Civil society around the world calls on the SEC (14/04/14)
544 PWYP members from around the world wrote to the SEC Chair, Mary Jo White, urging the Commission to reissue a strong implementing rule for Dodd-Frank 1504. You can view the letter - with all its signees - in PDF.
The Honorable Mary Jo White Chair U.S. Securities and Exchange Commission 100 F Street NE Washington, DC 20549-1090
Monday, 14 April 2022
Re: SEC rule implementing the Dodd-Frank Act (Section 1504)
Dear Chair White,
We are a group of 544 civil society organisations from 40 countries, united by the Publish What You Pay (PWYP) Campaign and writing to urge the Securities and Exchange Commission (SEC) to re-issue an implementing rule for the Dodd-Frank Wall Street Reform and Consumer Protection Act (Section 1504) that aligns with the EU Accounting and Transparency Directives, with no country exemptions and full public disclosure of payments, without delay.
We, the signatories to this letter, represent the depth and breadth of the PWYP Campaign, including human rights, faith-based, anti-corruption and environmental organisations. We are from countries rich in natural resources, but blighted by corruption, conflict and poverty. We see on a daily basis the destructive effects that poor governance of natural resources has on our communities. Greater transparency of extractive industry revenues will reduce natural resource related corruption and conflict, and help ensure these resources are transformed into lasting public benefits.
We commend the SEC for its dedication in developing Section 1504’s original implementing rule, which followed Congress’s clear intent to make publicly available detailed information regarding revenue payments made to governments worldwide. We are extremely disappointed that a U.S. District Court vacated the rule.
However, the Court’s ruling does not preclude the SEC from requiring full public disclosure of project-level payments or denying exemptions, and we believe the SEC has the discretion to retain these critical provisions in the final rule, as long as sufficient justification is given.
Project-level reporting will bring great benefits to citizens’ groups in resource-dependent countries. Some of the signatories to this letter work in areas where numerous extractive companies are active, and in order to ensure that each company is meeting its fiscal obligations to the host government and community, we need to know the identity of individual company making the payment.
In other areas, a single company dominates production and makes numerous payments that arise from individual projects. Citizens in these areas need to be able to identify which project each payment originates from in order to be able to meaningfully monitor individual payments, which can reach up to US$1 billion. As the original 1504 rule recognises, contracts provide the basis for determining the payments that arise from resource projects. As such, the SEC should ensure that the final rule requires contract-based project-level reporting, so that communities are able to track payments from project to government.
Conversely, publishing compilation reports of data aggregated from multiple projects or keeping company names hidden from public view would deprive citizens of this vital information, allow extractive firms to hide questionable payments behind aggregated and anonymised data, and defeat the purpose of the Section 1504 law.
The importance of full project-level transparency is heightened further in areas where local revenue-sharing agreements are in place. In the Democratic Republic of Congo, for example, national law stipulates that 25% of tax revenues from individual mining projects should go back to the province, and 15% back to the local territory or town where development takes place. However, communities are currently not in a position to claim the tax money they are entitled to, as there is no way of knowing how much a given local project is generating in taxes.
Similarly in the Philippines, indigenous communities have a legal right to a minimum of 1% of royalties from mining in their ancestral domains. However, none collect this full amount, and there is little revenue transparency to help them do so. Project-level reporting would help communities to collect their entitlements, as well as help the government keep track of the royalties generated.
By helping to usher in a new era of stability and prosperity in resource-dependent countries and contributing to global energy security, Section 1504 will also deliver benefits for investors and companies. In order to achieve these positive results, the final rule must:
- ensure full public disclosure of payments, including the identity of reporting companies;
- require contract-based project-level reporting;
- include no country exemptions; and
- set a reporting threshold of US$100,000.
This would align the U.S. with the global standard for extractive revenue transparency, which includes the EU Accounting and Transparency Directives, as well as similar legal developments in Norway and Canada.
The United States has shown great leadership in the field of natural resource transparency, for which the communities we work with and represent are extremely grateful. Kofi Annan, Chair of the Africa Progress Panel, has urged the SEC to maintain its high transparency standards, and described efforts by the American Petroleum Institute to prevent meaningful disclosure as a “blip on the road to greater transparency.”
We sincerely hope the SEC will continue to support progress towards a global transparency standard by moving swiftly to produce a strong final rule, which will help achieve the goals of reducing corruption, poverty and instability in resource-dependent countries.
On behalf of the Publish What You Pay Coalition,
Marinke van Riet, International Director, Publish What You Pay
Burkina Faso Hien Jonas, Organisation pour le Renforcement des Capacités de Développement
Tiergou Pierre Dabiré, Réseau Africain des Journalistes pour l’Intégrité et la Transparence
Dupleix Kouenzop, Dynamique Mondial des Jeunes
Justin Mabout, Service National Justice et Paix
Jaff Napoleon Bamenjo, Réseau de Lutte Contre la Faim
Samuel Nguiffo, Centre pour l’Environnement et le Développement
Ernest Nkolo, Acting For Guaranteeing Governance In Economy And Society
Ndi Richard Tnto, Service OEcuménique pour la Paix
Central African Republic
Josephe Bindoumi, Ligue Centrafricaine de Droits de l’Homme
Maoundonodji Gilbert, Groupe de Recherche et de Monitoring du Projet Tchad/Cameroun
Abbé Madjiro Raymond, Commission Nationale Justice et Paix
Mekombe Thérèse, Association des Femmes Juristes du Tchad
Abdoulaye Djibrine, Commission Permanente pétrole N’Djaména
Nailar Clarisse, Cellule de Liaison des Associations Féminines…
…Read the PDF version to see the other 530 signees!