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Draft SEC oil and mining rule would facilitate corruption


A proposed Securities and Exchange Commission (SEC) implementing rule for a key oil and mining anticorruption law is a handout for kleptocrats and industry insiders warned Oxfam.

The SEC voted today to release the proposed rule for Section 1504, a provision in the 2010 Dodd-Frank Act. Also known as the Cardin-Lugar provision after its bipartisan supporters, Section 1504 mandates regulations requiring all oil, gas, and mining companies listed on US stock exchanges to disclose the payments they make to government by project and by company. The SEC issued a strong rule in 2016 that Oxfam welcomed, but this rule was removed in 2017 by a Republican-controlled Congress and signed by President Trump.

“This rule looks like a product of insider Beltway wheeling and dealing that prioritizes shady deals and irresponsible corporate actors over real American security,” said Isabel Munilla, Policy Lead for Extractive Industries Transparency at Oxfam America. “Corruption in the oil and mining sector is alive and well, and the billions that companies pay governments around the world is still at risk.”

Today’s proposal is followed by a 60-day comment period, after which the SEC will vote on a final rule. Commissioners Jackson and Lee voted against the proposal, arguing that a range of weaknesses needed to be fixed. Public input on the proposal will be considered as the rule is finalized.

“We agree with SEC Chair Clayton that the US should continue to lead the global fight against corruption," continued Munilla. “Unfortunately, today’s proposed rule misses the mark. This rule needs a lot of work. As we have done over the past decade, we’re ready to support the SEC as they strengthen the rule.”

“This rule is supposed to provide transparency to citizens of resource-rich countries so they can see the money that is being paid to their governments by the extractive industries, said Commissioner Lee. “Instead, we would deviate widely from existing international disclosure regimes and severely limit the utility of the required disclosure.”

“Aggregated, anonymized disclosure would make it harder to hold corporate insiders to account for the choices they make in this area,” said Commissioner Jackson. “Whatever Congress intended us to do with this statute, surely they imagined that corporate insiders would be held to account for these payments.”

Despite not yet being implemented, Section 1504 inspired an international standard for oil and mining transparency. Sister laws soon followed in 30 countries, including in the European Union, Canada, and Norway. Today, Companies like BP, Shell, Total, Rio Tinto, and BHP Billiton, the world’s largest miner, as well as Russian and Chinese state-owned companies are publishing what they pay.

“Companies are disclosing all over the world, at little to no cost,” said Munilla. “The US has gone from leader to laggard in the global fight for transparency in the last decade. We hoped that today’s draft rule would begin to reverse this trend. Instead, it plays into the hands of corrupt politicians, compromised bureaucrats, and insider lobbyists who thrive on secrecy.”

The American oil industry has historically challenged mandated disclosure reforms, such as Section 1504. The SEC is regularly lobbied by the American Petroleum Institute, the largest trade association for US oil and gas companies.

According to Oxfam, this rule also runs counter to the bipartisan spirit of Section 1504, which was intended to advance national security and energy interests. If implemented properly, Section 1504 should counter the corruption and government abuse that catalyzes conflict, instability, and violent extremism around the world. It would also help protect American investors by giving them information they can use to assess investment risks in global markets. In fact, investors worth over $10 trillion in assets under management support project-level payment disclosures and alignment of the draft rule with the international standard on transparency.

“The SEC can still hit the mark and issue a strong final rule,” said Munilla. “The US should lead the world in fighting oil and mining corruption, as intended by Congress. To do so, the final rule must align with global norms and arm citizens, investors, and American officials with the data they need to push for accountability, strengthen economic development, and keep us safe at home and abroad.”


Press contact

For more information, contact:

Andrew Bogrand
Senior Communications Advisor, Extractive Industries
Washington, DC
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