Global Witness welcomes today’s announcement by the UK Government that it will pass legislation in 2014 to ensure UK oil, gas, mining and logging companies publish details of their revenue payments to governments, such as taxes, royalties and licence fees, right down to the project-level.
The announcement adds pressure on the U.S. Securities and Exchange Commission (SEC) to re-issue a strong new implementing rule for the Dodd-Frank Act’s Cardin-Luger provision, which similarly requires U.S.-listed extractive companies to disclose project-level payments.
The SEC is re-writing the rule after a court decided that it must provide better justifications for certain aspects of the regulations, following a legal challenge brought by the American Petroleum Institute (API), an oil business lobby group.
API members including Exxon, Chevron, Shell and BP claim that certain countries such as Angola and China ban the disclosure of revenue payments, and are lobbying for exemptions in the SEC rule that will allow them to continue making payments in secret in these countries.
This is despite the fact that oil companies have failed to produce any credible evidence to support their claim that payment disclosure is outlawed in any oil producing country.
Allowing exemptions would effectively create a “dictators’ charter”, as it would encourage corrupt regimes to introduce local laws that ban the publication of revenue payments and defeat the purpose of the U.S. legislation.
The oil lobby is also pushing to limit public disclosures to aggregate payment data, despite the fact that this would defeat the whole purpose of transparency law, which is intended to ensure the information is fully accessible to citizens across the world.
All 28 EU Member States are required to introduce payment disclosure legislation for extractive companies by July 2015, under the recently adopted EU Accounting Directive. In addition to the UK, Germany, France, Italy, Sweden, Denmark and Finland have committed to fast-track implementation of the Directive.
The Accounting Directive requires full public disclosure of project-level data in all countries with no exceptions, and EU Member States have no leeway to alter the Directive’s requirements.
“European legislators emphatically rejected exemptions, and have set the standard for project-level reporting,” said Brendan O’Donnell, head of Global Witness’s Oil Campaign. “To avoid burdening industry with inconsistent reporting regimes and ensure a level playing field, the SEC must re-issue a payment disclosure rule that matches the EU legislation.”
In August a group of 44 U.S. investors with assets worth $5.6 trillion, including Allianz Global Investors and UBS Global Asset Management, called on the SEC to create a rule that aligns with the EU Directive. A uniform global standard would improve investors’ ability to compare and assess investment value across markets, manage risk, and should lower compliance costs for companies.
World leaders backed a consistent global transparency standard at the 2013 G8 summit in July. The final communiqué commits G8 countries to make progress towards a common, mandatory global reporting regime for the extractive industries. The G8 position is supported by the International Council on Mining and Metals, whose members include U.S.-listed Newmont, Rio Tinto, BHP Billiton, Barrick Gold and Vale.
A number of oil companies already publish revenue payments at the country or regional level, including Talisman, Tullow and Statoil. Statoil reports its payments to government in Angola – a country that the API claims prohibits disclosure – and has publicly distanced itself from the API’s legal challenge against the Cardin-Luger provision.
Other countries outside the EU are advancing quickly to establish revenue transparency laws. Norway is on track to introduce a mandatory project-level reporting standard with no country exemptions by January 2014, and Canada is moving swiftly to introduce comparable legislation. Switzerland, meanwhile, is developing options for a revenue disclosure law.
Project-level reporting of revenue payments is also now a requirement of the Extractive Industries Transparency Initiative, which is being implemented in 39 resource-dependent countries.
The UK’s commitment to implement a revenue transparency law in 2014 is included in the UK’s Open Government Partnership (OGP) National Action Plan 2013-2015, published today to coincide with the OGP Annual Summit in London. The UK National Action Plan is available here.
The UK is fast-tracking its obligation to incorporate the EU Accounting Directive into national law. The Directive requires EU-registered oil, gas, mining and logging companies to report their revenue payments to governments, such as taxes, royalties and licence fees, on a project-by-project basis in all countries of operation without exception.
Brendan O’Donnell +44 (0) 7912 517 128
Dominic Eagleton +44 (0) 7738 713 016