Petroleum The Resource Industry In Libya

Petroleum The Resource Industry In Libya

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Petroleum The Resource Industry In Libya

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Petroleum The Resource Industry In Libya

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According to Benjamin the global scale and nature of the oil and gas industry along with complexity related to operations and contractual connection with the venture partners, contractors and suppliers as well as anti-corruption and anti-bribery law implementation need increased focus by the management[1]. The risk of Bribery and corruption is rapidly becoming a significant concern for the oil and gas sector. There is huge sum of capital and profits involved in the sector which invites corruption. As stated by Abdallah, Mirvat, and Houssam Salami the problem with corruption is most significant in the developing countries because of their legal system and weak regulatory authorities[2]. 
The purpose of this paper is to develop a proper framework for Libya in relation to corruption in the oil and gas sector. The main primary source of income in Libya is through the oil and gas industry. Corruption can pose a significant hurdle in the development of the country as it restricts its independent power of decision making and institutional foundations. Developed countries like Australia and UK have a well-coordinated and tested corruption policy in place to take care of corruption in the sector such as the Independent Commission Against Corruption (New South Wales). However such policies can be implemented in Libya or not is a great doubt. This is because the legal system of the country is based in religious content and mainly on Islamic Syrian Law. Therefore any change in the corruption policy of the country has to be consistent to the Islamic provisions.
In addition the Libyan government is a single bureaucracy and therefore it is a doubt that whether the policies which have been implemented in Australia having a federal government could be successfully implemented in Libya or not. The paper aims to provide a corruption management framework for the country.
The Libyan context
Libya (l?bi?/ or /?l?bj?/; Arabic: ?????‎) is a developing Arab state located in the northern coast of the African continent, bordered by Algeria and Tunisia in the west, the Mediterranean Sea in the north, Egypt and Sudan in the east and Chad and Niger in the south as illustrated in Figure (1). The capital city of the country is Tripoli located in the east with the other large city Benghazi located in the west.  Libya is a small country by population with a large area of land. It is the fourth largest country in land mass size in Africa and the seventeenth largest in the world.[3] It occupies a huge area of 1,759,540 square kilometers (700,000 square miles) and has 1,900 kilometers of coastline.[4]
The first census of Libya was conducted in 1954; the population at that time was only 1,080,000.[5] Since 1954, the census has been conducted every ten years. The last census of Libya undertaken in 2009 indicated that Libya has a population of 6,411,776 people.[6] 30 per cent of population in Libya is under the age of 15 and most of population is concentrated along the Mediterranean coastline.[7]
All Libyans are Muslims and follow the Maliki sect. Arabic is the official language in Libya.[8]The climate of Libya has marked seasonal variations mainly influenced by the Mediterranean Sea and the desert.  It has a mild Mediterranean climate along the coast, an arid desert weather prevails in the rest of the country. Libya is the eleventh largest oil producer in the world.[9]
The oil-rich countries, many of which can be classified as developing, experienced substantially increased revenue as a result of increased oil prices during the period of the late 1970s and early 1980s, and then after 2000. However, many oil-rich countries exhibit some of the lowest economic and social indicators in the world.[10] Oil-exporting countries achieve a lower long-run economic growth rate when compared with non-oil producing and exporting economies,[11][12][13][14]and their income and government revenues experience much higher volatility as a result of turbulence in the price of oil.[15][16]
The Libyan economy is no exception to that of other resource abundant countries. Although Libya has been a considerable producer of crude oil since the 1960s, it displays lower economic and social indicators when compared with other developing oil and non-oil producing economies[17]The country’s lack of transparency, inefficient government institutions, widespread corruption and misuse of its oil revenue contributed to the under-performance of its economic growth and development. This recently resulted in traumatic political and economic upheaval arising from an eight-month long civil war that led to the ending of 42 years of dictatorship under Muammar Gaddafi in October 2011. The cost of the war was enormous with huge loss of life, major economic dysfunction, and destruction of the country’s infrastructure and reduced oil production, the country’s major source of revenue generation and exports.  Production fell from 1.6 million barrels per day before the war to 50,000 barrels a day during the war; much of the sector’s support infrastructure was also destroyed.[18]
 Oil wealth in Libya has been seen as a curse and not a blessing. One possible explanation for the natural resource curse is that natural resource wealth tends to cause a conflict with the usage of the resources, which in turn leads to poor institutional quality and lower growth. The argument here is that the large revenue generated from the natural resource sector creates motivations for interested groups, such as government officials and local or foreign investors, to engage in rent-seeking behaviour, which can be in the form of voracity, corruption or even civil conflict as in the case of Nigeria.[19][20][21]This behaviour can lead to economic failure and political crisis, including a collapse in none-natural resource production, capital flight, higher inflation, poor institutional quality and hence lower growth. Institutions play an important role in determining the government’s ability to adopt and implement policies that would mitigate risks that may have adverse effects upon economic growth.[22] Countries with well-established institutions will be able to implement sound policies in response to external shocks, and hence will be able to maintain their economic growth. On the other hand, the lack of such institutions result in poor policy choices, therefore deepening and extending the negative effects of the external shock.
