Global summit supports oil and mining revenue laws

By jforres

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Paris – As the Extractive Industries Transparency Initiative (EITI) global summit concluded in Paris, international humanitarian organization Oxfam welcomed commitments by France, Germany and the United Kingdom to make it mandatory for oil, gas and mining companies to publish their payments in resource-rich countries.

Governments, companies and civil society organizations convened to discuss the future of EITI, which was launched in 2003 to improve governance in resource-rich countries through a set of voluntary reporting requirements.

“The lack of transparency in accounting for the world’s riches has fueled corruption, disease, atrocious acts of violence and even civil wars,” said Ian Gary, senior policy manager of Oxfam America’s Extractive Industries program who attended the conference. “A voluntary approach to transparency may work in countries where there is strong political will, but mandatory reporting laws, such as the recently passed Dodd-Frank Act in the US, will arm citizens with information they need to hold their governments accountable, especially in countries unlikely to join EITI.”

At the summit, the French, UK and German governments committed to support a new European law matching the US Dodd-Frank Act, which was passed last summer as part of the financial reform package. The governments agreed that mandatory reporting requirements would complement not compete with the voluntary initiative.

“We expect to see quick and robust implementation of the US law by the Securities and Exchange Commission, as European regulators are watching this process and looking to harmonize their reporting requirements,” said Gary. “The US law already covers a large number of companies including those based in the United States, Europe, China, Brazil and South Africa and broader application of mandatory reporting will bring more companies under the requirement and reduce competitive fears, which we believe are overstated by many companies.”

There is growing support from the investment community for such requirements to help assess the political and reputational risks faced by some oil and mining companies.

“In the United States, asset managers and pension funds with over $1.2 trillion in assets under management have written to the SEC to express strong support for the robust implementation of the US law. These firms believe this information is important and material to make decisions,” said Gary.

“The new American law shows that country-by-country tax reporting is possible,” said Maylis Labusquiere, advocacy officer at Oxfam France who was also present at the conference. “Extending the requirement to other sectors, with disclosure of further information will be vital to fight illicit financial flows, tax avoidance and tax havens which rob governments of the resources to combat poverty.”

Notes to editors:
•    More than 1.5 billion people live on less than $2 a day in the more than 50 countries rich in natural resources.
•    Eleven countries have now been judged to have completed the minimum requirements of the EITI, publishing data regarding payments made by oil, gas and mining companies as well as government receipts. EITI implementation requires governments to sign up to the initiative. EITI is implemented at the national level by a multi-stakeholder working group comprised of government, company and civil society representatives. An international board makes decisions on country compliance and enforces the EITI rules. More rigorous disclosure requirements, including disaggregated, company-by-company reporting and disclosure of contracts are needed to further advance the EITI globally. The Central African Republic, the Kyrgyz Republic, Niger, Nigeria, Norway, and Yemen have joined Azerbaijan, Ghana, Liberia, Mongolia, and Timor-Leste as EITI Compliant countries.
•    A provision in the Dodd-Frank Wall Street Reform Act signed into law last year by United States President Obama requires all American and foreign companies registered with the U.S. Securities and Exchange Commission (SEC) to disclose payments they make, annually and at a project level in each country of operation. The SEC is expected to issue a final regulation this April. The law covers European companies such as Total, BP, Shell and 27 out of 30 top internationally operating oil and gas companies are covered by Dodd-Frank. The list of the covered companies can be found at the Publish What you Pay USA website along with a Q and A about the provisions of the law.  All submissions can be found on the SEC website.