This piece is part of a larger blog series on transparency in the extractives industry. Stay tuned for more updates on this topic.
So far, the campaign to fight corruption in the extractives industry has received tremendous support from ONE members. About 99,000 of you have signed the petition, 6,000 have commented directly on the Security and Exchange Commission (SEC) website, and nearly 1,300 tweets have been directed at the SEC, all in a week’s time! Yesterday, Bill Gates and 14 members of the US House of Representatives added their voice to yours urging the SEC release a strong Cardin-Lugar rule.
Yesterday, Mr. Gates sent a letter to the SEC highlighting the importance of a “strong and robust” ruling on the bipartisan Cardin-Lugar Amendment (Section 1504 of the Dodd-Frank Act). According to the letter, in 2009 natural resources in Africa brought in nearly $246 billion to the continent (six times the amount of aid going to the continent). Yet the endemic corruption in many governments in developing countries means that much of this wealth is siphoned off to private bank accounts. With the help of the amendment, citizens of resource-rich countries can ensure that this money no longer fills the pockets of autocrats but goes toward improving the lives of average citizens.
In addition, 14 senior members of the US House of Representatives joined their Senate colleagues in urging SEC commissioners “to resist [industry] pressure and promptly release a strong and effective final rule” on the Cardin-Lugar Amendment. Signatories included Representatives Barney Frank, Norman Dicks, Henry Waxman Jose̒ Serrano, Maxine Waters, Donald Payne, Nita Lowey, Betty McCollum, Barbara Lee, Jesse Jackson Jr., Alcee Hastings, Gregory Meeks, Rosa De Lauro and Marcy Kaptur. The letter highlights three areas that the oil lobby is trying to weaken including the definition of a project, de minimis requirements, and exemptions:
WARNING: This post is about to get wonky but try and stick with me.
1. No Exemptions. Some oil companies have pointed to countries like Angola, China, Cameroon and Qatar as countries whose laws prohibit reporting and want to be awarded exemptions from reporting. However, to date, they have provided no evidence that such laws exist. Furthermore, exemptions may encourage corrupt governments to enact laws that prohibit disclosure.
2. Reporting by Country and by Project. Cardin-Lugar requires companies to report payments on a country-by-country and project-by-project basis. The industry is pressuring the SEC to define a project as a country or geoglogic region. A geologic region can encompass a country or several countries, which would violate the Cardin-Lugar law. ONE and our PWYP partners are pushing for a more localized approach, similar to the US government’s domestic model requires project payments to be made in relation to a lease or concession. This definition would empower local communities in these resource-rich developing nations to see how much income is derived from resources on their land.
3. De minimis. This is basically the question of when is a payment so small it does not need to be included in the payments reported? The oil industry would like to set a high number that could allow millions of dollars in payments per project to go unreported. Think how many schools could be built or anti-malaria bed nets or HIV medicines can be bought for just $1 million.
Did all of the details make sense? If not, post your questions in the comment box and we’ll be sure to answer them.
Photo credit: Publish What You Pay
-Erika Ngoenha, ONE Government Relations Team