Litigation runs contrary to the UK G8 Presidency’s push for a global transparency standard
Global Witness is attending Shell’s AGM in The Hague today to ask the company to drop its support for a lawsuit that aims to kill off vital a U.S. transparency law. While the UK uses its G8 Presidency to advance a global transparency standard for oil and mining companies, the lawsuit seeks to stifle disclosure and move the industry in the opposite direction.
Shell is a leading member of the American Petroleum Institute (API), an oil industry lobby group that has filed a legal challenge against the U.S. Securities and Exchange Commission to strike down Section 1504 of the Dodd-Frank Act.[1] The Act compels U.S.-listed oil, gas and mining companies to publish their revenue payments to governments, such as taxes, royalties and licence fees, as a means of combating corruption and poverty in resource-rich countries. Shell is covered by the regulation as it lists shares in the U.S. as well as in the EU.
Last week the UK Prime Minister David Cameron called on G8 leaders to move towards a global standard for extractive companies to report details of their payments to governments “without exception.”[2] The statement came three days after the influential Africa Progress Panel urged all countries to adopt mandatory disclosure rules for oil and mining firms. The Panel’s report concludes that many of the charges against the Dodd-Frank legislation “stretch credibility”, while Kofi Annan, the Panel’s chair, suggested the litigation “is surely an act of strategic folly.”[3]
These high-level interventions followed last month’s landmark EU agreement to match the U.S. law and introduce mandatory reporting rules for EU oil and mining companies.[4] “Shell is swimming against the tide of transparency. As the world moves towards a global reporting standard for the natural resource industries, Shell’s continued support for the API lawsuit puts it on the wrong side of history. Shell must call off its assault on transparency and publicly dissociate itself from this case,” said Global Witness campaigner Dominic Eagleton.
Global Witness is also drawing attention to Shell’s recent statement that it “has always supported a mandatory global reporting rule for all companies engaged in extractive activities.”[5] Eagleton continued: “Shell’s claim to support mandatory disclosure is starkly at odds with its backing for a lawsuit that aims to rip up the U.S. rules. Instead of being true to its word and welcoming new transparency legislation, Shell is using the API to wreck a law that could help millions of people escape poverty.”
The API case has suffered a series of setbacks since it was filed in October last year. The Norwegian energy giant Statoil, also a member of the API, withdrew its support for the litigation in February after coming under pressure from Global Witness. The SEC rejected the API’s request to suspend the implementing rules for Section 1504 of the Dodd-Frank Act, and last month the U.S. Court of Appeals – the API’s preferred venue – dismissed the case on jurisdictional grounds. The suit will now be heard in a lower court, where the SEC will be able to mount a more comprehensive defence of its record.
“Transparency of extractive companies’ payments to governments has become the new global standard. Instead of trying to turn back the clock and defend corporate secrecy, Shell should follow Statoil’s lead and publicly divorce itself from this case,” Eagleton added.
Contact: Dominic Eagleton +44 7738 713 016. Available for interview in The Hague on 21st May.
Notes to editors:
[1] The lawsuit was filed by the American Petroleum Institute, the Chamber of Commerce of the United States of America, the Independent Petroleum Association of America and the National Foreign Trade Council against the U.S. Securities and Exchange Commission in the United States District Court for the District of Columbia on 10th October 2012.
[2] Rt Hon David Cameron MP, ‘The UK's G8 agenda - Increasing trade, fairer taxes and greater transparency’, Wall street Journal, 13 May 2013.
[3] Kofi Annan, ‘Stop the plunder of Africa’, New York Times, 10 May 2013. The API’s charges against the Dodd-Frank provision include that it places a heavy cost burden on companies, damages the industry’s competitiveness, and forces companies to break the law in countries where disclosure is banned. These arguments were considered at length by the SEC during a two-year rulemaking process that included hundreds of submissions from industry, civil society and other stakeholders.
[4] On 9th April 2013, the EU Parliament, Member States and Commission agreed new project-by-project reporting requirements for oil, gas, mining and logging companies, which will be included in the new EU Accounting and Transparency Directives.
[5] Wall Street Journal, ‘EU agrees rules on oil, mining companies’, 9 April 2013