about the local security forces on the civil side typically usaid has people staying in countries for multiple years. the state department often has the challenge with locations in the fryer medications with the people who have a skill set that they also said people to language training but in afghanistan was the afghan

hands program as an attempt to get out of this career mentality to get out of the country to have someone focus on multiple tumors and language training and it took a war in afghanistan of a certain size to have that program created. then to go back to the normal resting place but your career is done thank you very much you will be posted to somewhere you don't need that promotion and i will look italy's places to the edges of the empire but that relationship the countries are based on relationships not in formal institutions. soul like yemen we will be here for a long time.

>> going back to the first commented did is fair or not because in many ways there is a complete lack of security who else will do that? lead is the issue to establish security but what we emphasize with the marines you have to hand off to somebody. >> this is what i meant. i did not mean to take anything away. >> you can hear that echoed. why does yemen get to do the things that we don't? why can't we have more state department your folks for more agencies? those are the things about security to go back to call things down to handle this

off to somebody. we know you don't belong. and hope that answers your question. [applause] >> they will stick around to sign the book. thank you. [inaudible conversations]

>> host: here we are with the author of "the secret world of oil". i will ask you the first question, why did you decide to write this book?

>> guest: i have written about the oil industry for a long time, over a decade. have written about the corruption of the international oil industry in the united states maintains close relationships with various unattractive regimes in the basis for the relationship is oriole. when i was at the "l.a. times" i first party to write about the topic. i wrote about the small west african country nobody knew about it or cared about it as a pariah state. and dirt for intended 1990's excellent found a lot of whale and other american

companies came in then the relationship changed now there were no longer a pariah. or a friendly relationship because it is too embarrassing but a rapprochement the and the president comes to washington from time to time. it was merely a coincidence looking at another story entirely looking at it general who got a private contract to develop the coast guard and he started to tell me so i started to write about that. so i spent the past decade to write about similar topics going all over the world to look at this topic. just like you get on to a topic and people bring you tips and do keep writing.

>> host: talking about economics and with other countries that have discovered oil or natural gas or other resources? what does that do to a country? because of make a them better off because they have no accountability? >> in general and makes the country's worse off but if you suddenly find oil in a country where there is no history of democracy that was a colony through the '60s 1968 in this literally a lunatic takes power to terrorize the country and 11

months later they overthrow him and execute him. no tradition of democracy. in that environment with that oil wealth it is almost inevitable people are corrupt. nigeria's oil firms have been pumping glial the country is certainly worse off, not better off. but to travel to nigeria but he concluded on the basis of conversation there would be better off if they never discovered whale.

as i note in the book died did not see fit to put wheel in democratic countries and in context on or azerbaijani reportorial kidney or chatter kiver rinaldi odds are it will not do the people good. they have done well but it is not automatic it depends on the context. >> it is of mixed bag. but then again with a former chevron executive now think that the center for strategic international

studies talk about the difference between development of oil resources and specifically like convicts on -- cause extent and azerbaijani. in the difference with the united states is in the united states the oil resources are not owned by the state's. the individual landowner in texas gets royalties him the company's pump the oil landowner gets the of money. not the big footprint. the company's make money and create jobs and create some wealth. certainly you can look at texas and louisiana and you

can see their elements of the traditional third world resources curse that has not been shared well in their ranks pretty low on everything health, education, per capita income. >> host: that generally has been a problem that there is a lot of corruption it is a political culture with any of their state in the u.s.. do you see a problem? >> guest: and definitely that is what i get at it is a political context but louisiana was notorious for corruption for a long time. in the united states we have all sorts of political problems but we are not

doomed yet so whale is better for people in the united states so the political context is important bad everybody knows for the environmental problems would be the main one people think about. i guess that is the main one that people worry about the most. >> host: what surprised me a little bit is the big political issue. did you decide that focuses on conventional oil? >> the book is called "the secret world of oil" i am trying to shine a light:the part of the oil industry or

the natural resource industry that does not receive a lot of attention that traders and middlemen are people who do the stratum between the companies if you weren't whale concession in cause expel on isn't like the government meets in a closed-door there is no other way you don't give an oil deal without making government officials will be. the old model was we will transfer received your swiss bank account now is more difficult. am not saying every deal is legally correct but you cannot do business in many

places of the world especially oil it is a commodity oil and weapons are the two most important you cannot defend borders without weapons and because of that there is a centralized decision making with only a few people with the countries that i keep referring to like central asia and west africa where we have those dictatorships are the authoritarian government very few people make decisions. the key to giving a deal in these places is he cannot do business in some countries without a door opener that is a person who has built up

the trust and confidence to officials in the president to get you in the door. when george swiss bank account? but now exxon and chevron with various oil companies got deals in they were investigated by u.s. government but never charged which i find it surprising because the average the government they did not wired cash but we want to build our compound. really?

