“With this level of shareholder support, Chevron can no longer ignore the call for transparency,” said Ian Gary, senior policy manager for extractive industries at Oxfam America, who attended the shareholder meeting. “We know oil revenues are too often squandered through corruption, internal conflict, and weak governance. This is an opportunity for Chevron to promote the rights of citizens by providing them with vital information about revenues coming into their countries. Transparency should not be a question for Chevron, it is central to accountable practice in the vulnerable countries where it operates.”
The shareholder proposal was filed in December 2009 by Oxfam America and five institutions with Chevron holdings. Prior to the vote yesterday, shareholders and their proxies spoke in favor of this proposal to help reduce instability and insecurity in oil-rich countries through a transparent and accountable payment disclosure policy in all countries where Chevron operates. Two other global oil companies, Statoil of Norway and Talisman Energy of Canada, already disclose this information to the public.
During his remarks, Mam Sambath, chairman of Cambodians for Resource Revenue Transparency, said: “Secrecy encourages conflict. In Cambodia, over the past decades, there have been numerous conflicts between communities and companies, and these have led to losses for both sides. We don’t want this to happen because we want Chevron to stay, and this is your opportunity to take leadership in Cambodia and help us ensure that your operations in Cambodia will be successful and beneficial to both your company and Cambodians.”
In 2008, Chevron paid more than $40 billion in taxes to governments around the world. Managed properly, these revenues can contribute to economic prosperity and stability in countries where Chevron and other companies operate. However, history has shown that oil company payments to governments as well as government receipts are often kept secret, leading to embezzlement, corruption, and revenue misappropriation, which, in many cases, has prevented oil revenues from contributing to economic development.
In his address to shareholders, Ian Gary said: “Disclosing payments would complement Chevron’s existing efforts in initiatives such as the Extractive Industries Transparency Initiative. EITI has serious limitations. It is voluntary and only works where governments have the political will be transparent…Chevron works in many countries run by governments suspected of corruption and worse. Unfair or not, undisclosed payments raise popular suspicion regarding Chevron’s role in maintaining a system of financial secrecy. Ensuring that payments are transparent puts Chevron in a leadership position and turns the spotlight back on host governments.”
With the results of yesterday’s vote, Oxfam America has the right to re-file this shareholder proposal with Chevron next year. Oxfam America will continue to call on Chevron and its shareholders to support disclosure of all payments to host governments.
]]>
In December of last year, Oxfam America and a number of fellow shareholders filed a resolution with Chevron calling for a comprehensive policy of publicly disclosing all payments made to governments of countries where the company operates. The resolution, which will be up for vote at the meeting today, aims to promote the rights of citizens in oil-rich countries by providing them with vital information about revenues coming into their countries.
“With this resolution, many shareholders have spoke and Chevron should listen. Oil revenues are too often squandered through corruption, internal conflict, and weak governance in resource-rich countries,” said Raymond C. Offenheiser, President of Oxfam America. “Chevron has an opportunity to stop sitting idly by while this happens under a veil of secrecy. By publicly disclosing all payments, these governments can be held accountable for using revenues for economic development and poverty reduction.”
In 2008, Chevron paid more than $40 billion in taxes to governments around the world. Managed properly, oil revenues can contribute to economic prosperity and stability in countries where Chevron and other companies operate. However, history has shown that oil company payments to governments as well as government receipts are often kept secret, leading to embezzlement, corruption, and revenue misappropriation, which, in many cases, has prevented oil revenues from contributing to economic development in these countries.
In Angola, a country where Chevron operates, more than $4 billion in state oil revenues disappeared from government coffers between 1997 and 2002, an amount roughly equal to the entire sum the government spent on social programs in the same period. New areas of Chevron exploration in countries like Cambodia are threatened with the same fate if the company does not adopt a payment disclosure policy.
“Cambodians have witnessed how the misuse of oil revenues tore apart countries like Angola and Nigeria. On the verge of oil boom in Cambodia, we urge the Cambodian government to prepare for the oil industry by committing to accountable, transparent policies and regulations for successful management of this sector,” said Solinn Lim, Regional Program Coordinator for Extractive Industries at Oxfam America in Phnom Penh, Cambodia. “We urge Chevron to publish what they pay for our natural resources, so that their corporate practice will help support an open and sustainable industry in Cambodia.”
