Today the Publish What You Pay coalition together with Friends of the Earth Europe launched a Europe-wide advert in the Financial Times calling on the European Union to seize a historic opportunity to pass European transparency laws for oil, gas, mining and logging companies.
The laws would ensure that citizens and investors are able to benefit from greater transparency in natural resource deals struck between companies and governments around the world.
The advert was written as a ‘Letter to Europe’ and urges key European decision makers to adopt strong transparency laws in the face of fierce opposition from the oil industry.
So much is at stake. If oil, gas, mining and logging companies published the payments they make to each government around the world and for every project, citizens would be empowered to track those financial flows to ensure taxes, royalties and other payments are used to benefit the whole country, rather than a select few. Investors would be able to assess risk more accurately with this data too.
Known as the European Accounting and Transparency Directives, these laws will play a huge part in opening up an industry which has for too long been shrouded in secrecy. More often than not, countries which are richly endowed with natural resources such as the Democratic Republic of Congo suffer high poverty rates and conflict. Transparency is part of the solution.
Strong rules have already been passed in the United States through section 1504 of the Dodd-Frank Act.
It is now time for Europe to play its part and we need rules which are at least as strong as those in the US. This means project by project reporting, “project” defined as a legal agreement, a low disclosure threshold, and no reporting exemptions.
Yesterday, Global witness highlighted the controversy over a payment by Shell and Italian energy company ENI to the Nigerian government of over $1 billion for an oil block. Soon after this payment was made, a transfer of the same amount was made by the Nigerian government to a company controlled by ex-Oil Minister, Dan Etete, who in 2007 was convicted in France of money laundering. Legitimate questions need to be answered by these oil companies about who ultimately benefited from their massive payment to the Nigerian government. Only with project by project reporting for each of these deals can we begin to uncover the facts in such a murky industry.
On Wednesday, ambassadors from EU member states will meet to agree their position before continuing crucial negotiations with the European Parliament later this month. It is possible a deal will be reached by the end of the year.
The oil industry has been doing its best to scupper these transparency laws both in the United States and in Europe. So far they have failed. Last week the American stock market regulator, the Securities and Exchange Commission, denied a bid by the American Petroleum Institute and other business groups to delay Dodd Frank 1504 which requires country by country and project by project reporting of payments. This was great news for our campaign which means that the US law, passed back in July 2010 together with its implementing rules published earlier this year, can go into effect today as planned.
Oil, gas and mining companies have been trying to water down the European laws too. In Brussels the companies, which include BP and Shell, even hired a lobbying firm called GPlus Europe which achieved infamy after becoming the first to be suspended from a registry of Brussels lobbyists for failing to disclose the name of its clients. GPlus Europe was also runner up in the "Worst EU Lobbying" awards run by the Corporate Europe Observatory in 2008.
On the day after a number of multinational companies faced a grilling by British parliamentarians over their tax affairs in the UK and their tendency – albeit legally – to avoid paying taxes by structuring their company using convoluted tax arrangements, it is essential that companies come clean about the payments they make to governments around the world. Europe can make this a reality by finalising strong transparency laws requiring oil, gas, mining and logging companies to publish the payments they make to every government and for each project with no exemptions.
Despite the assault on transparency being led by the oil industry, we believe the facts will win the day and openness will prevail in the battle for strong and effective transparency laws.
Europe: we’re counting on you to deliver!
You can view the advert below or by clicking here.
Find out more on our European Campaign page.