Message from Tanzanian CSOs in support of the EU's proposed mandatory disclosure rules

Source: Tanzania CSOs
Date: 21 Mar 2012

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Message from the Tanzanian Civil Society Organisations in support of the European Union’s proposed rules on mandatory disclosure by extractives and logging companies

Delivered in Brussels, Belgium, 21st March 2012

To Helle Thorning-Schmidt,
The Prime Minister of Denmark,

Your Excellency,

We, the undersigned Tanzanian Civil Society Organizations virtually convened on 13th March, 2012 to discuss the proposed EU regulations on mandatory disclosure on extractives and logging and its implications to the governance of Tanzanian oil, gas, mineral and forest sectors.

Greatly encouraged by progress in the US and in the EU to date and hereby commending the European Union Commission for proposing mandatory disclosure requirements for multinational companies to report on all payments including payments in kind -country by country. This is potentially a powerful tool for citizens to be able to hold their government and accompanies accountable for mismanagement of resources.

Deeply shocked by outliers like Germany who are questioning the need for mandatory reporting whilst others are moving forward; we urge them to double check their commitment to the principles of good governance.

Deeply concerned about the fact that over two thirds of the world’s poorest people live in resource rich developing countries! Secrecy and opacity in the management of the Africa’s booming extractive and logging exploitation industries have denied these citizens the information about how much revenues are generated from extraction of their resources by Multinational Corporations and how their governments spend such revenues for their wellbeing. There is limited accountability for the wealth that extraction and exploitation of resources generates; experience worldwide suggests that lack of trust about the management of these sectors breeds conflicts and unrests, hence, high incidence of poverty in these countries. Accountability and trust cannot be improved without real and meaningful data, which is structured in line with the way extraction is really organised. African citizens and Tanzanians in particular, are sick of getting very little benefit from of their national resources. A report by TRAFFIC estimated that Tanzania lost $58 million a year in 2004 and 2005 in timber revenue due to poor governance and corruption in the forestry sector. In 2008/9, Tanzania exported gold worth over $ 800 million generating only less than 10 % in tax revenue! Lumping data together for the country as a whole does not allow us to see where wealth is being generated, and where it is not. In the overall, we can see that the government is collecting little revenue, but we cannot see and tell where the problems lie.

Take note of the commendable steps taken by over 30 governments worldwide to join Extractive Industries Transparency Initiative (EITI); however, the initiative remains to be voluntary and narrow in scope. Tanzania joined EITI in February 2009; the first Country’s EITI reconciliation report remains unprecedented source of information about gas and mineral revenues with huge discrepancy of about 30% of the total payments. However, the depth of the information does not warrant meaningful comparison of revenues and the amount of resources extracted. Moreover, the report did not include payments in kind.

Underscore the need for comprehensive disclosure of payments made to the governments and that such data can only be produced through robust international listing and accounting rules on multinational companies that EITI alone cannot. For a meaningful transparency and accountability, all citizens have the right to know the amount of wealth that is generated from each resource and the terms of the deals and contracts signed between their governments and extraction companies.

Re-affirm our commitment to promote transparent, effective and efficient management of extractive resources in practice beyond just empty words; this takes strong, robust and credible monitoring mechanisms

Therefore:

Call upon the EU decision makers to:

- Show real global leadership by expediting enactment of the proposed mandatory reporting requirements. You have a great responsibility and opportunity to make a huge difference to the push for transparency and democracy in Africa and the world.

- Be firm on your decision and should not allow to be swayed by the huge lobbying pressure from the industry. Even if the US is scared by the corporate lobby for the rules that are weaker than those Congress intended, the EU must show the world that’s its decision-makers listen the real needs of the people globally, and will take up that mantle of global leaders, and create their own strong rules. The companies’ argument that they should not have to report any payment smaller than Euros1million is an ABUSE as this amount is much too large for many countries where even national budgets are a fraction of those of multi nationals, and local government budgets a fraction of these. The threshold should be in the tens of thousands of Euros if not every single sent paid to the government. Moreover, EI contracts typically have a clause allowing companies to report whatever is required by their listing or home government reporting requirements.

- Be strict on exemptions for opaque countries. When we set global norms for moral good practice and human rights, we don’t have to exempt certain countries. The EU should not include an exemption clause for any country that has law preventing transparency. Experience tells us that corrupt leaders will respond by making new laws to avoid disclosing such information to their citizens. Inclusion of country exemption clause will render transparency, accountability and good governance to mere empty words. This would make the work of local civil societies even more difficult. We need to know whether our governments are getting a reasonable return for the resources extracted and how much the government actually receives. We also need to track whether the revenues are distributed according to the law and spent according to national development priorities.

- Many African countries have rules that allocate a proportion of the wealth generated by specific projects to the local people and areas where the extraction takes place. People from extractive sites, that suffer displacement, pollution, loss of their livelihoods, want to see whether their own areas are receiving the payments that they are entitled to. Country level data won’t allow them to do this. So they need project specific payments data. Otherwise, the poverty, conflict, mistrust we see in many producing areas will continue. We need a meaningful reporting threshold that does not exclude payments that may not be meaningful to huge multinationals, but are highly material to national and local governments.

- Listen to the voices of the real people of Tanzania and Africa who have lost great deal of their national wealth to corrupt governments and multinationals. EU cannot afford to allow African children, women and men die of hunger, malnutrition, curable diseases and bloodshed resource based conflicts while their resources are being squandered by corrupt rulers and scrupulous Multinationals to fuel conflicts that displace millions of people, costing thousands of lives every year! These are the people who need your support.

Further call upon African Union to consider putting in place such mechanisms to ensure mandatory disclosure of revenues by Member states. Citizens of the opaque countries are the ones who need data the most, yet their leaders are the least likely to voluntarily undertake EITI. We recommend that The African Peer Review Mechanism (APRM) framework is reviewed to incorporate publishing revenues from extractive sector as an indicator of good governance. It has to be made mandatory and sanctions imposed for non-compliance.

Signed:

THE INTERFAITH STANDING COMMITTEE ON ECONOMIC JUSTICE AND INTEGRITY OF CREATION

Tanzania Policy Forum Agenda Participation 2000 Fordia Publish What You Pay Tanzania Agenda Participation 2000 HakiMadini

CC:
1. European Union: – Legal Affairs Committee (JURI), – Economic and Monetary Affairs Committee (ECON), – Director General, Internal Markets and Service Directorate (MARKT)

2. Chancellor of Germany, Her Excellency Angela Merkel.