As Chevron convenes their meeting of shareholders, the US Congress is also recognizing the importance of revenue transparency in the oil, gas, and mining industries. A bipartisan group of Senators introduced the Energy Security through Transparency Act, which would legally require all oil, gas, and mining companies registered with the US Securities and Exchange Commission (SEC) to disclose payments made to host governments. This includes European companies, such as Shell and BP, as well as many companies in emerging markets such as China, India and Brazil. The bill was introduced in September of 2009, and is expected to be considered for a vote in 2010.
“Congress has started to recognize the value of transparency in this sector, and we need industry leaders like Chevron to commit to a payment disclosure policy that would not only protect company investments and help stabilize energy prices for consumers, but also foster accountability in nations were secrecy has undermined development, democracy, and human rights for decades,” said Offenheiser.
]]>
“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,” said Raymond C. Offenheiser, president of Oxfam America. “We commend the Senators for encouraging US leadership to promote transparency where it is needed most.”
The “sense of Congress” in the Foreign Relations Authorization Act recommends requiring oil, gas, and mining companies to publicly disclose payments made to foreign governments; bilateral efforts to promote good governance in resource-rich countries through US missions and activities abroad; and encouraging foreign allies to establish similar policies. The legislation also recommends a US commitment to the Extractive Industry Transparency Initiative, an international voluntary initiative designed to increase transparency of payments by companies to 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. These policies would foster accountability in nations where secrecy has undermined development, democracy, and human rights for decades,” said Offenheiser.
These recommendations reflect requirements laid out in the proposed Energy Security through Transparency Act (S. 1700), which was introduced in September 2009 by a bipartisan group of Senators led by Senators Richard Lugar (R-IN) and Ben Cardin (D-MD). This bill would require all oil, gas, and mining companies registered with the US Securities and Exchange Commission to disclose payments. This includes European companies, such as Shell and BP, as well as companies in emerging markets like China, India, Brazil, and Russia.
“If passed, the information provided through The Energy Security Through Transparency Act would be a vital tool for citizens to hold their governments accountable for using oil, gas, and mining revenues to address community needs like education, health care, and jobs,” said Offenheiser.
“Passing the Energy Security through Transparency Act would demonstrate US leadership in the effort 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.”
]]>
Voluntary initiatives like the Extractive Industries Transparency Initiative (EITI) have emerged to increase transparent and accountable management of natural resource wealth. While these efforts are an important first step, transparency will not be effective without improved political accountability and the protection of basic human rights.
“Publishing numbers will only go so far if political accountability issues are not addressed. The US government and other countries supporting EITI implementation must develop accompanying strategies to improve human rights protection and oversight of government expenditures in these countries. Otherwise, transparency initiatives may have the perverse effect of masking these underlying problems,” said Ian Gary, senior policy manager at Oxfam America, who delivered the testimony.
“More than half of the world’s poorest people live in countries rich in natural resources. Despite billion dollar industries operating on their lands, many resource-rich countries exhibit classic signs of the ‘resource curse’ with high rates of underdevelopment, internal conflict, and political instability, all of which impinge on the rights of citizens. This hearing is a timely opportunity to assess the progress made in the last decade to improve human rights and development in these countries.”
For decades, these important issues were not part of the international development agenda. In the last several years, Oxfam and other nongovernmental organizations as well as civil society groups in developing countries have begun calling attention to the tragic irony of extreme poverty in countries with abundant natural resource wealth.
Secrecy in oil, gas, and mining industries has been identified as a major obstacle to reform. In many countries, contracts and payments between foreign companies and host governments are not made public, leaving citizens with little information about the revenues coming into their country.
“Without accurate, timely, and complete information about resource revenues, citizens have no power to hold their governments accountable for using this wealth for essential services like health and education. Transparency will help make way for stability and real solutions to poverty that the oil, gas, and mining industries can support improving the ability of these industries to address poverty,” said Gary.
