Measure sets new global standard for corporate transparency
The Senate gave final approval today to the Dodd-Frank Wall Street Reform and Consumer Protection Act with a landmark provision requiring energy and mining companies registered with the U.S. Securities and Exchange Commission to disclose how much they pay to foreign countries and the U.S. government for oil, gas, and minerals.
This historic measure gives citizens in resource-rich countries information they need to combat corruption in the oil and mineral sector and to demand government accountability for responsible resource use. The House passed the same legislation on June 30, and it is expected to be signed into law by President Obama next week.
The provision was based on the Energy Security through Transparency Act (S. 1700), which was championed in the U.S. Senate by a bipartisan group of legislators led by Senators Benjamin Cardin (D-MD) and Richard Lugar (R-IN). Sen. Patrick Leahy (D-VT) introduced the provision as an amendment during the conference negotiations for the financial services reform bill. Critical support came from Senators Tim Johnson (D-ND), Russell Feingold (D-WI), Charles Schumer (D-NY) and Richard Durbin (D-IL). Both the Senate Banking Committee Chairman Christopher Dodd (D-CT) and the House Financial Services Committee Chairman Barney Frank (D-MA) supported the Senate amendment during conference negotiations.
“This provision is a critical part of the increased transparency and corporate responsibility that we are striving to achieve in the financial industry,” said Senator Cardin. “Given the catastrophic events in the Gulf of Mexico, oil companies, in particular, should well understand that secrecy fosters instability, corruption and greater risk. We now have the tools to help people in resource-rich countries hold their leaders accountable for the money made from their oil, gas and minerals.”
“Transparency empowers citizens, investors, regulators, and other watchdogs and is a necessary ingredient of good governance for countries and companies alike. The Cardin-Lugar amendment brings a major step in favor of increased transparency at home and abroad. It empowers investors to have a more complete view of the value of their holdings. It brings more information to global commodity markets, which would benefit price stability. Most importantly, it helps empower citizens to hold their governments to account for the decisions made by their governments in the management of valuable oil, gas, and mineral resources and revenues,” said Senator Dick Lugar, Senate Foreign Relations Committee Ranking Member in a Senate Floor Statement.
The measure is a major victory for the global Publish What You Pay coalition, which includes over 600 faith, human rights and development groups working in over 55 countries.
“This is a game changer,” said Isabel Munilla, Director of Publish What You Pay United States. “This legislation sheds light on billions in payments from oil and mineral companies and to governments. Citizens now have a powerful tool they can use to scrutinize the levels of public spending on economic development, environmental protection and health and human services.”
The measure covers hundreds of companies, including 90% of the world’s largest internationally operating oil and gas companies, and eight of the world’s ten largest mining companies. It will provide citizens in nearly every country around the globe with much needed information.
Publish What You Pay is calling on other governments to follow suit. “Citizens on the Gulf coast of the U.S., in the Niger Delta, and all around the world deserve to know how much their governments receive for the development of natural resources,” Munilla said. “That’s why we are calling on other governments, such as the United Kingdom, Canada, and Australia, to adopt similar requirements, so that we can build on the leadership of the U.S. Congress.”
Isabel Munilla – firstname.lastname@example.org
+1 (202) 525-2754 – +1 (202) 680-4606 mobile
1 The provisions were derived from the bipartisan Senate bill, the Energy Security Through Transparency Act (S. 1700) introduced in September 2009. http://www.govtrack.us/congress/bill.xpd?bill=s111-1700
2 Investors support the measure:
Quote from Calvert Investments, a socially responsible investment firm that has been doing advocacy to push the measure for several years:
“The depletion of conventional oil reserves and the declining grades of mineral resources such as gold are forcing oil, gas and mining companies to intensify their efforts to develop resources in countries with poor governance, weak rule of law, and high levels of corruption,” Bennett Freeman, Senior Vice President of Sustainability Research and Policy, said. “The resource payment disclosures required by the Dodd-Frank Wall Street Reform and Consumer Protection Act are necessary to evaluate the reputational, regulatory and taxation risks involved in operating in an emerging era in which all the easy to access resources are gone.”
See the full press release here: http://www.calvert.com/
A subset of investors active in the Social Investment Forum supported the bill https://org2.democracyinaction.org/o/5399/images/Investor%20support%20le…
In June, Chevron investors representing $10 billion in shares, supported a shareholder proposal calling on the company to disclose its payments to governments. http://www.oxfamamerica.org/press/pressreleases/shareholders-call-for-tr…
3 Faith groups support the measure:
US Conference of Catholic Bishops and Catholic Relief Services letter in support of the underlying legislation
Faith groups: https://org2.democracyinaction.org/o/5399/images/Faith%20Groups%20sign%2…
4 Measure in line with recent trend on company payment disclosure:
Hong Kong Stock Exchange (HSX) recently adopted a listing requirement for company payment disclosure. Last month, the Hong Kong Stock Exchange, which carries a number of Asian majors, required new applicant mineral companies to disclose “payments made to host-country governments”. http://www.revenuewatch.org/news/news-article/china/hong-kong-stock-exch…
The International Accounting Standards Board is considering a rule change to make disclosure of payments to governments by oil, gas and mining companies standard. http://publishwhatyoupay.org/en/resources/standard-setters-risk-putting-…
5 Some oil, gas and mining companies already publish payments to governments:
Newmont Mining, the second largest gold company in the world already publishes what it pays to government for mineral extraction, and has endorsed the underlying legislation. See Newmont quote in: http://org2.democracyinaction.org/o/5399/images/Senateintro9_09FINAL.pdf
This also includes Talisman Energy (Canada) and Statoil (Norway).
6 The measure will help to combat the following examples of corruption:
In Equatorial Guinea, a key oil supplier to the U.S. from Africa, the oil sector is opaque and relations between the government and international oil companies such as ExxonMobil, Chevron and Marathon lack transparency. The president’s son is under investigation by the U.S. Senate Permanent Subcommittee on Investigations for a number of years for laundering millions into the U.S. for the purchase of luxury cars and homes. Despite amassing billions in windfall oil revenues, Equatorial Guinea has been unable to prevent poverty for its tiny population of only 650,000 (roughly the size of the city of Baltimore). Currently, the majority of the citizens of Equatorial Guinea live in poverty. More here: http://www.egjustice.org/
7 See www.Openthebooks.org for more information on the legislation and supporters.