Anti-corruption groups celebrate new US transparency rules

I’ve been investigating corruption in the oil, gas and mining industries for nearly 20 years, and today feels historic. Here’s why: on Monday, the U.S. Securities and Exchange Commission (SEC) announced a landmark transparency rule which requires U.S.-listed companies in these industries to publish details of the payments they make to governments for the right to exploit a country’s natural resources. It’s a requirement of the Dodd-Frank Act and, after six years of delay during which more corruption has been exposed, it’s long overdue.

I’ve seen what corruption does. In countless countries rich in natural resources, but whose populations are desperately poor, citizens watch as their children’s future stolen from beneath their feet by officials who know nobody will hold them to account. Their stifled economies remain dependent on foreign aid as the money that should be building schools, hospitals and roads is lavished on flash cars, mansions and superyachts.

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All too often, the oil, gas and mining companies that come to exploit countries’ natural capital operate in opaque conditions, leaving citizens unable to determine the legitimacy of deals that have been struck in their names. As our investigations have frequently demonstrated, often companies are involved in driving the government corruption that can lead to countries being bled dry. As the old saying goes, it takes two to tango. Once a deal has been done, exploration can move ahead at breakneck speed, often with devastating social and environmental costs.

These shameful practices help to keep brutal dictators in power, at least until their citizens get so fed up they pour onto the streets in bloody protest, as we have seen in the Middle East and Ukraine in recent years.

At Global Witness, our investigations have revealed that there is a systemic reason why it’s easy for the corrupt to steal on this scale. Deals that could transform a country’s future, for better or worse, are done in secret. Companies pay money to governments, but there’s no obligation to declare how much, or which state agency the money was paid to. The scope for abuse is astonishing – take for example Nigeria, where an estimated $400 billion of oil revenues has been lost since the 1960s.

That was why, in 2002, I co-founded the Publish What You Pay Campaign, now a movement of over 800 civil society organizations in more than 60 countries. It had a simple idea at its core: that companies should be legally required to put on record the payments they make to governments, so citizens can follow the money resulting from the deals that are being struck in their name, and deter politicians from ransacking their resources.

After lengthy delays, the U.S. has finally released legally-binding rules for oil, gas and mining companies to publish their payments to governments, such as taxes, royalties and license fees, wherever they operate in the world. Elements of the oil industry, including ExxonMobil and the American Petroleum Institute, fought hard to dismantle the U.S. rules. They challenged the rules in court and managed to delay their introduction, and could still mount a further legal action against them.

But the tide has turned towards transparency, and regressive companies are on the wrong side of history. Civil society groups around the world, oil majors such as Statoil and Total, the U.S. State Department and investors with a colossal $9.8 trillion in assets under management have all publicly stated their support for strong payment transparency rules.

Crucially, the European Union, the UK, Norway and Canada have already established laws that require oil, gas and mining companies to disclose their payments to governments. Together with the U.S. rules, these laws have created a global standard that is bringing a new era of transparency to the extractive industries.

While the first company disclosures from the U.S rules are not due until 2019, Global Witness and our colleagues in the Publish What You Pay coalition are already analyzing reports published by companies under the European reporting regime, and using them to hold both companies and governments to account for natural resource revenues. Today, we are celebrating a momentous victory in the fight to end the corruption that keeps poor countries poor, and we will be watching closely to see that the new U.S. rules are properly implemented.     

Simon Taylor is co-founder of the international NGO Global Witness and a longtime activist for this transparency rule.