In some countries, such as Ghana, EITI discloses new information and provides a platform for civil society and government engagement. But Ghana has a vibrant civil society with an active press and a generally favorable human rights environment. In countries like Equatorial Guinea – with a history of oil-fueled corruption, no free elections, independent media, or strong civil society – transparency of payments from companies to governments is important but needs to be accompanied by progress on human rights to be used as a tool for political accountability. Equatorial Guinea was dropped from EITI on April 15, 2010 after it was not granted an extension to complete a validation process to assess EITI implementation. EITI’s board did not find evidence that “exceptional and unforeseen” circumstances had prevented the country from making progress.
Given the uneven progress of voluntary initiatives to date, additional disclosure rules for oil, gas, and mining companies are needed. The US Congress, for example, should pass the Energy Security through Transparency Act (S.1700) this year to require all oil, gas, and mining companies to disclose payments to host countries and extend transparency as a truly global standard for company operations. The legislation, introduced in September 2009 by Senators Lugar and Cardin, would apply not only to US companies, but to all companies registered with the US Securities and Exchange Commission. This includes European companies, such as Shell and BP, as well as those in emerging markets like China, India, and Brazil.
In addition to this legislation, Oxfam suggested additional US government reforms during the testimony that would help address human rights violations in resource-rich countries, including the development of concrete strategies for human rights promotion and protection in resource-rich countries by the State Department; engagement of the State Department’s Bureau of Democracy, Human Rights, and Labor in the global EITI process; and increased US support for efforts by civil society, journalists, and others to disseminate payment information disclosed as a result of EITI.
“The US and other countries must recognize that more comprehensive strategies are needed for resource-rich states to truly overcome the ‘resource curse’ through human rights promotion, political accountability, and improved transparency in all areas. Only then can citizens truly begin to see the benefits of natural resource extraction,” said Gary.
]]>
In reaction to these developments, Ian Gary, Senior Policy Manager for Extractive Industries at international aid and humanitarian organization Oxfam America made the following statement:
“Many countries had not even completed draft validation reports before the initial March 9 deadline, so the reasons for granting them extensions should be fully explained. The EITI board should fully disclose the rationale for accepting the extension requests of 16 countries, including the ‘exceptional and unforeseen circumstances’ that were accepted as valid. This information will help external observers, and the countries themselves, judge whether or not the rules were consistently applied. All countries must be treated the same and according to the EITI’s own rules. Disclosure of the reasons for granting extension requests will also help increase awareness of any external issues that have been hampering EITI progress.
“While it’s unclear how much time countries have been granted, extensions should be of limited duration and one-time only. The strength of this voluntary initiative will depend on enforcing real deadlines and consistently applying the rules.
“During the next few months, the EITI board should carefully scrutinize the final validation reports, especially with regard to the free, independent, and active participation of citizen watchdog groups in the country-level EITI process. Respect for human rights, including freedom of expression and association, is fundamental to the reform agenda in resource-rich countries. Transparency regarding financial flows in the oil and mining industries can help increase accountability around government spending decisions only in countries where citizens, journalists, and parliamentarians can ask questions of their own governments.
“While EITI is making some progress in some countries, the pace and depth of progress to date, and the fact that many resource-rich countries are outside the process, show that other complementary measures are needed. The US Congress, for example, should pass the Energy Security through Transparency Act this year, to increase the disclosure of oil, gas, and mining company payment information to host governments around the world.”
]]>The International Labour Organization (ILO) is calling on President Álvaro Colom to suspend operations at the Marlin Mine in the western highlands. The ILO’s Commission of Experts told the government that it should “suspend exploitation” until it can provide information for a review under way concerning the social, spiritual, cultural, and environmental impact of the Marlin mine on local Maya people. (See the Report of the Committee of Experts on the Application of Conventions and Recommendations, pp. 769-770.)
The same report (p. 781) urged the government of Peru to suspend mining exploration and operations affecting indigenous people until “until such time as the participation and consultation of the peoples concerned is ensured through their representative institutions in a climate of full respect and trust.”
The review is part of the government’s responsibility under the ILO’s Convention Concerning Indigenous and Tribal People in Independent Countries (known as ILO Convention 169).