we own the land so we'll buy it from you so they buy a security forum to guard their compound and installations the security forum was owned by the brother of the president. there are several companies that were made a partner one business deals were he did not have to put money down. we will just give you a cut. exxon gave him 20%. it was in the oil concession itself but the distribution we will just take it out of the royalty check then it just goes to you.

>> host: it is structured that way the people would say that is the price we pay precisely was exploited 100 years ago. because of that countries whose borders were drawn by powers and cross cultural borders to affect ethnic groups and that the price to get the oil why should we hold u.s. companies that a higher standard in the theater companies buy whatever they want?

>> guest: i did not answer the previous question when i did not write but now developing a new were formed of development with international business but all of the established patterns. >> host: but the barnacle wife and crustacean? >> guest: exactly that track the industry is expanding but it is domestic you don't have the middleman here in the same way. the question why shouldn't we? okay just tolerate corruption because it is part of the environment. to a certain extent it is true. there is no way of less you say we just won't get oil

anymore in survive without it, it will not have been but you have to be practical and realistic. i don't think anyone would argue let's not do this. >> that is the accomplishment in a way. but it is not just that we get the oil and that is it. not a passive relationship to develop the fields and take the oil. it is much more complicated. i do think it is wrong with american oil companies like a equatorial guinea and go into a country that is your

report -- dirt or you cannot do business over there without making officials happy he is one of the richest rulers in the world at this point and his son has a $30 million home in malibu has been seized with the asset forfeiture the commission the $350 million yacht he is a 45 year-old nothing kid whose father has the department of environment that we jokingly referred to as the department of chopping down trees to appropriate money from the zero allele well. so we have to tolerate a little bit of corruption that they facilitate mass corruption and beyond that in order to secure their

hold, their interest they lobby for the government you have the oil companies actively promoting as a reformer which is preposterous. they tried to develop in intense relationship on the basis of a of fraud. he has been reelected in quotations with negative% of the bow to the last three times it is incredible. [laughter] >> host: so you build a relationship can become a partner. >> guest: that is a part of it. you can see time and time again at a reduced american

foreign policy it is too simplistic but anyone that looks of it is equally preposterous. look at the relationships we have developed it is not like we have had flowback to have deep been long relationship with the saudis that is controversial. it is not just that ethical issue but post 9/11 is one of the reasons we have to move away from middle east oil would get the trouble. west africa and central asia will solve that. there is an ethical argument but no way one can say we have to have a perfectly ethical energy policy.

other governments don't play that way. but there are practical considerations that are costly in many ways to the united states and the public to maintain these relations. >> host: at what cost? >> guest: if you look at the middle east. what is the basis of the relationship? pretty much oil. not to reduce it but. >> host: also israel to one that is true. definitely it is because this is our closest ally in the region there is energy related there but to it is

not strictly oil definitely not. however it is significant you have the deputy assistant under break-in of the center for american progress said if the saudis exported artichokes' we would not have a close relationship with them. look at the war in iraq once again not purely but is there any way the architect is sitting around the room thinking about whether to invade or not it? it had to be on the table. if not. >> host: it would have to be because of their original invasion of kuwait who was training to much from the

river. it does come down to the oil so what should we do differently? >> guest: certainly, my book does not have the grant theoretical argument. worked as an investigative reporter. i want to promote myself. >> host: just lift the rock to see what is underneath? >> guest: yes. there is not a grand theory. i just rightabout things and i think are interesting and help others do to. for what we should do differently, federal think any one even the oil companies would not say

maybe to be dedicated to reduce our dependence on fossil fuels. for that environmental global warming there are all sorts of negativity is to depend on oil. everyone talks about it every time there is a presidential election candidates talk about our dependence on foreign oil and now we should use less fossil fuels. that is not a cure all but i do think it is the most corrupt industry in the world. there are a variety of reasons one of them is a lot of oil is interrupt

countries -- corrupt countries. . .

