New Senate bill would open the books in the oil, gas, and mining sector

WASHINGTON, DC – International aid agency Oxfam America today welcomed the introduction of The Energy Security Through Transparency Act of 2009. This bipartisan bill, introduced by  Senators Richard Lugar (R-IN), Ben Cardin (D-MD), Charles Schumer (D-NY), Roger Wicker (R-MS), and Russ Feingold (D-WI), aims to reduce corruption and insecurity in the oil, gas, and mining industries by requiring companies to publicly disclose payments to foreign governments.

“More transparency and stability in the oil, gas, and mining sector could help unlock billions of dollars in resource-rich countries that are home to more than half of the world’s poorest people,” said Raymond C. Offenheiser, president of Oxfam America. “The Senators have taken an important step toward improving the use of government revenues from natural resources by introducing a law that promotes transparency where it is needed most.”

Paradoxically, developing countries dependent on oil and mineral wealth often have high rates of poverty, internal conflict, and instability. Known as the “resource curse,” this phenomenon leaves citizens vulnerable with no information about how natural resource revenues are used.

“Natural resource revenues are too often squandered through corruption, internal conflict, and weak governance,” said Offenheiser.“The information provided through The Energy Security Through Transparency Act could be a vital tool for citizens to hold their governments accountable for using these revenues to address community needs like education, health care, and jobs,” said Offenheiser.

Oil, gas, and mining companies are increasingly operating in new areas of developing regions, including West Africa, the Amazon basin, and Southeast Asia. Given the weakness of government oversight and high rate of internal conflict in many of these countries, it is even more important that companies be transparent.

“It is no secret that lack of transparency in the oil, gas, and mining industry often goes hand-in-hand with government corruption and violent conflict. Instability in these regions poses a long-term threat to national security, foreign policy, and economic interests of the United States. While some companies are ahead of the curve and understand the advantages of transparency for their relationships with local communities, without mandatory revenue disclosure for all companies, the industry suffers with company investments at risk and higher energy prices for consumers. This legislation would foster accountability in nations where secrecy has undermined development, democracy, and human rights,” said Offenheiser.

Similar legislation was introduced in 2008 as the Extractive Industry Transparency Disclosure Act in both the House and Senate. The Lugar/Cardin bill would apply not only to US companies, but to all oil, gas, and mining companies registered with the US Securities and Exchange Commission. This includes European companies, such as Shell and BP, as well as companies in emerging markets like China, India, Brazil, and Russia.

“Like the Foreign Corrupt Practices Act of 1977, this legislation could have a ripple effect around the world and would be an important complement to voluntary initiatives that may take hold in only a few countries,” said Offenheiser. “Mandatory revenue disclosure has the power to weed out corruption in developing countries making way for stability and real solutions to poverty that the oil, gas, and mining industries can support.”