In addition, the UN’s Committee on Elimination of Racial Discrimination (CERD), in its 76th session in Geneva urged the government of Guatemala to take action to support the human rights of indigenous people affected by mining: “It was recommended that Guatemala put in place adequate mechanisms, in conformity with the United Nations Declaration on the Rights of Indigenous Peoples and International Labour Organization Convention No. 169, to ensure effective consultation with communities that could be affected regarding projects for the exploitation and development of their natural resources, with the objective of obtaining their prior informed consent.”
These statements reaffirm the importance of free, prior and informed consent (FPIC) of the indigenous people of Guatemala. Local communities--especially indigenous communities--have to be informed in a timely manner about development projects and should have the opportunity to approve (or reject) a project before it starts.
Oxfam America works with national organizations to inform communities about the possible effects of mining projects in their communities and their rights to FPIC. “The reports and the recommendations of ILO and CERD reconfirm the importance and the validity of the demands of the indigenous people in Guatemala affected by mining, and the importance of consulting with these communities,” affirms Andrés McKinley, program officer for Oxfam America in Central America. “In the absence of these fundamental rights, mining in Guatemala will continue to threaten peace and sustainable development in the country.”
]]>In a letter to Chevron shareholders, Oxfam is urging investors to support a shareholder proposal on fiscal transparency calling on the company to disclose annually all taxes, royalties, fees, bonuses, and other payments to specific national governments.
Chevron paid more than $40 billion in taxes to governments around the world in 2008. Knowing how much money Chevron pays to the governments of Nigeria, Chad, Angola, Myanmar, and other countries rich in oil and struggling in poverty can make a significant difference for citizens pushing for government accountability.Chevron is a participant in the Extractive Industry Transparency Initiative (EITI), which is promoting disclosure of resource revenues paid to governments, and has stated in its 2008 corporate responsibility report that it supports the mission of the EITI:“Chevron believes that disclosure of revenues received by governments and payments made by extractive industries to governments could lead to improved governance in resource-rich countries. The transparent and accurate accounting of these funds contributes to stable, long-term investment climates, economic growth and the well-being of communities.”
Unfortunately, the voluntary EITI initiative works only where governments have the political will to implement the program. In many Chevron countries of operation the host government has either not signed up to EITI or not fully implemented it. Only 2 out of 22 countries facing a March 2010 deadline to have their implementation of EITI independently verified met the deadline.
Chevron has an additional opportunity to take a leadership role in advocating for resource revenue transparency as the US Congress debates the proposed Energy Security through Transparency Act of 2009. This law, if enacted in its proposed form, would require all oil companies like Chevron that are registered with the Securities and Exchange Commission to disclose payments to governments. The law would ensure more disclosure in resource-rich countries, whether or not the government is participating in the voluntary approach.
The Oxfam shareholder proposal concludes: “Chevron should practice the highest possible degree of disclosure of payments from the company to host governments to maintain its industry leadership position on this critical issue and to ensure that its investments contribute to increased economic development and political stability.”
Oxfam hopes for strong support for the proposal at the annual Chevron shareholders meeting on May 26th.
]]>Unfortunately, not all indigenous groups participating in these working groups felt that the discussions were productive. AIDESEP, a long-time Oxfam America partner and one of the largest federations representing indigenous peoples in Peru’s Amazon, has withdrawn from the dialogue process, citing lack of progress and reluctance on the part of the government to accept its share of the responsibility for the violence in Bagua.
While indigenous people and the government struggle to continue a meaningful dialogue, the Indigenous Federation of Madre de Dios (known as FENAMAD) has been objecting to the presence of Hunt Oil of Texas in the Amarakaeri Communal Reserve (RCA), part of the 3.5 million-acre Block 76 oil concession located in the Madre de Dios region in southeastern Peru. FENAMAD contends that Hunt Oil could be playing indigenous communities against each other to gain access to their lands. “The current strategy of the US company Hunt Oil is to negotiate directly with the members of each native community and seek to divide them and provoke open confrontation among the brother indigenous people within each community,” FENAMAD is saying in a memorandum.