The second possible explanation from the literature is that economic factors arising from the boom in there source (oil) sector and its revenue volatility are the primary causes of the natural resource curse. It suggests that natural resource wealth may result in lower growth in the non-resource sector. This can be briefly summarised as the notion that a boom in one tradable sector, such as oil, contributes toward a contraction of other non-booming tradable sectors such as the manufacturing sector. That is, the windfall revenues arising from the oil sector brings about a real exchange rate appreciation, which in turn reduces the competitiveness of the non-resource tradable sector, thus undermining the growth of the non-resource tradable sector[23]. It also leads to undermining of economic growth in the non-booming tradable sector by reallocating production factors towards the natural resource sector and non-tradable sector.[24][25] [26][27]
Political situation
Libya has been subject to waves of military invasions and colonization throughout its history until its independence in 1951.[28][29][30] During Ottoman control, Libya had an economy that mainly depended on subsistence primitive agriculture. As a result of the low and irregular rainfall and shortage of financial resources, the agricultural activities were limited to subsistence crops and livestock production which also were used as raw materials for small industries in the country such as food and clothes. At the same period, the country had no infrastructure such as roads, ports and rail roads.
In the first two decades of the Italian occupation of Libya, there was significant resistance from Libyans and the country was in a state of war. However, Libya’s economic situation was enhanced compared to the Ottoman period. From 1932 substantial investment in agriculture and industry was made by the Italians. However, Libyans were left in very poor living conditions as the economy was run fundamentally for the advantage of the Italians.[31][32]The International Bank for Reconstruction and Development (1960) reported:
“…the Libyans paid heavily for what the Italians achieved, they were pushed off the best farming land in the country, large numbers of their livestock were lost in the fighting…and their traditional industries suffered severely from competition from Italian products. Moreover, the Italians did little or nothing to prepare the Libyan people for self-governance.” (p. 27).
During World War II the Libyan economy was badly affected as many factories, farms, and livestock were destroyed.[33] After World War II, Libya was administered by British and French military administration operating as caretakers of the country in a transitional period towards Libya’s independence. Libya become an independent state in 1951 under the rule of King Idris Al-Sansui and named the United Kingdom of Libya.  The country relied on external aid through the UN agencies which primarily came from the USA and UK to face difficult economic conditions As a result, Libya formed strong political and economic ties with the UK and USA which both had military bases in Libya for over two decades starting in 1953.[34][35]A turning point in Libya’s modern history was the discovery of oil reserves in 1959. The revenues from oil sales allowed the country to overcome its deficit and create a surplus in the balance of trade leading to a substantial increase of GDP and per capita income.[36] Libya became one of the important producers of oil and a reasonably wealthy state that still largely depends on the oil sector.[37] Despite a significant improvement in the economy and infrastructure in the 1960s, dissatisfaction appeared amongst Libyans due to the domination of the nation’s wealth by the ruling elite and the Italian settlers and the rejection of many Libyans of the pro-western political policies adopted by King Idris Al-Sansui.[38][39]This dissatisfaction gained additional momentum with the rise of the Arab Nationalism, particularly among younger generation of Libyans who started to call for change, inspired by Egyptian President Jamal Abdel Nasser (1953-1970) and the call for Arab Nationalism, Pan-Arabism and restoration of the Islam-Arab identity on its own cultural foundation.[40][41] As a result, in September 1969, several pan-Arab and Nasser-inspired officers in the Libyan Royal Army, led by Colonel Gaddafi, seized power through a military coup.[42][43] These officers formed the Revolutionary Command Council (RCC) as a governing body chaired by Gaddafi, and changed the name of the country to the Libyan Arab Republic.[44][45][46] To consolidate his power and improve his popularity, Gaddafi announced his intention to place Libya on the path of anti-imperialist, anti-communist, and anticorruption, with additional ideological connections to Arab nationalism and Islam.[47] Therefore, the new regime began to adopt and implement a series of reforms and polices under the direct leadership of Gaddafi which significantly impacted on Libya’s political, economic and social context in the next forty two years. The new regime started with the request of all companies that were operating in Libya to be controlled by Libyans, with banks and oil companies being particularly affected. The British and American military bases in Libya were also requested to leave immediately which occurred in March and June 1970 respectively. The American experts were replaced by Arabs, primarily from Egypt. The Arabic language alone was permitted for official stationery and publications.[48] Moreover, Gaddafi announced “the Cultural Revolution” in 1973 to encourage more participation of people in political life by establishing “the People’s Committees” to administer domestic and regional administration. After that Gaddafi outlined his political, economic and social views in the Green Book in 1975 which introduced a Government of Masses based on direct democracy, which later developed to become “the People’s Authority”. This concept is based on “Shura” Islamic jurisprudence, an Arabic word for consultation, where under Islam all decisions for the Muslim community should be based on Shura of the Muslim society.