Energy and mining standard still lacks teeth - campaigners

by Katherine Baldwin | Thomson Reuters Foundation
Wednesday, 2 March 2011 19:30 GMT

The Extractive Industries Transparency Initiative needs a stronger mandate, campaigners say

PARIS (TrustLaw) – A global standard designed to promote transparency in the oil, gas and mining sectors has helped tackle corruption in some resource-rich countries but more must be done to broaden its reach and strengthen its mandate, campaigners said on Wednesday.

The Extractive Industries Transparency Initiative (EITI) – a coalition of governments, companies, interest groups, investors and international organisations – has been pushing since 2002 for companies to publish what they pay and governments to disclose what they receive in a bid to root out inconsistencies and corruption.

Six more countries achieved compliance with the EITI on Wednesday, meaning payments to and from governments and companies are now in the public domain. The countries were Central African Republic, the Kyrgyz Republic, Niger, Nigeria, Norway and Yemen.

That brought the total number of compliant countries to 11 while the number of candidate countries – countries progressing toward the EITI standard – rose to 35. New candidate countries were Guatemala and Trinidad and Tobago.

Outgoing EITI chair Peter Eigen said the initiative had achieved “surprising success” - despite some critics calling the body a “toothless tiger” because of its limited remit.

The EITI publishes figures but has no authority over the fairness or environmental soundness of investments, the treatment of labour or how governments allocate revenue from extractive industries.

“We produced 60 reports on payments in countries that cover a billion people and a huge proportion of natural resources in the Third World,” Eigen, former chair of global graft watchdog Transparency International, told TrustLaw at an EITI conference in Paris.

“In many ways, there has been a great and unexpected impact.”

Transparency campaigners say mineral and petroleum wealth, when not managed correctly, can fuel large-scale corruption, poverty, injustice and conflict.

Countries compliant under the EITI now score better on Transparency International’s annual corruption perceptions index, Eigen added.

Going forward, the EITI must expand, particularly to try and include Brazil, Russia, India and China or the so-called BRIC countries, incoming chair Clare Short said.

“We’d like to get more BRICs and be geographically more representative and we’re hopeful about that but it’s step by step,” she told TrustLaw.

VOLUNTARY OR MANDATORY?

But campaigners said the EITI was only a start and that mandatory rather than voluntary measures were essential to tackle corruption.

“Legally binding measures are required wherever there are stock exchanges where major extractive companies are registered to ensure that we make the best use of these resources at a global and national level,” said Jamie Drummond, executive director of ONE, a non-governmental organisation cofounded by U2 singer Bono.

ONE is part of the Publish What You Pay coalition of civil society organisations on the extractive industries. EITI built on the successes of Publish What You Pay.

Drummond called on the European Union, the African Union (AU) and other bodies and countries to take the lead from the United States where the Dodd-Frank Wall Street Reform and Consumer Protection Act will require companies from the mining and energy sectors to disclose all payments to foreign governments.

Dodd-Frank, which passed into U.S. law in July 2010, will apply to companies registered with the U.S. Securities and Exchange Commission (SEC), which also includes British and South African companies and companies with secondary listings in the United States.

“It’s essential … in terms of the domino effect that Europe should go next but that doesn’t mean that we shouldn’t be working with the AU in Africa for example, or in the BRIC countries to make sure very soon it is multi-lateralised everywhere,” Drummond said.

While Short and Eigen said the Dodd-Frank Act should strengthen the EITI, some oil companies expressed opposition to it.

Peter Voser, chief executive officer of Royal Dutch Shell, told delegates at the conference that Dodd-Frank’s unilateral approach could undermine EITI as it did not involve host governments and did not respect countries’ sovereignty. Companies will be forced to publish figures irrespective of a host country’s wishes.

“Transparency for the sake of transparency is not enough. Transparency should help advance society. That’s why we believe the EITI succeeds and Dodd-Frank fails. Dodd-Frank’s goal is transparency only. It doesn’t seek to involve host governments,” he said.

Short, former British secretary of state for international development, said it was impossible to measure the impact of the EITI on populations but predicted the publishing of information on extractive industries would have a snowball effect, prompting civil society organisations and members of the public to start demanding accountability from their governments in how income is spent.

“When you get transparency, you start to get accountability and you start to get better use of resources,” Short said.

While it is up to the people in the countries to hold their governments to account, “the information is there as ammunition,” she added.

(Additional reporting by Luke Balleny)

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