For immediate release: October 11, 2012
Global Witness is outraged by a lawsuit filed by the American Petroleum Institute (API), the U.S. Chamber of Commerce and others to gut Section 1504, an important anti-corruption provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act. (1) By seeking to nullify this provision, API, whose members include BP, Chevron, ExxonMobil and Shell, and other industry groups are demonstrating that they have something to hide. Any claims by API that they support transparency efforts are preposterous when they are not only trying to weaken the rules but to strike Section 1504 in its entirety.
Section 1504, also known as the Cardin-Lugar Amendment, requires oil, gas and mining companies registered with the U.S. Securities and Exchange Commission (SEC) to disclose payments to the U.S. federal government and foreign governments at both a country and project level. In so doing, it will shine a light on billions of dollars of payments to governments from oil, gas and mining companies, helping to prevent corrupt government officials from siphoning off natural resource revenues.
“This action by API and the Chamber is not just contemptible, it shows how out of touch the industry has become,” said Simon Taylor, Director of Global Witness. “The companies claim this law will create a competitive disadvantage, but their arguments don’t stack up. Instead, it seems what they really want is to continue to operate in an opaque environment – which can only aid and abet the transfer of massive and often illicit payments, beyond the prying eyes of concerned citizens who have a right to expect accountability when it comes to payments for their resources.”
Earlier this year, Global Witness reported revelations from New York court documents that Nigerian subsidiaries of Shell and ENI made payments of US$1,092,040,000 to the Nigerian government to acquire oil block OPL-245. The Nigerian Government then paid precisely the same amount to Malabu Oil and gas, a company associated with Dan Atete, a convicted money launderer and former Abacha era Oil Minister, who oversaw the transfer of the block to Malabu 14 years previously. If implemented properly, and as envisaged by the SEC rule, Section 1504 would provide transparency around these types of payments. In contrast, the project definitions suggested by companies and the API are meaningless, and would ensure billion dollar payments such as these would remain hidden.
Section 1504 was passed in 2010 with bi-partisan support. The SEC spent two years developing the rules and considered hundreds of letters and comments from industry, civil society and other stakeholders.
“After such an extensive rule-making process by the SEC, oil companies failed to produce any evidence of laws, regulations or contracts that would force them to breach laws or contracts with foreign governments as they claim in the lawsuit,” said Corinna Gilfillan, Head of U.S. Office of Global Witness. “These companies hypocritically claim to support natural resource revenue transparency by participating in the Extractive Industries Transparency Initiative (EITI), while at the same time working aggressively to dismantle this transparency requirement.”
The API lawsuit is a direct assault on the democratic process in order to protect secrecy,” said Taylor. “API members, especially its biggest and most influential players which include Chevron, BP, ExxonMobil and Shell, are using API as a front to destroy this law. These companies need to stop hiding behind the API. Instead, they must now publicly state for the record whether they are in favor of this lawsuit or against it. To say nothing will be a vote in favor – demonstrating their contempt for transparency, accountability, not to mention democracy in the United States.”
Global Witness calls on the SEC to strongly defend the rules from this legal attack and to not stay the rules.
Note to journalists and 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 October 10, 2012.
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