[49] As a result, the General People’s Congress (GPC) was established in 1977 as the highest national legislative body instead of RCC. The official name of the country was changed to the Socialist People’s Libyan Arab Jamahiriya and the GPC was delegated all legislative and executive authorities of the country. The GPC later declared that all Libyans exercise their authority via the Basic People Congresses (BPCs) and the People’s Committees (PCs). Both were founded in all areas across Libya and male and female Libyans aged 18 years were required to take part in direct consultation and consensus in their local BPCs. The structure of each BPC included two bodies: a secretariat of conference and an administrative committee, and a PC as an executive committee that implemented the decisions and recommendations of the BPC. All BPCs were members of GPC as well as representatives of professional associations and unions. People in BPCs discuss and consult on an annual agenda of their local community and the country’s general issues and make their decisions and recommendations about them. These are later passed up to the GPC to consider the process of making national polices. Nevertheless, the GPC vested executive authorities to the General Secretariat of GPC and General People’s Committees (Ministries). The latter members are secretaries of Libyan ministries and act as the Libyan government and are responsible for implementing national policies.[50][51] During the period of the implementation of this system 1977-2011, Gadhafi himself held a senior position as “the leader of the revolution” and through his revolutionary instructions practically ruled the country.[52][53][54] Moreover, the implementation of this system faced many difficulties and barriers including: (i) the continued restructuring of the system’s legislative and executive institutions, which affected the stability of public institutions and the efficiency and effectiveness of public polices in various areas and sectors; (ii) the concentration of the power of decision making in the hands of leadership of GPC and secretaries of GPCs which contradicted the main aim of the system of decentralisation of decision making; (iii) the constant intervention of Gaddafi in all major decisions of GPC and GPCs which reduced the Libyan people’s trust of the effectiveness of this system as Gaddafi had an upper hand in all the most important decisions.[55][56][57][58]
During Gaddafi’s rule Libya had an unstable relationship with the west particularly the USA and UK. For example, many events during the late 1970s and 1980s between Libya and the US eventually led to the banning of all exports except food and medicine to Libya in 1982 as well as the importation of Libyan oil into the USA.[59] In 1986, additional American economic sanctions were imposed against Libya, including the freezing of Libyan assets in USA, a total ban on direct import and export trade, commercial contracts, and travel-related activities including students. This escalated further when the US attacked Tripoli and Benghazi in April 1986, in retaliation for a bombing in a Berlin discotheque.[60] Moreover, Libya suffered from UN sanctions in the 1990s. The Libyan government was accused of ordering the Lockerbie bombing of Pan Am flight no.103 in 1988. As a result, the UN imposed a number of sanctions on Libya in 1992 to force the Libyan government to hand over the two suspected Libyans for trial in a special court. These sanctions restricted Libya’s diplomatic representation in other countries and banned flights from and to Libya, the sale of aircrafts and their parts, supply of arms and related materials. In addition, in 1993 the UN, after strong pressure from the USA, imposed additional sanctions including freezing Libyan government owned or controlled assets and all funds and financial resources abroad except funds related to petroleum, air communications, and oil equipment and banned the transfer of money or assets to Libya.[61][62] The American and UN sanctions had negative influences on Libya. The country faced many difficulties such as an increase in the costs of raw materials that led to a rise in prices of goods produced in Libya and limitations on the importation of goods and some goods were stopped completely as companies faced restrictions to get foreign exchange that they needed to import these goods.[63] Additionally, business visits to Libya were constrained and Libya’s market share of exports also declined as a result of the sanctions. For example, Porter and Yergin noted that Information Communication Technological infrastructure in Libya was poor as the government was restricted on supplies of technology and expertise during the period of sanctions.[64] Also, during the 1990s Libyan companies found it difficult to import many kinds of facilities, equipment or spare parts particularly from western countries that could assist Libyan development programmes.[65] The international sanctions against Libya were suspended in 1999 following the handover of the two suspected Libyan citizens by Libyan authorities to Holland to be tried in a special court. These sanctions were officially lifted by the UN in August 2003, after the Libyan government reached a settlement with the families of the Lockerbie victims. In 2004, the American embargo lifted after the Libyan government declared it would abandon its Weapons of Mass Destruction programmes. This resulted in Libya being again reintegrated into the international community.[66][67][68]On 17th February 2011, Libyan people across the country rose against Gaddafi’s rule of Libya. In the absence of an organised political opposition, Libyan people protested and encountered the security forces leading to many deaths.[69]Consequentially, an armed conflict started between forces loyal to Gaddafi and opposition forces seeking to oust him. The National Transitional Council was later set up by leaders of civil society and defectors from Gaddafi government to lead the rebellion and be the interface with various powers that supported the overthrow of Gaddafi.[70][71] Following these events, the Security Council adopted resolution 1973 on 17th March 2011 which led to international intervention, led by NATO, to end all attacks against civilians, protection of civilians, a no-flyzone, and enforcement of the arms embargo, a ban on flights and an asset freeze on Gaddafi regime. Therefore, the international community refused to recognise the Gaddafi government as the legitimate representative of the Libyan people and, gradually, the NTC formed an Executive Committee as an interim governing body and it was bilaterally recognised by other countries as the legitimate ruling authority in Libya. In October 2011, Gaddafi’s rule of Libya ended after his death, and the NTC became the sole governing body of Libya. In July 2012 and for the first time in five decades, the Libyan people voted for electing their members of the General National Congress (GNC) as the constitutional assembly which was delegated to draft a constitution for Libya within an 18 month timeframe. After this, the GNC formed a transitional government to be responsible for implementing national policies. The GNC is also in the process of redrafting (in 2014) the majority of all state legislation, as well as policy formation practices abolishing those inherited from Gaddafi’s time.
