FOR IMMEDIATE RELEASE
Transparency supporters still wait for oil, gas and mining financial transparency law implementationJul 14, 2011
Washington, D.C. –Transparency supporters, including international humanitarian organization Oxfam America, as well as investors across the country called on the US Securities and Exchange Commission (SEC) to implement a landmark law that will lift the veil of secrecy on billions of dollars that flow every year from oil and mining companies to governments around the world.
One year ago, Congress passed the Cardin-Lugar provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act, requiring oil, gas and mining companies registered with the SEC to disclose the payments they make to host governments for oil, gas or minerals. Oxfam America and the Publish What You Pay coalition commended the SEC for drafting a regulation in December that followed Congressional intent, but the regulatory agency has yet to issue final rules required to bring the legislation to life.
“The oil, gas and mining industry have had plenty of time to comment on the draft,” said Isabel Munilla, director of Publish What You Pay US. “Many industry suggestions to the SEC would effectively gut implementation. The SEC must not give in to the wishes of companies that don’t want to follow the new law.”
The provision, backed by a bipartisan group including Senators Richard Lugar (R-IN) and Ben Cardin (D-MD), among others, will cover 90 percent of the largest internationally operating oil and gas companies, including a broad range of US, European, Chinese, Brazilian and other companies, as well as eight out of 10 of the world’s largest mining companies.
“From rural villagers in Africa to investors on Wall Street, this groundbreaking law casts the transparency net far and wide, arming the public with information it can use to track the amount of money governments receive from oil and mining companies,” said Ian Gary, policy manager of Oxfam America’s oil, gas and mining program. “The longer the SEC waits to act, the likelier countries such as Ghana, Africa’s newest oil producer, will be at risk of falling victim to the resource curse.”
By requiring companies registered with the SEC to disclose and publicize the payments online, citizens in resource-rich countries and civil society groups can use the information to help hold governments accountable for how the funds are used.
“Too often, oil and mineral riches have led to corruption, violence and wars, affecting people on both sides of the pipeline,” said Mohammed Amin Adam, convener of the Ghana Civil Society Platform on Oil and Gas who is visiting Washington to urge implementation of the law. “In Ghana, this new law will close the gaps in our system, preventing corrupt government officials from squandering oil and mineral wealth instead of investing in health, education and agriculture.”
Furthermore, investors will have better information to assess high-risk investments, companies will benefit from better relations with local communities next door to their multi-billion dollar investments, and consumers won’t feel the pinch at the gas pump if countries supplying oil are more stable.
“Project-level reporting is precisely the kind of potentially material information investors want to see,” said Bennett Freeman, senior vice president for Sustainability Research and Policy at Calvert Investments. “The need for such information that we can use to evaluate oil/gas and mining companies is why Calvert and other investors wrote to the SEC in support of a strong set of rules to implement this law. Together our firms represent over $1.2 trillion of assets under management and make clear that investors look forward to strong final rules by the SEC.”
Despite the evidence, the American Petroleum Institute, Chevron, Exxon, Shell and other companies argue that disclosure of such information puts companies at a competitive disadvantage. In fact, some companies such as Talisman Energy, Statoil, AngloGold Ashanti and Newmont Mining, already disclose payments in every country of operation and in some cases provide this information at a project level.
“If it truly hurt their bottom line, they simply wouldn’t be doing it,” added Freeman.
When the SEC follows the law and Congressional intent, the rule will become a new global standard for mandatory disclosure of payment information. The move would also complement and strengthen the Extractive Industries Transparency Initiative (EITI) – a voluntary international disclosure scheme followed by some countries.
“For years, we have been asking the EITI program in Azerbaijan to adopt the type of payment reporting that is required by the new US law, but participating companies have prevented this from happening,” said Ingilab Ahmadov, Director of the Eurasia Extractive Industries Knowledge Hub in Azerbaijan. “Our national program is stagnant. The SEC has an opportunity to energize programs such as ours, with final rules that will help countries suffering from the so-called resource curse, help themselves.”
Movement for transparency in the oil and mining sector has been growing globally. The G8 recently endorsed mandatory disclosure laws and José Manuel Barroso, president of the European Commission, has committed to advancing legislation in Europe, with a proposal tabled by October.
“The passage of the US law has kicked off a race to the top,” said Corinna Gilfillan, head of the US office of Global Witness, which is lobbying in Europe for the adoption of similar laws. “Other markets are moving very quickly to consider transparency legislation, and with all eyes on the SEC, it is crucial for the final rules to be released as soon as possible.”