the corrupt act practices cases, prosecutions by any measure the industry has come up most often our weapons and oil and partly the deals were so huge and partly as i referred to earlier, you typically have very few decision-makers. you don't need to gain public support. you need to get the attention of the president of a country or the oil minister and the way to do this typically -- >> host: is fungible and easy to steal. i was fascinated i did a lot of work on the economy after the invasion and the ways in of the ways in which the pipelines were running and half normal capacity because people drill the holes in the pipeline and it would disappear and get transferred somewhere else and of course it is theoretically possible to

trade the signature is to figure out where it came from but once you moved it out of the country and got it into the market it's a valuable commodity that is pretty much on traceable so you're always going to have a lot of incentive i would think. one more question and then we have to go to a break. what is the most surprising or outrageous or interesting thing that you came across writing your book plaques >> guest: in talking to oil company officials or that middlemen who were focused on the book a lot of them would only talk off the record the casual acceptance of corruption

was sort of surprising to me because i didn't expect people to be forthright about it because publicly nobody ever says what they say in private. in this case in private that companies would never say it of course we can't work without paying off the senior government officials, give me a break but in private, that was the attitude. he did speak off the rack or did do but he said something along the lines of you can collect russian but it's part of the system and an openness about it in some ways was surprising and people talked about i was intrigued and interested to hear about the new forms of corruption where people said we can't just pass a bag of cash

under the table so it has to be more sophisticated so you have the oil minister's nephew opened a company in the british virgin islands which can't be traced to them anyway and then that company is hired to do some consulting service and they are just a recipient of money that will find itself to the minister. so i can't say that i was shocked but i was surprised with the openness and i was intrigued and interested. >> host: you hear in the developing world if of corruption on the grounds that there was the joke that went around about hillary clinton talking to a foreign minister somewhere that said we call it family values but that in fact in the societies this kind of thing has moral obligations and in some ways if you don't have the ability to raise taxes

that's how police work in new york. is that at all fair these are states that don't have the power and corruption? >> i think it is a bit self-serving for behavior most people wouldn't find acceptable. i wouldn't say that it is entirely false. i mean i heard another oil trader who said i made this argument. in the united states goldman sachs makes political contributions in the third world we just base it on money. i don't think that one can dismiss the argument. the argument that it is claimed

based doesn't hold up if you travel to these countries. i have been to a number of countries in western africa and yes it's true money is distributed by the head of the tribe or the clan but in the spaces you can just see with your own eyes and go away is the president of the country living in this mansion overlooking. it isn't going far. >> we have to take a short break and then we will be back. >> host: you know, we have been talking about the country

and the corruption and now i want to move on to the people in the middle because you have some very theatrical characters that are facilitating these. you talk about the traders and the gatekeepers. what is the difference between the fixer and the gatekeeper? >> guest: they do similar things. basically you have the fixing people who maybe a dozen or a few dozen people who have in various parts of the world have sufficient access to the top government officials that you pretty much have to do business through them and so if you want to get a deal in nigeria, for example, for long-time there

were a few people you could go to. one of them was a longtime friend of bill clinton and a major donor to the clinton foundation and had a pretty close ties. he was a guy that nobody knew exactly quite how he did it, but he had access to the senior government officials in nigeria. so, you know, it wasn't just a whale because he had all kinds of relationships he would broker a lot of deals that he would hire him as a consultant and miraculously end up with big contracts but this is an interesting story of an american who is very well-connected in the former soviet union from the

very beginning from the earliest post-communist period so he was actually indicted by the u.s. justice department did charge with i don't know if they were bribes -- it was about ten years ago he had moved money -- he had been hired by big u.s. oil companies as a consultant and he was charged with filing i think $80 million into -- this was the old model into account controlled by the minister of kazakhstan and, you know, he had a very close personal relationship with the president. you know, he had a house in the