The main motive or the objective of this research study is to focus upon the widespread and firstly growing corruption in the economic as well as trading purposes in mercantile aspects of the developing countries throughout the world. Though, the research mainly focuses upon the corruption in petroleum resource industry in Libyan context. The fiscal policy or the annual GDP growth rate of Libya generally depends on the petroleum industry to a large extend. But recent reports emphasis over the fact that, corruption in industrial aspects provide detrimental impact on the economic background of the nation.
According to the current reports, the oil reservoir or petroleum resources of Libya are now holding the tenth position throughout the global business arena. The country produces 1.65 million barrels oil per day. Majority of the crude oil is generally exported to the European market from the Islamic countries and among that, almost 11% or around 403 million barrels oil is exported by the Libya only.
After the civil war in 2011, the country has witnessed detrimental downfall in political as well as economical perspective which in turns sheds light on the “accountability vacuum” condition between the government and the populace of Libya. This in turns provides detrimental impact on the petroleum oil resources. On the other ward, it can be said that, in spite of relatively higher level of the human development, a huge number of the population in Libya do not get any kind of economic or social benefits from the “oil-driven economy”. Financial estimation reveals that almost 30 to 40 percent of the total population lives below poverty level and above that, more than 45 percent population does not get minimum essentials so that they can lead a normal livelihood. Reports reveal that, before civil war, Libya, one of the important members among the petroleum producing countries, had generated more than 1 million crude oil per year, which decreased drastically after civil war, 2011 and now the country produces 450,000 billion crude oils. This can shed light upon the corruption, in petroleum oil resources for prolonged period of time.
Rule of Law
As the corruption in Libya provide detrimental effect in both political as well as the economical perspective, so proper rule and legislation can be best possible way for the government to overcome this massacre. Proper and strict legislation can provide effective framework to the administrative process by which the unfavorable impact of corruption in society can be minimized.
Libyan Commercial Law
Libyan Commercial law was enacted in 1953[73], and included regulations concerning business activities performed by any person, whatever his or her legal status. It covered the rules executed on traders (first Article 1/P) (Libya State 1970), which bound every trader to abide by regular daily bookkeeping, inventory and budget at a minimum level (Article 58) (Libya State 1970), and to keep special files for correspondence and dialogues relevant to trade affairs (Article 59) (Libya State 1970). The most formal measures and objective conditions, which guarantee the consistency of these books, are outlined below.
Every page of the obligatory books must be numbered and stamped by the court of first instance’s stamp. In addition it is necessary for the registrar to write attestation on the first page of each book, indicating the number of pages and to confirm the official title with the signature and date on this attestation. Books and files must not have spaces, writing in their margins or any erasures or writing between lines (Article 60) (Libya State 1970). The law binds every trader to keep these books and files for a period of not less than five years (Article 64) (Libya State 1970). It also binds the board of directors to set up the fiscal year Balance Sheet for joint-stock companies, to calculate profit and loss, and to attach a report to the Balance Sheet indicating the progress of the company’s activity (Article 272) (Libya State 1970). The Balance Sheet contents of assets and deductions have to be fixed in the Balance Sheet with their overall value (Article 273) (Libya State 1970), and must be confirmed by the General Assembly (Article 516) (Libya State 1970). The board of directors must submit a copy of the Balance Sheet and the calculation of profit and costs as an attachment with their report, the control committee’s report and the General Assembly confirmation minute to the trade register bureau within 30 days of confirmation (Article 583) (Libya State 1970).
Libyan commercial law clarified many rules about estimating the assets, establishing the legal reserve, increasing and decreasing the invested capital and distributing profit. Among the important rules regarding the valuation of assets are the following:

fixed assets are valued on the basis of original cost;
inventory should be valued at the “lower of cost or market”;
trademarks shall not be valued higher than their cost or purchase price, and the values of these assets are to be amortized each financial year in accordance with their useful life;
debts should be valued at their estimated realizable value;
organization and development costs may be capitalized with the consent of the board of directors, in which case the capitalized values should be amortized over a period not exceeding five years; and
goodwill cannot be recorded unless it is purchased, and once recorded, it should be amortized in subsequent years by a suitable amount estimated by the directors and the board of auditors (Articles: 574, 575 and 576) (Libya State 1970).

