Proposed Repeal of U.S. Extractives Transparency Rule Would Increase Corruption and Poverty

26 January 2017, NEW YORK—A flagship U.S. anticorruption rule is under acute threat. Confirmation came yesterday that Republican members of Congress plan to introduce a Congressional Review Act resolution seeking to eliminate the June 2016 rule implementing the bipartisan Cardin-Lugar extractive industries payment transparency provision.
 
Daniel Kaufmann, president and CEO of the Natural Resource Governance Institute (NRGI), said: “We are deeply concerned at the attempt to gut this trailblazing U.S. law, which deters corruption and improves governance in the notoriously opaque natural resource sector. Legislators in both houses should abandon this plan immediately. Failure to do so would essentially be an endorsement of the kind of corruption and secrecy found in resource-rich dictatorships. This pro-inequality, pro-corruption move by legislators runs counter to the leadership exhibited by U.S. lawmakers when they pioneered global progress by passing this law over 5 years ago. It would make a mockery of the tough talk on fighting graft which we heard throughout the recent presidential campaign.”
 
The Securities and Exchange Commission rule, which implements Section 1504 of the Dodd-Frank Act, requires oil, gas and mining companies listed on U.S. stock exchanges to publicly disclose the billions of dollars in payments that they make to governments around the world for the right to extract natural resources. The Republican legislators who seek to dismantle the rule, in language closely mirroring past arguments made by major oil companies, claim that it harms the competitiveness of U.S companies but have failed to provide any evidence of such harm.
 
The U.S. law, passed in 2010 but only implemented last year after legal delays, was the first of its kind and has been replicated by 30 other countries, including Canada and many in Europe. It has equipped citizens in resource-rich nations to fight corruption and hold their own governments to account for the management of revenues from the sector. Investors with trillions of dollars under management also support these laws as a means to manage risk in the volatile commodities sector.
 
Company reporting, including by majors like BP, Royal Dutch Shell and Total, has begun in Canada, France, Norway and the U.K. Companies have already disclosed payments of over $150 billion to governments of over 100 countries to date. None of the reporting companies has claimed that business has been negatively impacted through such disclosures.
 
U.S. oil giants such as ExxonMobil have opposed these transparency laws for years. “The motivation for repeal of the rule is highly suspect,” said Kaufmann. “With former ExxonMobil CEO Rex Tillerson poised to be confirmed as the next Secretary of State, together with this sudden legislative attempt to undermine the fight against oil-sector corruption, it is reasonable to question whether ExxonMobil is exercising undue influence over the levers of power. The company claims to support transparency, yet it is completely undermining it by challenging this law in the courts and now apparently through its influence in Congress.”
 
For more information contact:
 
Lee Bailey
Communications Director
Natural Resource Governance Institute
[email protected]
T +44 (0)20 7332 6114
M +44 (0)7823 442 954 
 
Joseph Williams
Senior Advocacy Officer
Natural Resource Governance Institute
[email protected]
T +44 (0)20 7332 6113
M +44 (0)77 7575 1170 
 
 
About NRGI
 
The Natural Resource Governance Institute, an independent, non-profit organization, helps people to realize the benefits of their countries’ oil, gas and mineral wealth through applied research, and innovative approaches to capacity development, technical advice and advocacy. We work with government ministries, civil society organizations, journalists, legislatures, private sector actors, and international institutions to promote accountable and effective governance in the extractive industries. Learn more at www.resourcegovernance.org.