FOR IMMEDIATE RELEASE
Europe proposes strong disclosure rules for oil and mining paymentsOct 26, 2011
Urgency builds for US to finalize Dodd-Frank provision implementation
Washington, DC – International humanitarian organization Oxfam applauded the European Commission’s (EC) proposals for European Union laws that would increase transparency in the oil, gas and mining industry by requiring companies to disclose the payments they make to host governments for oil and mineral exploration and extraction.
Similar to the recently passed US “Cardin-Lugar” provision of the Dodd-Frank Act, the EC proposal goes further by requiring both public and private companies to disclose their payments.
“The revolution for transparency in the oil, gas and mining industry is continuing across the Atlantic, where there is strong political momentum, particularly in the United Kingdom and France, to build upon the ‘Cardin-Lugar’ provision of the Dodd-Frank Act passed last year by the United States,” said Ian Gary, policy manager of Oxfam America’s oil, gas and mining program. “The United States has an important opportunity to help shape the European proposal by issuing final rules for the Cardin-Lugar provision as soon as possible.”
With the US law covering the vast majority of internationally operating oil companies and world’s largest mining companies along with these European rules covering even more companies, the transparency net will be cast far and wide. Citizens of resource-rich countries will now be able to arm themselves with information they can use to track the amount of money governments receive from oil and mining companies.
“Too often, oil and mineral riches have led to corruption, violence and wars, affecting communities and consumers on both sides of the pipeline,” said Gary. “We applaud the leadership of EC President Jose Manuel Barroso and Commissioner Michel Barnier on this issue, but Europe and the United States need to act quickly, especially at a time when the world’s appetite for finite resources is at an all-time high.”
Despite the urgency, the US Securities and Exchange Commission (SEC) has delayed issuing a final rule for the “Cardin Lugar” provision. The regulatory agency was required by Congress to finish this rule by April 15, 2011, but now says the final regulation will be released by December of this year.
“While the heavy rule making workload of the SEC is appreciated, all parties have made their views known to the SEC. The deadline is well past and the public is waiting for this vital information,” said Gary. “Through SEC action, the United States will be in a good position to influence the EC legislative proposal.”
The oil industry has been seeking to weaken implementation of the US law and to water down the EC proposals. The strong proposals from the EC show that industry needs to recognize that this transparency wave is inevitable and should stop fighting disclosure rules that benefit companies, investors, energy consumers in industrialized countries and citizens in resource-rich states.
“Oil companies are hugely profitable and compliance costs will be minimal. This is information that any well-run company will already be collecting and accounting for,” said Gary. “If systems aren’t in place for tracking payments to governments for resource-rights, investors need to ask why.”
The EC proposals can be improved by ensuring that there are no exemptions for covered companies – as proposed by the SEC – and that reporting for each project is defined to cover payments made at the lease or license level in host countries.
Notes to the Editor:
- The EC proposal and the US law will complement the Extractive Industries Transparency Initiative (EITI), a set of voluntary principles under which governments publicly disclose their revenues from oil, gas and mining projects, and companies make parallel disclosures regarding payments they make to host governments for accessing publicly owned resources. So far, eleven countries have implemented EITI and the United States is the first G8 country to commit to implementation. EITI implementation in the United States will require private companies to also disclose their payments to the federal government.
- Clare Short, chair of the EITI, said in a statement that “These EU transparency requirements will strengthen the local accountability that the EITI provides.”