The legal reserve is established by deducting no less than 5% of the net annual profits until the value of this reserve reaches 20% of the company’s capital, and regarded as part of seized profits, which are classified as standing capital (Article 557). The increase in the company’s capital is achieved by issuing new Shares with a price more than their nominal value. This is done before finalizing the establishment of the legal reserve, or by transferring the reserve surplus to the company’s capital by issuing free new shares or by increasing the nominal value of floating shares (Articles: 578 and 590) (Libya State 1970). The reserve surplus may be decreased when it exceeds the enterprise’s needs, or in the event of losses of more than a third of the capital, by exempting the participants from paying the remaining instalments or returning the capital instalment to the State in conformity with current legislation (Articles: 578 and 590) (Libya State 1970).
The commercial law also stipulated the necessity to appoint auditors (Article 550) (Libya State 1970), so as to monitor the company’s administration and ensure sound progress of the company’s activities in accordance with the law. Article 553 of commercial law details the duties of the auditing board (Article 553) (Libya State 1970). The law binds the auditor to submit a report to the general assembly on the outcomes of the fiscal year activities indicating his view regarding the progress of the company’s work in addition to the authenticity and the confirmation of its budget and accounts (Article 580) (Libya State 1970). The law does not specify what this report should include, nor does it deal with the formality that should be included in this report.
The Financial System Law
The main objective of the research is to focus upon the unfavorable impact of the corruption in petroleum oil resources, it can be interpreted that, this massacre not only impact upon the societal stability but it also create such a consequence that provide negative effect on the financial framework of the nation.  This financial instability in society can minimize only by adopting and/or by implementing proper and effective financial legislation in overall administrative policy of the nation. As the structure of the economy of Libya is “oil-driven”, so reformed financial act or regulative policies can be suitable for minimizing the negative impact of corruption in petroleum oil resources.
The Act concerning the emergence of The Financial System Law (FL) (Libya State 1967) first came into operation in 1967. According to Article 1 of the FL, this law allows the Secretary of Treasury to control the State Budget and plan for future expenditure. In order to do this, the Secretary of Treasury selects a Finance Controller for every institution, and organization. The role of this controller is to prepare a report of the policies in the institutions and give it to the Secretary of Treasury. A copy of their report is sent to the related secretariat, organisation and institution. Kilani[74] stated that this is based on the principle that “the Treasury should be wherever the public money is”. Consequently, the Secretary of Treasury has been involved in all publicly held organizations. Generally, all the administration processes of the budgets are the same. Based on Article 6, every budget has two parts: revenue and expenditure (Libya State 1967). The expenditure itself has three divisions: wages, general expenses and new projects. Furthermore, Article 23 of the FSL (Libya State 1967) requires the Secretary of Treasury to prepare an annual report for the Public Control Office, including detailed information of the State’s budgets and expenses. It also calls its improvement, debt or any emergency accounts as well as trust.
Income Tax Law
The income tax law that was applied in Libya during the period from 1923 to 1968, was the Italian income tax law.[75] However, following the undertaking of some necessary amendments to suit local circumstances, a new income tax law was issued for the first time in Libya in 1968.[76] In 1973, this law was replaced by Income Tax Law No. 64 (Libya State 1973), which has been used by many companies for the purpose of setting up external financial reports.
Libyan income tax law does not differentiate between income tax from ordinary activities and income tax from unusual activities,[77] whether this income is a product of an activity sale or any of the activity’s material or non-material assets (Article 65).
 Income Tax Law No. 64/1973 (Libya State 1973) has been amended as well as Stamp Tax Law in accordance with the principal popular congresses’ resolution convened during the period from 26/12/2002 to 2/1/2003. In March 2004, Income Tax Law No 64 was replaced by Income Tax Law No 11, and there has been a significant change in the new law. It now offers tax allowances, especially for those with high incomes, and it has deleted the public tax category of income and increased the value of each category in the progressive taxes on the activities (Libya State 2004a). This encourages the private sector to make more profit and thus contribute to Libyan development plans.
