The international board of the Extractive Industries Transparency Initiative (EITI) made partial progress to strengthen the initiative during its meeting in Lusaka, Zambia on October 25-26th. While the EITI Board agreed to expand EITI’s reporting requirements, extractive industry companies continued to block the inclusion of transparency of resource contracts and project level payments. This comes at a time when the European Union (EU) Council agreed on October 26th to include project level reporting in transparency directives designed to mirror U.S. law.
At the board meeting, Global Witness condemned the American Petroleum Institute’s (API) lawsuit and the attempt to block project level reporting through the EITI and EU.
“Companies, including EITI Board members BP, Chevron, Exxon, Shell and Statoil, will continue to block EITI’s progress so they can use a weak EITI to fend off the scrutiny of mandatory reporting in the U.S. and EU. This position is incompatible with the aims of the EITI and undermines our efforts to move EITI forward,” said Corinna Gilfillan, Head of Global Witness’ U.S. office and EITI Board member.
The two day meeting focused on considering proposals to improve and expand EITI reporting as part of a review process to address weaknesses identified in a 2011 evaluation of EITI’s impact. Thirty-seven countries participate in the voluntary initiative, which requires governments, civil society organisations and companies to agree to publish reports disclosing oil, gas and mining revenues. Publish What You Pay, which is comprised of hundreds of civil society groups in 60 countries, has called for strengthening the EITI by requiring transparency of licenses, contracts, project-level payments and other information.
The Board meeting made some progress in agreeing to expand EITI reporting requirements related to the disclosure of information about natural resource licenses and license holders, bidding processes for the allocation of extractive contracts and the beneficial owners of companies holding or bidding for licences. Other requirements include transparency of payments made from the national government to the regional or local level, social payments that are part of contracts, transactions between state-owned companies and governments and disaggregated data by company and revenue stream.
Despite support from civil society and governments, oil and mining companies on the EITI Board continue to fight against requirements that are vital for an effective EITI. Companies opposed proposals to make project level reporting of payments a new requirement, citing difficulties in defining projects. They also blocked the idea of requiring contract transparency, some going as far as rejecting the idea that EITI rules should even encourage it. The Board will consider the proposals further and the EITI will finalize new rules at its international conference in May 2013 in Sydney, Australia.
The same companies resisting project reporting within the EITI are fighting mandatory disclosure requirements in the U.S. and EU. BP, Chevron, Exxon, Shell and Statoil, all members of the EITI Board, are members of the API which launched a lawsuit this month against the U.S. Securities and Exchange Commission (SEC). The lawsuit seeks to overturn Section 1504, the natural resource revenue disclosure provision in the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act that includes project level reporting. API recently petitioned the SEC to stay the implementation of Section 1504 and companies are lobbying furiously in Europe to squash similar provisions in draft EU laws.
Meanwhile the EU Council agreed on Friday (October 26th) to include project level reporting in transparency directives designed to mirror U.S. law. The EU Parliament have also agreed to a strong project definition and the requirement is likely to be included in the final directive due by the end of 2012.
“Both the EITI and the EU directives must include effective project reporting to be fit-for-purpose. Without this, citizens can not know exactly what is being paid for, how much is being paid and where the money goes,” said Brendan O’Donnell, Oil Campaigner Team Leader at Global Witness. “If these basic disclosure requirements are not adopted, the EITI will fall seriously behind the rest of the world and will fail to ensure that natural resource revenues contribute to development in resource-rich countries.”
Corinna Gilfillan, EITI Board member and Head of Global Witness U.S. Office email: [email protected], cell phone: +1 202 725 8705
Brendan O’Donnell, Oil Campaign Team Leader, Global Witness email: [email protected] , cell phone: 44 (0) 7912 517128
Global Witness statement at the EITI Board meeting on October 25-26th on API lawsuit is available here.