The Dodd-Frank Wall Street Reform and Consumer Protection Act passed into U.S. law last year
PARIS (TrustLaw) – A U.S. law that seeks to stamp out bribery and other corrupt practices in the oil, gas and minerals industries will complement a voluntary global standard rather than compete against it, a senior U.S. official said on Thursday.
The Dodd-Frank Wall Street Reform and Consumer Protection Act, which passed into U.S. law in July 2010, will require U.S.-listed mining and energy companies to disclose all payments to foreign governments and to the U.S. government on a case-by-case, project-by-project basis.
While many campaigners for transparency in the extractive industries support the law and want mandatory legislation to become an international norm, many oil companies oppose it.
They argue it will weaken the Extractive Industries Transparency Initiative (EITI), a voluntary standard that since 2002 has been persuading companies to publish what they pay and governments to disclose what they receive, while encouraging civil society to hold governments to account.
The Dodd-Frank Act “will help promote transparency in the oil and mineral sectors and will immediately shed light on billions in payments between multi-national corporations and governments,” Robert Hormats, U.S. undersecretary of state for economic, energy, and agricultural affairs, told delegates at an EITI conference in Paris.
“I want to stress that this provision will complement not compete with the EITI … (it) will however set a new standard for corporate transparency and the challenge for us now is to make this a global standard,” he added.
Many of the world’s poorest countries are rich in natural resources but campaigners say these resources all too often are misused, boosting the wealth of a country’s elite rather than being used to invest in poverty reduction and social programmes.
The EITI aims to give civil society ammunition – in the form of published figures on income from the extractive industries – with which to hold their governments to account.
Hormats said Washington would continue to support the EITI, under which 11 countries have now been designated as compliant, meaning they meet EITI standards on the publishing of payments between governments and companies.
There are 35 candidate countries, which are progressing toward the EITI standard.
While campaigners want the EITI to extend its reach to more countries in the developed and developing world - particularly the United States, Britain, Canada, and Australia as well as Brazil, Russia, India and China - they argue legally binding measures would be more powerful in the fight against corruption.
Peter Voser, chief executive officer of Royal Dutch Shell and an EITI board member, told the conference on Wednesday that Dodd-Frank’s unilateral approach could undermine the EITI since 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.
Hormats said the United States welcomed proposals by the European Union, supported by the UK and France, to draw up similar legislation to Dodd-Frank – a move also supported by many civil society organisations, non-governmental organisations and the EITI’s incoming chair Clare Short.
Countries must go further than the EITI, however, to promote transparency by advancing a broader campaign on anti-corruption and good governance, Hormats said.
He added it was vital that the next generation of oil and gas producers did not fall victim to the ‘resource curse’ – a term used to refer to the paradox that countries rich in oil, gas and minerals tend to have less economic growth and worse development statistics.
Hormats said anti-corruption was a key tenet of U.S. policy, essential to encourage economic development, reduce poverty and thwart terrorism.
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