Cultural and religious context
Tribal loyalties play an important role in Libyan social relations, economics and politics. However, the various legacies of the colonial period, independence, the development of the oil industry and the economic crises of the 1980s and 1990s did much to alter tribal and social structure. Indeed, traditional values have changed under the impact of economic changes. Social life in Libya centers traditionally on the individual’s family and tribal loyalty, which override other obligations in the community. Loyalty to family, clan, and tribe and the emphasis on regionalism and sectarianism occasionally outweigh loyalty to a profession and the law.[78] Libya is no different from many other developing countries in having a number of traditions and customs which emphasize the collective rights and obligations of families and tribes. Tribal and family collectivity is institutionalized in peoples’ work-related practices and social relationships. Thus, the Libyan culture is characterized by the prevailing attitude of favoritism in appointments to government jobs, which sees that they were and frequently are made on the basis of personal friendship or family connections rather than merit.[79]
Libya is one of a number of Arabic countries included in Hofstadter’s[80] 1997 cultural study, along with Egypt, Iraq, Kuwait, Lebanon, Saudi Arabia and the United Arab Emirates. Although Arab countries have many characteristics in common, they differ from each other in many respects. Hofstede[81]showed that, for instance, the Saudis are more collectivist than some other Arabs such as the Lebanese or Egyptians. Baydoun and Willett[82] demonstrated that the value the Lebanese place on power distance is probably much closer to the French value. Power distance refers to the unequal distribution or the flow of power from the hierarchical level to the subordinate level of the society through which only higher income group can experience benefits from both economical as well as societal perspective and the lower income groups do not get anything for living a life. The recent reports reveal that, after civil war in Libya in 2011, 30 to 40 percent of the total population lives under below poverty level and almost 45 percent of the population are involved in oil industry but unfortunately does not get any economic benefits from this “oil-driven economy” of the country.  Hofstede[83]and Baydoun and Willett[84]compare culture value scores between Arab countries, and other nations. Arab countries scored high levels of power distance with a score of 80 compared with low levels of power distance in Great Britain and the US, 35 and 40 respectively. Superiors and subordinates in large power distance societies consider each other unequal. Hierarchical systems exist and subordinates are expected to be told what, when and how to carry out their tasks. Centralization is expected to characterize high power distance societies. Arab countries scored 68 for uncertainty avoidance. This score is relatively high compared to 35 and 46 in Great Britain and the US respectively. Hofstede[85] argued that strong uncertainty avoidance societies, which include Arab countries, tend to be collectivists. Arab countries scored 38 on individualism which is considered low compared to Great Britain and the US with a score of 89 and 91 respectively. This indicates that Arab countries are more collectivist societies than many other countries. Islam may be one of the reasons for the collectivist nature of these societies. In this context, the Prophet Mohammed says that “believers [Muslims] in their mutual love, sympathy and co-operation, are like the [interacting] parts of the human body: when one part complains, the other parts call each other to hasten to its rescue, each sharing its pain and sleeplessness”.
The variety and the influence of cultural dimensions, economic, political and historical variables on the reform of public sector have led to different reforms in different countries.  Chiefly, social aspects influence the public administration through the domination of values, customs and traditions, which may hinder progress and the success of the administration in accomplishing its objectives. Among the social themes that noticeably influence public reform in Libya is tribalism and consequent nepotism. In accordance with custom and traditions, participation in the professions in the public sector is influenced by nepotism, by the influence of relations and close friends because of tribal affiliation and not through professional performance. This situation has been firmly established with the emergence of the idea of open-nomination for assuming public professions. This method can exploit the sustainable societal framework and also can impact upon the livelihoods of the large population throughout the Libya. This has inflicted serious damage on the public interest. It is worth mentioning here in this context, that tribalism is implanted even in the minds of the qualified and the educated  people not only in Libya but it is also implanted among the people of the Islamic countries throughout the globe. . Rather than turning themselves away from this tradition and practice they find themselves willingly or unwillingly steered by the tribe. They yield to its instructions regarding management and authority, because if they turn away from their tribe, they will be deprived of assuming membership of the professions in spite of their qualifications and performance. As a result, those administering public authorities support their own interests and the interests of the party over public and national interest. This is reflected in explicit egoism and demoralization of employees in the developing country to the stage where workers look at their profession as a mere source of subsistence, endeavoring to hold on to it until completion of legal tenure and retirement on a pension. During this period, employees strive to outdo one another and colleagues evade the burdens of work and deny responsibility. In actual fact, one’s profession is not looked on as a means of offering service to the country and people or a place in which to show talent and capability to increase the level of performance and production in the community. Administrative aspects are also affected by the social aspect, which is based on nepotism, courtesy and tribal affiliation. Appropriate rules to evaluate performance and assess employees’ efficiency are absent. The current system makes no comparison between the diligent and the lazy employee and removes the creative spirit of active employees, who in the shadow of these systems endure the mistreatment and hatred of their lazy colleagues and bosses alike. If they earnestly get on with their work they are accused of being covetous to take control of higher administrative professions and fulfil their own personal interests. On the other hand, they may be questioned and held liable for mistakes committed by lazy employees and find an acceptance by those lazy and negligent employees in performing their assigned duties at work. These negative impacts associated with being an employee, are compounded by other negative impacts, where the citizen who receives the service is answerable for it. It represents a reflection of social concepts on the employees character in accepting the services, as the employees come to the department totally convinced that he will not leave it unless he accomplishes all matters he wishes to undertake on the foundations of family relationship and friendship, whether that is in accordance with the rules and regulations or not. The reality cannot accept fallacy. Today we cannot refer to any administration unless we have a close relative or a friend in it. This subject, social relationships, though indisputable even in western societies, is the existence of human relations within the administration. In western countries, if an employee can help obtain a service quickly for one of
His or her friends, it is more difficult to offer this service or help obtain it ahead of others, unless someone entrusted with a prominent post authorizes him to acquire such a service. In the west, employees cannot break the law or give priority as happens in similar situations in developing countries. This is what prompted the necessity to ask how any employee can undertake any work or business and accomplish it without external influence. The influence of tribalism and nepotism is a matter which undoubtedly needs to be rectified by raising the awareness level of every citizen and employee. Educational institutions may contribute to this promotion of awareness by educating their students and making them realize that the only criterion that should regulate their relationship to others, is as a citizen of their country and not membership of their tribe.
