Brooking's Event on Natural Resource Transparency
June 11, 2014
At Monday’s event at The Brookings Institution, Senator Benjamin Cardin (D-Md.) delivered a keynote address, introducing the discussion on international developments in natural resource transparency. He outlined the three primary objectives that Section 1504 of the Dodd-Frank Act (requiring oil, gas and mineral companies to publish their payments to governments around the world) sought to achieve. This amendment (1) supported investors’ right to know, (2) stabilized and made more reliable global energy sources and (3) promoted good governance and human rights. However, in 2013, a U.S. District Court directed the U.S. Securities and Exchange Commission (SEC) to re-issue its rule, and therefore no disclosures have been made. Congress continues to fight for full disclosure with the SEC. They believe that American companies can compete on a level playing field, prompting them to question why there is secrecy and why American businesses are pushing against this initiative.
A panel discussion followed with representatives from the American Petroleum Institute (API), European Commission, Calvert Investments, Nigerian anti-corruption campaign, and Global Witness NGO. Europe has already agreed to full disclosure of all payments, reaffirming the need for the U.S. to assume leadership and for the establishment of global standards. API upheld that their institution supports transparency, but would like to see it implemented in such a way that specific company level payments are not disclosed. On the opposite side of the debate, poor nations argue that the multinational companies from the developed world compromise their development by not disclosing payments on a project-to-project basis, aiding the illicit flow of capital and prompting corruption.
This debate centers on the simple principle that transparency breeds better decision making. Ukrainian citizens, earlier this year, ousted President Yanukovych in an attempt to fight corruption within their country. Transparency initiatives are about the inclination of citizens to advocate for good governance and appropriately assign accountability.This is essential when it comes to ensuring that a country’s natural resources are used (or protected) for the benefit of its citizens.
Keeping payments to governments hidden not only undermines transparency and accountability in countries, but it also increases opacity and darkness in the global financial architecture – which creates even greater risks and opportunities for corruption worldwide.
Update on Section 1504 (as of May 2014): the SEC pledges to propose a rule by March 2015 governing how oil, gas and mining companies disclose payments made to foreign governments.