There is a real danger this could emerge as the next flashpoint in a disturbing stream of conflicts between communities and oil and mining companies in Peru. The Peruvian Ombudsman Office estimates that of the 273 social and environmental conflicts in Peru in the first six months of 2009, 80 percent were related to extractive industry projects. (In 2008 there were 123 social and environmental conflicts in the same period.)
FENAMAD and other indigenous federations are insisting that foreign oil, gas, and mining companies must attain the free, prior, and informed consent from communities before they can enter any indigenous lands such as the Amarakaeri Communal Reserve. The right of free, prior, and informed consent is a right of indigenous peoples established under international law, and requires free access to full information (including independent analysis of project proposals), adequate time for a community decision free of pressure and coercion, and the option to reject a proposal--or accept under certain conditions.
The failure of oil, gas, and mining companies to gain appropriate access to communities with natural resources limits Peru’s ability to benefit from revenues it needs to help the approximately 50 percent of its population now living in poverty.
The legislature gave Peru’s President Alan Garcia broad powers to promote economic competitiveness through decrees last year, saying it was necessary to adapt legislation to comply with new requirements of the Peru-US Free Trade Agreement. Indigenous federations and many civil society organizations have strongly protested the possible consequences of these laws for the Amazon rainforest and indigenous lands, as well as the fact that they were adopted without transparency or genuine consultation. Some of these legislative decrees were rescinded following violent confrontations last June, but many are still in force.
Oxfam America's campaign—called the Right to Know, Right to Decide—aims to arm local citizens with the information they need to weigh the costs versus the benefits and decide whether to provide consent for the projects to move forward.
“There is a potential for this confrontation to escalate to violence,” says Emily Greenspan, Oxfam America’s policy advisor who monitors oil and gas projects in Peru’s Amazon. “Companies seeking to operate in any areas need to attain the free, prior, and informed consent of communities. Those that appear to be forcing their way into communities risk serious conflict, as we have seen in the recent past.”
]]>The media in Ghana are reporting that representatives of all the main political parties in Parliament are sufficiently concerned about the anticipated $1 billion in additional revenue in 2010 that they issued a communiqué calling for the government to stop issuing any new licenses for oil production until it can improve its regulations for the oil industry and clarify how the money will be managed.
An article in the government-owned Daily Graphic newspaper said that the members of Parliament “argued that less than one year before the drilling of the country’s oil in commercial quantities, there was not a single law before Parliament on how the country would manage the oil fields and the expected revenue as well as how to ensure that the environment was not damaged by the companies.”
The communiqué urged the government to use oil money to diversify its economy, and avoid an over reliance on oil that has been so disastrous in other countries in Africa. The communiqué also pointed out that Ghana needs to beef up its tax revenue agency to ensure oil taxes are properly collected and available for social programs to benefits its citizens. The members of Parliament called for the government to use 80 percent of oil funds to improve the “physical and social infrastructure” of the country, save 10 percent for future needs, and use the other 10 percent for stabilizing the budget.
In early 2009 Oxfam America and the Integrated Social Development Center of Ghana (ISODEC) issued a report called Ghana’s Big Test that recommended the country halt new licenses and disclose details of licenses and agreements it makes with oil companies as a means to increase transparency. Following the release of this report, Ghana’s new president John Atta Mills committed to do this, and also said the country would take steps to promote new and better regulations and foster open and public procedures for issuing licenses and setting policies.
To date, the government has not followed through on its commitments to disclose petroleum agreements, despite continued calls from civil society and parliamentarians to do so. Oxfam partner organization ISODEC has continued to promote opportunities to implement recommendations from the report. Steve Manteaw, campaigns coordinator at ISODEC, says that, “Ghana must control the pace of petroleum sector development so that it does not outstrip the capacity of the government and society to build institutions, regulations and standards.”
“The communiqué issued by the members of Parliament, cutting across Ghana’s political spectrum, emphasizes the importance of transparency and responsible management of oil revenues,” says Ian Gary, Oxfam America’s senior policy advisor and author of the Ghana’s Big Test report. “It will be vital for the government to fully consult with members of Parliament and the public at large on the legal framework for regulating the sector and managing revenues so that strong safeguards are in place before oil starts to flow.”
]]>