Blog | Dec. 1, 2014

Today UK oil and mining transparency becomes reality. U.S. take note.

Congratulations to the UK Government and Parliament today for drawing a line in the sand.

New regulations requiring UK oil, gas and mining companies to disclose the payments they make to all governments mark the beginning of the end of obscure payments for dirty deals.

They also strengthen the ability of ordinary citizens to ‘follow the money’, so that communities affected by extractive deals can ask where the money has ended up, and companies can make it clear that they are paying their way.

Companies like the oil giant Statoil, the miner Rio Tinto and Anglo-Irish oil company Tullow have recognised that the tide has turned towards transparency, and seized the “first-mover” advantage by becoming champions.

Oil Rig Silhouette

We hope that the new rules will usher in a new commitment from extractive companies to clean up the business and reduce the risks of crippling corruption sagas that investors need to avoid.

The impetus for this legislation has come from the colossal loss of revenues in some of the world’s poorest countries, where citizens have been robbed of billions that could have been used to build schools and hospitals.  When the money ended up in the wrong hands, nobody could ask the right questions because payments were invisible.

Having first witnessed this phenomenon in war-torn Angola in the early 90s, and seen it repeat itself time and again in countries where we work, Global Witness co-founded the Publish What You Pay coalition. Over a decade on the movement is 800 strong and successfully campaigning for this transparency standard around the world.

As today’s laws come into force in the UK, what is particularly gratifying is that the measures have seen strong cross-parliamentary support.

With the Liberal Democrat Business Minister Jo Swinson championing the regulations through parliament, a Conservative Prime Minister evangelising about them globally and a Labour MEP Arlene McCarthy having campaigned relentlessly for the EU Directive that led to the UK law (and laws in 27 other member states to follow), these measures have support across Westminster.

It hasn’t been an easy ride however.  McCarthy fought for every phrase in the European directive to ensure that the end product fitted industry working practices whilst doing its job of fighting corruption and enabling genuine accountability.  But the outcome in Brussels too was cross-parliament support with 96% of MEPs voting in favour.

In the US, things are still complicated. A steadily shrinking cabal of Big Oil dissenters including Royal Dutch Shell and Exxon continue to seek to gut the emerging global standard by attempting to weaken equivalent rules there.  Their main strategy has been to make the data collected on payments less specific – which means it would be harder to follow the money from individual deals. They are also lobbying for loopholes that would allow them not to report in certain countries where they claim legal prohibitions.  These were rejected by UK and EU law-makers.

Their approach is dangerously behind the times, and perpetuating obscurity could hurt investors.  For example, Italian investigators are currently accusing both the current and former CEOs of Italian oil major Eni of corruption and bribery in relation to an oil deal known as ‘OPL 245’. The OPL 245 deal involved an obscure billion dollar payment made to the Nigerian government by Eni and its partner Shell.  While Eni and the CEOs deny the allegations, as a partner in that deal Shell should befocusing on convincing investors that such scandals will not be repeated, rather than trying to protect the secrecy that allowed them to happen in the first place.

With new UK laws in place and coming online in the other 27 EU member states, lobbying to protect a redundant business model seems as at best a waste of time and worst actively shooting themselves in the foot, not least because pushing for a different standard in the U.S. would now create double-reporting burdens.  The smart move would be to welcome the standard set by the UK today, and start actively working out how to adjust to an emerging business landscape in which openness and transparency is the norm.  This means supporting a fit-for-purpose, equivalent rule in the United States.

As the UK law becomes embedded, companies and civil society should now work together to ensure that corruption cases are history.  But we should remember that such measures, which look excellent on paper, are only as good as their implementation.

In the UK too we must keep the ultimate aim in sight – ensure that there is no room for payments such as those in the OPL 245 case to “slip through the net”, so that citizens are enabled to follow the individual payments made for the specific projects in their backyards.

That allowing, today is a very good day indeed for extractive sector transparency and for the people who need it most.

Brendan O’Donnell leads the Oil, Gas and Mining Campaign at Global Witness. Follow him on Twitter here


  • Brendan O'Donnell