fanciest neighborhood of the capital when the president came to washington to meet with washington officials he couldn't hope to do business without hiring him on as a consultant. so he was indicted and charged into the case dragged on for years and years and he basically used the defense. i don't want to say that he acknowledged he made payments to the president although it is clear that he thought the president and his wife matching snowmobiles and jewelry for the wife and bbc paid the tuition of a daughter that attended college here in the washington area but he said everybody knew what i was doing. this isn't a mystery. i was talking to, you know,

state department and i think he said of the cia and everybody knew what i was doing and what my relationship was and so why are you bothering me. and in the end, he basically the judge in the case said you've been persecuted. i think that he even used the term american hero. he said you were helping the u.s. oil companies get concession and put into the united states and so it became known as cows extend debate could he -- cause expand date. >> it isn't clear how one becomes a fixer. is there a swimsuit competition

or how do they get to the connection or is a process we don't really understand how to get the connection to enable them to be trustworthy conduit? >> it is ironic because the industry is generally pretty corrupt but one way is becoming trustworthy in the sense that you know that they do have the access. you can arrange deals. one of the people i write about he had a lot of contacts and influence in nigeria and the to him extensively and as i had college in the book i came to

like him and become friends with him and he was a really fascinating character hard not to like. one of the things there is no job application one of the things i think is part of you have to be relatively charming and he is very charming and hard not to like. he was a family of lebanese origin but grew up in nigeria and he told me that he had initially how he got into the middleman business he said was his family was wealthy in nigeria. they had i think it was a peanut business and someone who was a friend of his may be related to

his sister from a middle eastern airline said we are looking for business in nigeria and we need an introduction and he knew everybody. he was in business. it was a significant business. so he knew the various government officials and he made the necessary introductions and the deal was struck. he said why should i be paid to use my context so it's hard to know exactly unless people are talking about it but when you do business in the country or nigeria which is larger if you

are a prosperous businessman you tend to know government officials and you can make use of that. >> host: is that because the oil companies need someone international for some sort of communication or trust or did you have a sense? >> guest: because you are talking about middleman who are not -- they play this role to broker the introductions and the companies and the government and american companies because of the act have wanted to have a certain distance.

you want to be able to deny your relationship so you hire somebody that isn't accountable to the corrupt practices act so you hire a european or middle eastern or -- >> host: i had no idea why it was expensive but they said this is the best place to put the headquarters so that is what we bought. >> guest: the locals have grown up in nigeria for example there are now a lot of local middlemen who've gotten very well be brokering deals with the government. the initially in a lot of these countries when you go into a place where you are not familiar, you're looking for somebody that can give you the lay of the land and who i'm sure they have their local context but often in angola or vp at one

point got into trouble because they hired someone to be the spokesman who was a senior government official but often you want somebody who is a bit of an outsider but who knows the country and can point you to the right people. >> host: what about the traitors and you talk about the link or -- glenn core. >> guest: it's this enormous company that a lot of americans haven't heard of. >> host: they've heard of marc rich to. >> guest: he was charged with trading with the enemy and he

fled to the united states ahead of an indictment and he was pardoned for reasons. there were extensive campaign contributions that she made and certainly it would be naïve to think that didn't have something to do with the pardon. i do hope to be writing another story about that and i think there are other interesting reasons as well. >> host: i can't wait to hear. are you allowed to dish on c-span? >> guest: is a good story but i don't -- i hope to be telling it in the next few months. it's an old story but part of it

is interesting and i will only say that it involves favors that marc rich did for the u.s. government overseas. >> host: you're killing me here. >> guest: it's a great story. >> host: of child for that on the media. so, you've got these big -- one of the things you suggest is that they could be manipulating oil prices. you say for the past seven years the price of oil had been swimming in the contradicting of the mandated data. for almost 20 years it declined in 2005 when it cost $75 after falling back at his back it is back to 140 in the middle of 2008 but then $30 in just six months it tripled again. do you think that is the role of

the predictable response of getting to the production found here when we seemed to be expanding at a little bit but the chinese demand seems to have collided with the amount of oil they can possibly produce? how much do you think that we'll traitors play on that? >> guest: it's hard to measure and certainly as with the role in the foreign-policy to say that it is a function of manipulation of the market is just wrong there are all sorts of things that impact the price of oil. the war in iraq for example or chaos -- there's all sorts of things impacting the price of oil. there have been periods where the traitors have accelerated the trends and people do make money on this business.

