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In reaction to a U.S. Department of the Treasury report recommending the repeal of Section 1504 of the Dodd-Frank Act, the bipartisan Cardin-Lugar Anti-Corruption Provision, Oxfam America’s Policy Lead for Extractive Industries Transparency Isabel Munilla made the following statement:
“Transparency is critical to make sure that money does not end up lining the pockets of corrupt government officials. In calling for a repeal, Secretary Mnuchin is in effect promoting corruption by allowing foreign governments to rob their citizens of precious revenues that are critical to economic development and poverty reduction. It is disgraceful. Repealing the anti-corruption law known as “Section 1504” would allow oil, gas, and mining companies, like Exxon, to make corrupt deals in secret and mean that citizens have no way of holding their governments accountable for stolen public money. Treasury’s proposal is a slap in the face to investors worth nearly $10 trillion who have formally supported the law, and Congress that passed the law.
“The Securities and Exchange Commission (SEC) has a legal mandate to issue the rule for Section 1504, and has been directed by Republican members of Congress to align it with existing rules in other countries. Leading Republicans, including Senators Graham, Corker, Collins, Rubio, Isakson, and Young, support revised rule action by the SEC. Instead of calling for Congress to repeal the law, Secretary Mnuchin should be encouraging the SEC to finish its important work, so the US join the international community and get back to playing the leadership role.
“The Treasury’s report makes the same arguments that Exxon and the American Petroleum Institute made years ago that were thoroughly debunked during the SEC rulemaking process, including the claim that extractive industry revenue transparency information is not necessary for U.S. investors. In fact, during the multiple rounds of the SEC rulemaking process, the investor community made it very clear that revenue transparency is very important information that allows them to accurately assess risk.
“Moreover, Treasury’s call for the repeal of this anti-corruption law is inappropriate given Congress’ very public commitment to working on a new rule. Congress knows that repeal would be a gift to corrupt governments that destabilizes economies, damages the investment climate, and threatens US national security interests. In the five years since the passage of Section 1504 (between 2010 and 2015), more than $1.5 trillion in extractive industry revenues has been paid by oil companies to the governments of some of the poorest countries on earth. Without transparency, we don't know if those funds arrived, or how they have been spent and all indications are that millions of dollars in oil and mining revenues are easily siphoned off by corrupt elites, because citizens have very limited access to the information needed to “follow the money.”
“By proposing repeal, the Treasury Department is proposing the United States forfeit its leadership on transparency. Both parties in Congress viewed US leadership in the global transparency movement as a critical national objective when they enacted Section 1504 in 2010. Since then, major oil and mineral markets like the UK, the rest of the European Union, and Canada have followed our lead by enacting similar transparency laws modeled off Section 1504. Major multinational companies like Shell, BP and Total are already reporting their payments under those laws, as are Russian state-owned oil companies like Gazprom and Rosneft and from China are reporting payments. So what exactly are U.S. companies like Exxon and Chevron so afraid of?
“The experience of companies who are already disclosing their payment information without issue shows industry’s doomsday claims against disclosure are pure fantasy. It also exposes Treasury’s proposal for what it really is: a shameless handout to corrupt foreign governments, corporate lobbyists, and the few corporations who would exploit secrecy to execute corrupt backroom deals. Secretary Mnuchin should get the Treasury Department back to the business of using American tax dollars to help real people rather than searching for new ways to line the pockets of corporate lobbyists and corrupt government officials here and abroad.