Apart from this, set up an ICAC or the independent commission against the corruption committee can be considered as an important and effective anti-corruption agenda in Libyan context, which is widely used in south Wales and throughout the Australia. But, according to social religious perspective, but the countries have some basic differences. Among those differences, the religion or the religious believe can be accepted as one of the important or major differences between Australia and Libya. Libya is an Islamic countries and the Libyan regulation is based on Islamic approach which is also known as Sharia Law. So, the anti-corruption agenda or reform act to control the corruption in Libyan public sector must be consistent and relevant with the Islamic approach.
Apart from the religion perspective, Libyan governmental framework is unitary in nature and it is based on single central bureaucracy; whereas Australia is a federal country and the social administration is generally based on the three tire system: national, state and the local. Moreover the judiciary system and the media in Libya is very weal compared to the Australia. Lack of transparency, excessive involvement of the political authorities in legal and judiciary system of the society of Libya can restrict the implementation of reform or regulatory act, by which government can keep accountability and control over the corruption.
Judicial Independence
According to Melton, James, and Tom Ginsburg the independence of the legal framework of a country collectively, institutionally and individually is necessary for ensuring impartiality in decision making[86]. The independence of the judiciary have been ensured for centuries in various ways. These ways include keeping the judges separate from the legislature and executive and not involving them in political debates. The judges cannot be removed from their position unless a resolution has been passed by the parliament. Entire immunity is provided to the judges from the legal risk of being sued for making an alleged wrong decision while they act as judges. For the purpose of ensuring that the decision made by the judges is obeyed by the public it has to be ensured that they indulge in impartial decision making. For the purpose of making impartial decision the judiciary has to be kept independent. In the same way for the purpose of making the judiciary independent the judiciary has to be kept free from pressure, influence and interference. However this is not the case in Libya. A dual judicial system had been developed during the reign of the Ottoman Empire for the purpose of distinguishing between secular and religious legal matters. However the system was no longer necessary which the primacy of the Islamic law had been accepted. There are significant challenges faced by the judiciary of Libya which pose hurdles to the judges to provide strict enforcement of law against corruptions. The 2011 uprising in Libya was fuelled by the desire of the society to be based on the rule of law and the principles of justice. The constitutional declaration of 2011 apparently assured the people of the country that the rule of law would be established[87]. However significant challenges are being faced by the Libyan judicial system. The main reasons for this is the significant deterioration of security and political conditions since 2014. Currently the judicial system barely functions and is subjected to significant difficulties from increasing unclear legal and judicial framework and armed actors. The present government crisis engendered the uncertainty relating to the framework. The Australian anti-corruption polices and been successfully implemented and currently used because the country has an independent judiciary and a very competent and strong framework.  These laws cannot be implemented in Libya because of its weak judicial system. Thus before thinking about any law to combat corruption in the oil and gas industry the primary requirement is to ensure the independence of the judiciary from political interference. Only when the diary would be able to impose the law in a proper manner the problem of corruption in the sector would be solved.
Independent media
Law provides a Universal human right to the citizen in form of freedom of expression. This right is used by journalist in their day to day work as they exercise their right towards notifying the public. One of the fundamental pillars of a democratic society is a free press. The role of media is to seek out and circulate information ideas news opinion and comments and make those who are in authority accountable. Media act as a platform for making multiplicity of voices heard to those were in authority. It acts as a public watch dog at the regional local and national level doing the job of a Guardian and activist as well as an entertainer and educator. According to Leslie the better the media of a country the less population the country has to live with[88]. Research which have been conducted in relation to political corruption recommends that the basic contributor with respect to good governance is a Press structure which is free and independent and is able to invigorate lively as well as respectful political disclosure along with making the people participate in elections. The more the freedom provided to the press the less is the corruption in a country. Another research has shown that where there is high percentage of newspaper consumption the corruption in such country is low[89]. Just like the judiciary the independence of media also have to go through significant challenges in Libya.
After the end of the Gaddafi period there was an assumption that the rule of law would be established and media would be able to play an enhanced role in the society. People in Libya started to take increased interest in newspapers as well as digital media. However there is significant doubt over how independent and free the media is in Libya as it has to operate under tremendous pressure. There is no second thought about the fact that media has great power. It has powers so great which can easily influence the entire nation for and against the government. However for the exercise of such power the media has to be made free from interference by political parties. On the other hand if media is owned by the members of the political party they then it cannot be regarded as free no matter how much freedom the government apparently provides to media. A strong and independent media structure can easily tackle and significantly reduced the evil of corruption from society. If there is a fear of media among those who indulge in illegal activities they would definitely think twice before doing any act as they would be having the fear of getting exposed to the public. In oil and gas industry where the corruption is high and in a country like Libya where the primary source of income comes from this industry media has a very significant role to play. Even after the end of the Gaddafi government there has not been much changes in relation to the Framework in which media personals operate.  Through the process of periodic exposure the media can help to create public opinion against corruption. It also helps in sustaining newly created momentum against malpractices. It provides the public a platform through which they can share the grievances with the other and can highlight the issue. Several countries have various measures in relation to the freedom of press such as Sting operations, holding public debates, introduction of Right to Information, investigative journalism and opinion polls. However such Liberty is a very restricted to the media personals in Libya. These features restrict the media in Libya to fight corruption effectively. In order to ensure that corruption is eradicated from the Oil and Gas sector in the country the first and foremost requirement is establishment of a free and strong media structure which can report any corruption and make those who are responsible accountable to the public.
