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US Congress undoes Dodd-Frank regulations on extractive industry revenue transparency

Oil companies that support revenue transparency

Congressional leaders in early 2017 said they would use the US Congressional Review Act, allowing quick legislative repeal of regulations recently issued by the Executive branch, to reverse regulatory and executive actions from the last seven months of the Obama Administration.  As a priority, Congress targeted for repeal regulations finalised in June 2016 by the Securities & Exchange Commission under section 1504 of the Dodd-Frank financial reform act.  These regulations require oil, gas and mining firms to disclose their payments to foreign governments.  A wide range of NGOs opposed the repeal, arguing that it will foster corruption by enabling companies and governments to hide these payments, including to repressive governments such as Angola, Equatorial Guinea and Kazkhstan; and that companies listed on stock markets in other countries including the EU and Canada are already subject to very similar requirements.  Both houses of Congress passed legislation to undo these regulations in the week of 30 January 2017.

Business & Human Rights Resource Centre has invited 30 companies to respond to an open letter by Publish What You Pay coalitions and several of their member NGOs on this issue.  The letter urges the companies to issue statements in defence of the SEC regulations and against the Congressional bill to undo the regulations.  The letter, related materials, and company responses and non-responses available here.  See additional materials on opposition to the repeal and the importance of these rules here.

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Article
10 February 2017

Leading mining firms' CEOs say US legal changes won't alter their disclosures on social impacts & governance

Author: Ed Stoddard, Reuters (UK)

Mine bosses say transparency will not be clouded by U.S. rule changes, 9 Feb. 2017

The expected demise of transparency regulations for minerals and oil companies listed in the United States will not cloud the global drive for financial clarity in extractive industries, company executives told Reuters at [the Investing in African Mining Indaba].  Efforts to shine a light on payments such companies make to foreign governments are considered key to eliminating graft, conflict and the so-called resource curse... The administration of U.S. President Donald Trump, however, has begun dismantling such transparency requirements... But companies with European Union and Canadian listings - or which work in countries that have signed up to the voluntary Extractive Industries Transparency Initiative (EITI) - still have to abide by strict disclosure rules, executives say...

[The] chief executive of the International Council on Mining and Metals (ICMM),...Tom Butler ...was critical of the Trump administration's actions, but said they would not derail the broader global push for increased transparency.  "It's disappointing because overall the global trend is in the other direction. The train has left the station," said Butler. [also includes positive statements by CEOs of Gold Fields, Vedanta Resources for maintaining disclosures and avoiding deals with "illegal miners"]

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Article
8 February 2017

USA: Congress repeals law on disclosure of payments to govts. by oil & gas companies

Author: Lisa Lambert & Timothy Gardner, Reuters

"U.S. Republicans ax disclosure, emissions rules on energy", 5 Feb 2017

U.S. Republicans on Friday repealed a securities disclosure rule aimed at curbing corruption at energy and mining companies and voted to ax emissions limits on drilling operations, part of a push to remove Obama-era regulations on extractive industries...After a number of legal battles, the U.S. Securities and Exchange Commission in June 2016 completed the regulation, which supporters said could help expose questionable financial ties U.S. companies may have with foreign governments.Senate Democrats raised concerns that Exxon's chief executive during those legal fights was Rex Tillerson, who was recently confirmed as U.S. secretary of state and has worked extensively in Russia...Exxon and other major energy corporations fought for years to block the rule, required by the 2010 Dodd-Frank Wall Street reform law...The change could give American companies an edge over Canadian and European companies that face some of the toughest transparency rules in the world...

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Article
4 February 2017

Investors warn of ‘bribery risk’ as America repeals resources industry corruption law

Author: Jon Yeomans, Telegraph (UK)

The repeal of a US [regulation] designed to crack down on corruption in the resources sector is a blow to the fight against bribery, mining groups, investors and NGOs have warned... [The provision] was designed to boost transparency by showing how much money foreign governments receive from selling mineral rights.  It is estimated that some $150bn in payments have been disclosed globally in the last two years. However, the oil lobby in the US had complained that it made companies less competitive... 

BHP Billiton said it supported “the establishment of a globally consistent disclosure framework”.... Anglo American said: “As a multinational company we of course encourage the alignment of transparency requirements across jurisdictions.”... [The repeal] will make it harder for investors to understand the bribery risks of companies they invest in, said Lauren Compere, of Boston Common Asset Management. “It’s very short-sighted and destabilising,” she said.

