Clinton: SEC should go ‘as far as possible’ on transparency rule

Secretary of State Hillary Clinton is pressing the Securities and Exchange Commission (SEC) to issue strong rules requiring petroleum and mining companies to disclose payments to foreign governments.

The SEC is working on rules required under the 2010 Dodd-Frank financial reform law, but faces pressure from oil companies to include various exemptions in the regulation and leeway to report the information on an aggregated basis.

“We are encouraging [the SEC] to go as far as possible because the [European Union] is already considering provisions similar to Section 1504 because we have passed 1504,” Clinton said Tuesday, referring to Section 1504 of the Dodd-Frank law, which was authored by Sens. Dick Lugar (R-Ind.) and Ben Cardin (D-Md.).

Clinton’s comments at a Senate Foreign Relations Committee hearing could buoy human-rights and anti-poverty groups advocating for the rules, which have been delayed at the SEC.

The law requires the SEC to issue regulations that force SEC-listed oil, gas and mining companies to reveal payments to governments related to projects in their countries, such as money for production licenses, taxes, royalties and other aspects of energy and mineral projects.

Oil companies say the rules could create a competitive disadvantage, while human-rights groups accuse the industry of seeking provisions that would gut the intent of the law. Click here and here for more on the battle over the rules.

The provision is aimed at increasing transparency to help undo the “resource curse,” in which some countries in Africa and elsewhere are plagued by high levels of corruption, conflict and poverty despite their energy and mineral wealth.

“We know that there are challenges in doing this. I hope the regulations expected from the SEC reflect the clear intent of the law, namely to require all relevant companies operating in this sector to disclose the payments they make to foreign governments. I think everybody is benefited from the disinfectant of sunshine and the spotlight to hold institutions accountable,” Clinton said.

She noted that the rules will complement State Department efforts to improve oil-and-gas sector governance in other nations that have large hydrocarbon reserves, pointing to State’s Energy Governance and Capacity Initiative.

The program seeks to “ensure sound and transparent energy-sector governance for the benefit of national economic development.”

This item first appeared in Tuesday's Overnight Energy.