Another factor which causes significant shortcomings to the independence of media in Libya is the corruption in media itself[90]. As the Oil and Gas sector involve huge amount of capital those who are involved in malpractices bring along with them media persons by offering them gifts and drives so that there is legal activities can be hidden. These practices have to be eradicated from the media industry in Libya so that an appropriate and just media Framework is formed. Thus the media in Libya has to be made independent along with the judiciary if the government is interested if fighting corruption. This can be done by enhancing the transparency in media industry and public funding so that the sector does not depend upon government sources.
Therefore from the above discussion it can be concluded that policies in relation to managing oil and gas industry corruption in Libya require significant changes. These changes cannot be directly copied from other jurisdictions such as New South Wales or United Kingdom. This is because the legal as well as constitutional framework of such jurisdiction is totally different from that of Libya. The primary source of income for Libya comes from the oil and gas industry. The country holds 10th position in the Global Business Arena in relation to Oil and petroleum Reserves. The best possible way to address the issue of corruption in Libya is through the implementation of the rule of law. As the corruption in Libya provide detrimental effect in both political as well as the economical perspective, so proper rule and legislation can be best possible way for the government to overcome this massacre. Proper and strict legislation can provide effective framework to the administrative process by which the unfavorable impact of corruption in society can be minimized. Legal modifications are required in areas such as commercial law and income tax law. These area of law are directly related to matters concerning money and thus they can help to tackle the problem. Strengthening taxation law would ensure that the individuals have to provide strict accounting compliance which would help identify any black money involved. There are various examples of anti-corruption policies which have been used by other jurisdictions. On the other hand the judicial system of Libya is still not strong and free from government interference. These laws cannot be implemented in Libya because of its weak judicial system. Thus before thinking about any law to combat corruption in the oil and gas industry the primary requirement is to ensure the independence of the judiciary from political interference. Only when the diary would be able to impose the law in a proper manner the problem of corruption in the sector would be solved. In addition to the judiciary the media also as discussed above has a significant role to pay in relation to corruption in the oil and gas sector. Independent and free media can be used as a primary tool to tackle the problem of solution. However even though increased and enhanced rights have been provided to the media during the post Gaddafi period such rights are not enough to tackle the increasing problem of corruption. Therefore the independence of media also needs to be established if the government intends to fight corruption in the oil and gas industry.
Abbas J Ali, ‘Organizational development in the Arab world’ (1996) 15(5) Journal of Management Development 4
Agnaia, Almehdi A, ‘Management training and development within its environment: the case of Libyan industrial companies’ (1997) 21(3) Journal of European Industrial Training 117
Ahmida, Ali Abdullatif, ‘Libya, Social Origins of Dictatorship, and the Challenge for Democracy’ (2012) 3(1) The Journal of the Middle East and Africa 70
Ali, Issa and Charles Harvie, ‘Oil and economic development: Libya in the post-Gaddafi era’ (2013) 32 Economic Modelling 273
Almehdi A. Agnaia, ‘Management training and development within its environment: the case of Libyan industrial companies’ (1997) 21(3) Journal of European Industrial Training 1
Auty, Richard M, Resource abundance and economic development (Oxford University Press, 2001)
Badia-Miró, Marc, Vicente Pinilla and Henry Willebald, Natural Resources and Economic Growth: Learning from History (Routledge, 2015)
Barnett, Mr Steven and Mr Rolando Ossowski, Operational aspects of fiscal policy in oil-producing countries (International Monetary Fund, 2002)
Bubaker F Shareia and Fakher Buferna, ‘The Effect of Changing in Tax legislation upon Government Revenues and Private Sector Activities Taxation System in Libya: Evaluation & Improvement Conference Tripoli’ (Paper presented at the Libya University of Garyounis, 2001)
Buiter, Willem H and Douglas D Purvis, Reference type not supported by output style
Carneiro, Francisco, ‘Development challenges of resource-rich countries: the case of oil exporters’ (Paper presented at the Proceedings of the VI International Colloquium, 2007)
Censorship, I. (2017). Free speech in post-Gaddafi Libya – Index on Censorship. Index on Censorship. Available from: [Accessed on 19 Sep. 2017].
Central Bank of Libya, ‘Economic Bulletin’ (1977)
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My Assignment Help. Petroleum The Resource Industry In Libya [Internet]. My Assignment Help. 2018 [cited 19 December 2021]. Available from:

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