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Item
3 February 2017

U.S. Congress Votes for Corruption by Overturning Historic Transparency Law in Gift to Big Oil

Author: Global Witness (UK)

Today’s decision by the Republican-led U.S. Senate to overturn a rule designed to stop oil companies striking corrupt deals with foreign governments is a grave threat to U.S. national security and an astonishing gift to big oil, said Global Witness. The news comes just two days after Rex Tillerson, a longstanding opponent of the law while CEO of ExxonMobil, was confirmed as Secretary of State... The law...requires U.S.-listed extractive companies like Exxon, Chevron and several Chinese oil majors to publish details of the hundreds of billions of dollars they pay to governments across the world in return for rights to natural resources. Bringing shady oil deals to light should help ensure these vast public revenues benefit all instead of lining the pockets of corrupt elites. However, this week, Congress voted to rescind the implementing regulation...

“...Now [Tillerson is] Secretary of State Congress has immediately sanctioned corruption by green lighting secret deals between oil companies and despots. These deals deprive some of the world’s poorest people of oil wealth that is rightfully theirs...,” said Corinna Gilfillan, Head of U.S. Office of Global Witness... Thirty other major economies around the world, including the UK, Canada, Norway and all 27 members of the European Union, have laws requiring their oil, gas and mining companies to disclose their payments to governments. Dozens of major European and Russian oil companies have already published their payments to governments. Claims made by the oil lobby that greater transparency will harm U.S. oil companies’ competitiveness has proven untrue...

Bishop Cantu, Chairman of the Committee on International Justice and Peace at the United States Conference of Catholic Bishops said, “Transparency in extractive industry payments to governments is important to us as leaders of the Catholic community of faith... We believe these principles, policies, and rules can help protect the lives, dignity and rights of some of the poorest and most vulnerable people on earth. The rules have moral and human consequences as well as economic and political impact.”

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Article
3 February 2017

US Senate Overturns Dodd-Frank Transparency Measure

Author: Jubilee USA Network

The US Senate voided a rule requiring greater financial transparency in the oil, gas and mining industries by a vote of 52-47... The resolution voiding the rule has already passed the House. Now the resolution goes to President Trump, who is expected to sign it.  Eric LeCompte, Executive Director of the religious development organization Jubilee USA, [said]..."We are worried how this action will impact poor and vulnerable communities.  Congress acted hastily and didn't take the time to understand how this action affects transparency and accountability..."

Read more about the Cardin-Lugar amendment

Read the oped published on 1504 from Eric LeCompte, Jubilee USA executive director

Read the letter Jubilee USA's executive director sent to Congress on the legislation

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Item
2 February 2017

A gift for Putin, courtesy of Congress

Author: Jana Morgan, Director, Publish What You Pay - United States

With unresolved questions lingering about Russia’s interference in...[US] elections, it is peculiar that one of the apparent priorities of the new Congress is to hand Russian president Vladimir Putin a rather valuable gift.  Only one month on the job the House has rushed to kill a regulation intended to make it more difficult for Vladimir Putin and other corrupt leaders to rule with impunity. It’s an odd thing to do, especially when doing so would undermine U.S. security and foreign policy objectives.  Why would Congress do such a short-sighted thing? Money. Not yours, but that of oil companies, namely the profits of big oil companies and the millions of dollars the oil industry generously “donates” to members of Congress each year... 

The regulation in question, a bipartisan anti-corruption provision passed in 2010..., requires oil, gas and mining companies to disclose the payments they make to government around the world. This includes places like Russia, China, and many other non-democracies whose leaders treat oil revenues as a state secret in order to stay in power and enrich themselves at the expense of their citizens, millions of whom struggle just to survive. Put an end to that secrecy, and suddenly citizens are empowered with information they can use to hold their leaders accountable. [refers to ExxonMobil]

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Article
2 February 2017

NGO coalition urges 30 oil, gas & mining firms to oppose repeal of US rule requiring extractive cos. to disclose payments to govts.

Author: Publish What You Pay Intl., 13 national PWYP coalitions, 8 PWYP member organizations

Help defend the Cardin-Lugar anti-corruption rule and the global extractive industry transparency standard

To US-listed EITI-supporting companies Anglo American, AngloGold Ashanti, ArcelorMittal, Barrick Gold, BHP Billiton, BP, Chevron, Conoco Philips, Eni, Exxon Mobil, Freeport-McMoran, Glencore, Goldcorp, Gold Fields, Hess Corporation, Hudbay, Iamgold, Kinross, Kosmos Energy, Marathon Oil, Newmont Mining, Noble Energy, PEMEX, Petrobras, Rio Tinto, Royal Dutch Shell, Statoil, Teck Resources, Total, and Vale SA

Certain US legislators are seeking to use the Congressional Review Act to void the Cardin-Lugar anti-corruption rule (Dodd-Frank Act 2010, Section 1504). To roll back this rule would be a retrogressive step for oil, gas and mining industry transparency and for the global battle against corruption.

Country- and project-level reporting of extractive industry payments is essential for citizens in resource-rich countries to hold their governments accountable for how they use the massive revenues they receive for their finite natural resources from companies. Oil, gas and mining companies need payment disclosure to maintain their social license to operate.  Without payment transparency, citizens cannot know how much money extractive companies pay to dictatorial and non-transparent governments such as in Angola, Equatorial Guinea, and Kazakhstan...