you are making money at the margin. if the price per barrel changes by a small amount if you own enough barrels it is very profitable to be on the right side of the curve. >> host: barrels of unprofitable to be on the side of the curve. >> guest: somebody told me when bidding on the price of oil to go up you don't want to be betting on it to go down. >> host: the goldman sachs of the industry. >> guest: yeah. i think there i think there is a contributing factor and there's been times when the traitors have influenced. i talked to another trader that said when i started in this business that paper trade --

>> host: the right to buy. >> guest: he said the ratio was 1-1 and it was more like 40 or 50-1. there is a huge paper trade and it is subject -- i want to be clear i am not accusing them specifically of manipulating the market at the move 3% and it's not even the biggest oil trader there are other firms that are bigger. so there is an ability to manipulate markets which i think has happened at times. >> host: doesn't show up in the swift movement or in the one direction or the other?

>> guest: it isn't ever going to be the one factor that you're not going to see that because of manipulation of the market but if you see the market going like this naturally you might see it go a little bit sharper because of the manipulation of the oil prices. >> host: so it accelerates whatever way the market is going. >> guest: they wouldn't say that it accelerates all the time but there have been times when it appears the traitors have certainly contributed to downward and upward movement. >> host: did you get to see these operations and see how they look? >> guest: it's like going to a wall street firm. i went to a couple of these firms. they are hyper corporate, very fancy and one of the firms i went to in geneva was a little

bit more polished than our c-span studio here. they had the furniture with polishing and when we opened the electronic door you know, you are looking at you're looking at a computer screen and you are looking at the price of oil so the daily it's like being a wall street trader. >> host: i used to work on trading before he became a journalist. they are now so quiet. it's like a library it is totally quiet. >> guest: that is what i saw. it was not hugely exciting but it is interesting because i did

talk to the traitors about what they did at night which tends to be more interesting they were wining and dining. and he was working on the upstream side so he was selling refined products to the buyers in asia who needed large quantities. >> host: a lot of karaoke. >> guest: exactly. they did a love of entertaining in the evening. he said, and again that's part of the way the business is done. we take them out for more than just karaoke and they gain access to information and discover that's how they got a lot of their contracts. >> host: that sounds very similar. grab some girls and get some drinks.

>> guest: that is the central part of the business i think. >> host: why has the paper trade increased so out of whack? why is everything happening on paper? >> guest: i can't give you a detailed answer to that. i wrote a little bit about speculation in the book. it wasn't a central part of the book. maybe it should have been because it is a topic that is interesting but i think it's from the same way that, you know, wall street trading, so much of the trade now is these highly sophisticated products that nobody really understands and i think it is a similar trend but i can't give you a good answer. >> host: lobbying. we are not racing through but how different is this from other kinds of lobbying? is it special or is it basically

the same dance it's done in every state capital and every country in the world? >> guest: i wrote about federal lobbying and been extensively about louisiana and the situation there. to a certain extent yes it is the same old deal. the oil industry is very powerful and influential. it's not a stand-alone industry in that regard obviously. it is one of a number of -- i would say it is one of the more powerful lobbying forces because it is a huge industry and they view what other industries do they just do more of it. they hire more lobbyists than to pay more money and get more meetings and they do have an advantage in that because oil and gas or central to running the economy and its it frequently plays a role in

foreign-policy. people in government are very open to arguments about the need to help out the industries over the years the industry has done quite well in washington. in louisiana, i think because the industry has always been so influential that the state level and if you include the offshore component i think it's still the biggest offshore per capita producer. and as we discussed earlier, louisiana really does have a particular culture and its an interesting and fun place to report from. you always meet interesting

people and eat great food as well for the most part. the situation in louisiana is one of the states the industry has the most influence and when they want something they tend to get it. i told the story in the book about how getting a couple of lucky breaks in louisiana one of them is that i went to interview lobbyists ginger sawyer and we had a conversation during which she was extraordinarily for pride about the influence of the industry and how they were able to gain support the support of lawmakers and a sort of layout the details of how they had pushed the bill could push the bill through the legislature in the previous session, and i kept thinking why are you being so

forthright with me? .. >>