Attack on Dodd-Frank 1504 is a giveaway to big oil and despots across the globe
Rex Tillerson Lobbied Against Law While CEO of ExxonMobil
Washington, DC — Today’s vote by the majority of Republicans on the U.S. House Financial Services Committee to overturn a bipartisan transparency law is a major setback for combating corruption and a gift to big oil companies. The news comes after months of astonishing roll backs from the Trump Administration and Republican-controlled Congress to abdicate U.S. leadership on global transparency.
“These attacks on vital transparency provisions are a big giveaway to ExxonMobil and Chevron, as well as despots across the globe,” said Corinna Gilfillan, Head of Global Witness’ U.S. Office. “The U.S. has thrown away its global leadership on tackling corruption.”
The bipartisan law,1 known as the Cardin-Lugar anti-corruption provision, requires U.S.-listed extractive companies, including ExxonMobil, Chevron and several Chinese oil majors, to publish details of the hundreds of billions of dollars they pay to governments across the world in return for rights to natural resources. OECD analysis2 indicates the extractives industry is the most corrupt in the world: bringing shady oil deals to light is a vital way of ensuring these vast public revenues benefit local communities in resource-rich countries, instead of lining the pockets of corrupt elites.
However, today Republican members of the Committee, with the exception of Representative Royce (R-CA-39) who stood up for transparency, voted to rescind this law in favor of allowing deals to be made behind closed doors. These transparency provisions are essential if we are to shed light on deals such as ExxonMobil’s renewal of three lucrative oil licenses in Nigeria, currently the subject of a high-level corruption investigation.3
In February, the Republican controlled Congress voted to overturn the 1504 rule implementing the Cardin-Lugar provision. The vote in the senate came just two days after Rex Tillerson was confirmed as Secretary of State by the Senate. Tillerson had lobbied against the law while CEO of ExxonMobil.
This grave news of another attack on this law is just the latest move from the Trump Administration and Congress, backed by the American Petroleum Institute, to undermine the U.S.’ long-standing bipartisan commitment to transparency and anti-corruption efforts. In November, the U.S. Department of Interior announced that the U.S. would withdraw from implementing the Extractive Industries Transparency Initiative (EITI), a multi-stakeholder global anti-corruption program for the oil, gas and mining sectors. The move was a result of the insistence of major U.S. oil companies ExxonMobil and Chevron on keeping their U.S. tax payments secret.
“Oil, gas and mining companies from other countries have already disclosed over $150 billion in payments under mandatory transparency rules,” said Gilfillan. “If they can do it, you have to ask – what are the U.S. companies trying to hide?”
All of these moves set the U.S. in opposition against a broader global trend toward greater transparency and accountability in how oil, gas and mining revenues are managed. Thirty other major economies around the world, including Canada, Norway, the UK and the other 27 members of the European Union, have laws requiring their oil, gas and mining companies to disclose their payments to governments. Dozens of major European, Russian and Chinese oil companies have already published their payments to governments.
Claims made by the oil lobby that greater transparency will harm U.S. oil companies’ competitiveness have proven untrue. In fact, research concludes that increased transparency resulting from the disclosures required by the Cardin-Lugar anti-corruption provision could lower the cost of capital for covered companies by between $6.3 billion and $12.6 billion.4
Notes to editor:
a co-founder of the Publish
What You Pay (PWYP)
coalition, Global Witness led the global movement behind this law. For two
decades our investigations have shown the need for the world’s most corrupt
trade to open its books, and our advocacy has helped make that happen. This
work led to the passage of the law we’ve seen attacked today, as well as
similar measures in the UK and EU.
- OECD analysis indicates the extractive industries
are the most corrupt on the planet.
A study of over 400 international bribery cases involving companies or
individuals from countries signed up to the OECD Anti-Bribery Convention found
the extractive industries to be the worst culprit. Nineteen percent of the
cases were from the extractive industries, ahead of construction (15%),
transport (15%) and telecommunications (10%).
Economic and Financial Crimes Commission (EFCC), a law enforcement agency that
investigates high-level corruption, is currently probing a major deal struck by ExxonMobil in Nigeria. Mobil Producing Nigeria, a
wholly-owned subsidiary of ExxonMobil, reportedly paid $600 million to the
Nigerian government to renew three oil licenses in 2009. Mobil Producing
Nigeria also reportedly agreed to construct a $900 million power plant as part
of the deal. Nigerian NGOs claim the government valued the assets at $2.55
billion, and that the Chinese oil major CNOOC offered to pay $3.75 billion for
the same licences. NGOs successfully petitioned the EFCC to investigate the
seemingly low price paid by Mobil Producing Nigeria to renew the licenses, as
well as the status of the power plant. The investigation is ongoing.
submitted to the SEC by Anthony Cannizzaro and Robert Weiner. Does Dodd-Frank Disclosure Regulation
Benefit Investors? Theory, Landscape, and Application to Extractive Industries
(Feb. 2016). https://www.sec.gov/comments/s7-25-15/s72515-22.pdf
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