As a responsible US-listed and EITI–supporting extractive company, please help defend the Cardin-Lugar rule by speaking out publicly in its favor and urging the US Congress and Senate to maintain the rule intact.

We look forward to seeing your company statement. 

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Article
1 February 2017

Is Congress voting for corruption?

Author: [opinion] Isabel Munilla, senior policy advisor for extractive industries - Oxfam America, in The Hill (USA)

...[You] might find it perplexing that scrapping an anti-corruption law is at the top of the congressional to-do list in Washington.  But Congress will seek to do just that this week by voting to roll back rules to implement the landmark bipartisan Cardin-Lugar anti-corruption law known as section 1504 of the Dodd-Frank Act... This rule is a hallmark of U.S. global leadership in fighting corruption in poor countries. It covers the vast majority of the world’s largest oil, gas and mining companies, including ExxonMobil, Chevron, BP and Shell, as well as leading state-owned companies from China and Brazil...

[More] than 30 countries have followed the United States’ lead and passed similar laws... Reports have been published by BP and Shell and even by Russia’s state-owned companies, Gazprom and Rosneft... At a time when aid dollars are shrinking, transparency is essential to prevent the looting of much needed revenues by corrupt officials. And if the rule is rolled-back, these payments will remain a secret, possibly forever, fueling corruption, waste, and keeping poor countries dependent on U.S. foreign aid... Business professors from George Washington University and Catholic University...[conducted] a study of more than 1,500 equity securities...[which] found that increased transparency resulting from disclosures required under section 1504 lowers the cost of capital for covered U.S.-listed firms by up to $12.6 billion... This effort comes just as the Senate moves to confirm former ExxonMobil CEO Rex Tillerson to be the next U.S. secretary of state. Tillerson and ExxonMobil lobbied aggressively to oppose this anti-corruption rule with the American Petroleum Institute, and tried to block it and overturn it in the courts. 

[refers to support for the law by ING, BNP Paribas, UBS; also refers to reports already published by BHP Billiton, Rio Tinto, Glencore, Kosmos Energy]

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Article
31 January 2017

Put the American people first: Keep the anti-corruption rule

Author: Former Senator Richard Lugar and Sen. Ben Cardin, in The Hill (USA)

...[Some] politicians now want to...cancel a pioneering anti-corruption law that bolsters American national security, advances our humanitarian goals, and demonstrates U.S. moral leadership. The bipartisan Cardin-Lugar amendment, aimed at fighting corruption in mineral-rich developing countries,...requires that oil, gas and mining companies listed on U.S. stock exchanges (whether or not U.S.-based) disclose their royalties and other payments to foreign governments... [Many] resource-rich countries are actually poor because the vast mineral revenues breed corruption that leads to poverty, hunger and instability. Oil-rich Venezuela is running out of food and medicine.  Nigeria, with vast reserves, is gripped by economic crisis and terrorism.  This “resource curse” is not only a tragedy for the citizens of these countries, it impacts Americans, too. It has empowered anti-American dictators... It worsens global poverty, which can be a seedbed for terrorism... 

One way to fight this corruption...is to reveal just how much money the autocrats are making from their oil, gas, copper, gold and other resources. These vast sums are often secrets known only to the governments and the international extractive industry companies who pay them. Disclosure of these funds shifts power from the elites to the citizens so they can “follow the money” and hold governments accountable. [refers to disclosure reports already filed by BP, Shell, Total, Rosneft]... [Now] Big Oil is back, seeking repeal of Cardin-Lugar so their payments can be kept secret from the people... Besides Big Oil, those most eager to repeal Cardin-Lugar are the autocrats, in places like Russia, Iran or Venezuela, with oil wells, gas fields or copper mines who want to keep the money secret from their citizens. Why do their bidding?

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Item
31 January 2017

Statement from EITI Chair on repeal of SEC's 'resource extraction' rule

Author: Fredrik Reinfeldt, chair of Extractive Industries Transparency Initiative

The proposed Congressional Review Act resolution now being considered by Congress would overturn the SEC Rules – adopted in June 2016 – that require resource extraction issuers to disclose payments made to governments for the commercial development of oil, natural gas or minerals as mandated by the Dodd-Frank...Act (Dodd Frank 1504). The European Union and Canada have adopted similar requirements.

The EITI has in recent years frequently spoken about the ways in which disclosure requirements like Dodd Frank 1504 and the EITI complement each other... Our aim is to ensure responsible and transparent resource governance and this requires multiple efforts. The SEC took great care in drafting these rules in consultation with industry to ensure that they complement the EITI’s efforts and avoid unnecessary duplication. I would urge Congress to consider this matter thoroughly, and to ensure that any action does not undermine the hard-won gains in this arena.

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