Tuesday, June 03, 2008

A step towards better transparency in the U.S.

We bring to your attention (a little belatedly) a new bill introduced by U.S. Congressman Barney Frank, called the "Extractive Industries Transparency Disclosure Act." It is a fine piece of legislation, in large measure the fruit of a long and arduous lobbying effort by non-governmental groups such as Global Witness and the Publish What You Pay coalition for greater transparency in the extractive industries (those that produce natural resources like oil, copper or diamonds.) It also follows a motion with similar intent put forward in the European parliament last year, which we reported on here.

A new website, www.openthebooks.org, has been set up to support this bill. It says that the bill

"would have far-reaching benefits for everyone involved in the international oil, gas and mining industries. It is simple and virtually cost-free."

Countries that depend on extractive industries suffer from a so-called "Resource Curse" (it is also talked about in terms of a Paradox of Poverty from Plenty) - in other words, not only do these countries not manage to harness their often huge mineral wealth for development, but they actually make people in these countries poorer than they would have been without such resources. Witness, for example, these basic statistics for Nigeria: its GNI (income) per capita is actually lower than the average for sub-Saharan Africa. And poverty is just one of the ills that affect mineral-dependent countries in the developing world: they also tend to be more conflict-ridden, authoritarian and corrupt than their peers.

Transparency is one of the key weapons needed in the fight against the curse of mineral revenues. As Publish What You Pay reported on the new Barney Frank bill,

"The freedom of information made possible by this bill will shed light on the billions of dollars governments are receiving from oil, gas, and mining contracts. Governments can then be held accountable by their citizens and the international community for how the money is being spent. The bill would require that all payments over $100,000 be disclosed as part of financial statements that are already required by the SEC. This would apply to both American and
international companies listed with the SEC, including a majority of the largest oil, gas and mining companies in the world. The requirement would set an international standard for the public disclosure of such information."

One piece of the bill is notable. It says that under the proposed changes each party involved in natural resource extraction should file an annual report with the US Securities and Exchange Commission with detailed information about

"the total amounts, for each foreign country and for each category of payment for each foreign country, of any and all payments made, directly or indirectly, by the issuer or any of its subsidiaries, to an agency or instrumentality of a foreign government"

Like the earlier EU parliamentary move, the requirement to disclose for each foreign country and each category is essential: and it is a step further towards country-by-country reporting. What we now want is to start extending this country-by-country principle to all sectors, not just the extractive industries.

We warmly welcome this initiative. Support it in any way you can - see here for more details.


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