Washington, DC – International development and relief organization Oxfam America expressed extreme disappointment that the oil industry has decided to try to use the courts to keep investors and the public in the dark regarding payments to resource-rich countries. The American Petroleum Institute, a lobby group representing companies such as BP, Exxon, Chevron and Shell, filed a lawsuit against the US Securities and Exchange Commission (SEC) yesterday to overturn a US law that will provide valuable information to investors and help prevent corrupt government officials from squandering oil and mineral wealth in resource-rich countries.
The law, known as Section 1504 or “Cardin-Lugar” provision of the Dodd-Frank Act requires oil, gas and mining companies to disclose payments, such as taxes, they pay to foreign governments for the extraction of oil and minerals. After missing the Congressional deadline by more than a year, the SEC issued final rules on August 22, 2012 and companies are required to start reporting their payments for fiscal years ending after September 30, 2013. Oxfam America believes the SEC conducted a robust and lengthy input process, thoroughly addressing public comments and analyzing the economic consequences of the final rules.
“By approving final regulations for the Cardin-Lugar provision, the SEC acted to lift the veil of secrecy on billions of dollars that flow every year from oil and mining companies to governments around the world,” said Ian Gary, senior policy manager of Oxfam America’s oil, gas and mining program. “The agency followed the letter of the law. Now it’s time for oil companies to comply with the final regulation, not fight it in the courts.
“We are greatly disappointed that the oil industry is trying to use the courts to bully the SEC and push for secrecy in their payments to governments.” said Gary. “We call on companies, such as BP, Exxon, Chevron and Shell, who are hiding behind industry associations to do their dirty work while espousing transparency rhetoric, to disassociate themselves from the lawsuit.”
In a recent review, the Government Accountability Office (GAO) concluded that the rule promulgated by the SEC is legally sound. Investors worth more than $1.2 trillion weighed in with the SEC, asking the agency to quickly implement a final rule that followed the statutory language and Congressional intent. Several companies, such as Talisman Energy, Statoil, AngloGold Ashanti and Newmont Mining already disclose payments in every country of operation, in some cases at the project level as the law and final rule requires. The final rule does not require companies to disclose contracts or contract terms, nor does it require companies to disclose proprietary information.
“If payment disclosures hurt bottom lines, then leading companies like Statoil and Talisman Energy would not already be disclosing this type of information,” said Gary. “Any well-run company should already collect and account for this information and if systems aren’t in place for tracking payments, investors need to ask why.
“The oil industry loves to trumpet their contributions to society but when a new law requires them to tell the public exactly how much money they pay to governments around the world, they bring out the lobbyists and file a lawsuit,” continued Gary. “This lawsuit is wholly incompatible with the industry’s transparency commitments and embrace of payment disclosure through such initiatives as the Extractive Industries Transparency Initiative.”
NOTE TO EDITORS:
The lawsuit was filed in the United States District Court for the District of Columbia by the American Petroleum Institute (API), the US Chamber of Commerce, the Independent Petroleum Association of America and the National Foreign Trade Council.