The proposed rule currently does not provide any reporting exceptions, including for companies operating in countries that ban disclosure of information related to their work in the jurisdiction. Exemptions for companies where laws in the host-country prohibit required reporting would contradict the purpose of the legislation and create a clear incentive for those countries, who want to prevent transparency, to pass laws against disclosure. In fact, it is precisely those jurisdictions for which investors and the public need additional transparency. Creating reporting exceptions would also risk creating loopholes that could undermine the rule's creation of a level playing field for all covered issuers.
Levin is chairman of the Permanent Subcommittee on Investigations, and has probed the misuse of oil revenues in oil-producing countries in Africa.
The letter also covers several other aspects of the rule that requires new disclosures in company filings with the SEC. For instance, Levin argues that the final rule should define what constitutes a “project” that’s subject to the disclosure requirements.
“Without a definition, issuers are likely to define the term differently, produce information that is not comparable, and create many questions about the meaning of their disclosures,” the letter states.
Oil companies allege the SEC rule could place them at a disadvantage when competing for contracts against state-controlled Russian and Chinese firms.
The provision in the Wall Street law is aimed at ending the “resource curse” in which some energy- and mineral-rich nations in Africa and elsewhere are plagued by high levels of corruption, conflict and poverty.