Tullow faces tough EU disclosure law
Data: 23 Nov 2011
Tullow Oil as well as other oil and gas companies based in the European Union, will be required to publicly disclose their payments to the government, according to a new law being drafted by the EU.
The oil industry has come under the spotlight in recent weeks over the highly confidential dealings and payments to the government of Uganda, which are kept under tight wraps. But apart from oil companies, many other European companies are currently extracting precious minerals and metals but very little is known about their dealings and the payments they make to the government.
The European Commission now wants to amend the existing EU directives on market transparency and corporate accounting to ensure that companies based there that are engaged in the extractive industries; are transparent with their payments to governments in a move intended to “act as a deterrent to corruption.”
The UK, where Tullow is registered, has backed the legislation, saying it will push for its implementation as an effort to eradicate irregular dealings and ensure that revenues benefit all citizens and not a few individuals in poor countries.The EU appears to be taking a cue from the U.S Government, which has taken drastic measures to check questionable payments made to government officials in poor countries by listed US companies.
“Such disclosure would provide civil society in resource-rich countries with the information needed to hold governments to account for any income made through the exploitation of natural resources, and also to promote the adoption of the Extractive Industries Transparency Initiative (EITI) in these same countries,” said an EU statement last week.
Anti-corruption activists have welcomed the development, saying it would complement the work of the Extractive Industries Transparency Initiative (EITI), a global voluntary initiative whose objective is to improve transparency and accountability in countries that are rich in oil, gas, and mineral resources.
Marinke van Riet, international director of Publish What You Pay, a coalition of civil society groups, noted in a statement: “Secrecy in company payments for oil, gas and mineral resources has too often led to corruption, violence and civil war in many countries, which are rich in natural resources, while exacerbating poverty by preventing those funds from being invested in basic services like health and education.”
Under the new EU law, listed and large non-listed extractive and logging companies will be obligated to declare all their material payments to governments including production entitlements, taxes on profits, royalties, dividends, signature and discovery and production bonuses. Other payments to be disclosed include licence fees, rental fees, entry fees and other considerations for licences and/or concessions, as well as other direct benefits to the government concerned.
The new law is widely expected to put pressure on other G20 countries like Australia, Canada, South Africa and China to institute similar measures on companies based there. Tullow Oil is partnering with France-based Total and CNOOC, a Chinese corporation, to develop Uganda’s oil industry.
By Peter Tyanzi
