Using UK company data as an accountability tool

By Miles Litvinoff, PWYP UK on March 1, 2017

After well over a decade-and-a-half of campaigning by the Publish What You Pay anti-corruption movement, oil, gas and mining companies are starting to report payments to governments under long-awaited mandatory disclosure rules. Although the voluntary Extractive Industries Transparency Initiative (EITI) has resulted in a growing body of available payment data since 2003, company disclosures on a worldwide basis began only under transparency laws in Norway in 2015 and in France and the UK in 2016. Similar laws in other EU member states and in Canada will require company reporting from 2017, and US companies are due to report from 2019.

By 2019 an estimated 84% or more of the world’s 100 largest oil and gas companies by market capitalisation, and at least 58% of the largest 100 mining companies, will be required by law in one jurisdiction or another to disclose their payments. The global extractives transparency standard will have well and truly arrived.

Getting oil, gas and mining companies to publish their payments to governments is necessary to deter opaque or corrupt deals and poor revenue management. But civil society’s work does not stop there. We also need to act as watchdogs by using company disclosures to hold governments and companies to account so that squandering natural resource revenues becomes a thing of the past.

Open data makes numerical analysis of payment disclosures easier. But resulting CSV files and data-filled company PDFs are not always the best tools for citizens and civil society to use when discussing payments or questioning government officials. Hence the need for data infomediaries to work with the data and enable citizens and civil society to assess company reports and hold duty bearers to account.

Project activity

As part of the Data Extractors programme, PWYP UK has focused on payments to governments made in 2015 as disclosed under UK regulations and rules by UK-incorporated and London Stock Exchange-listed oil, gas and mining companies. Drawing on PWYP’s strength as a global coalition, we selected UK-based companies operating in four resource-rich developing countries with active PWYP national coalitions and affiliates: Royal Dutch Shell in Nigeria; BG Group (now part of Shell) and Petrofac in Tunisia; BP and Shell in Indonesia; Shell and BP in Iraq.

Large sums of money are involved:

Country Company Total reported payments in 2015 (US$)
Nigeria Shell $4,951,993,935
Iraq Shell $1,359,249,519
Iraq BP $67,700,000
Indonesia BP $885,896,787
Indonesia Shell $1,000,000
Tunisia BC Group $101,365,00
Tunisia Petrofac $12,863,00
Total payments in project scope $7,380,068,241

We used infographics in three cases, and a straightforward information and data summary in the fourth case, to highlight important company disclosures as a basis to question governments on their revenue receipts, and about how they govern natural resources and allocate revenues.

Nigeria

Taking Shell’s 2015 payments in Nigeria, we summarised key data in an infographic and included questions that colleagues at PWYP Nigeria agreed would be useful to put to the Nigerian government. The infographic uses a Piktochart format originally devised by PWYP data consultants OpenOil. PWYP Nigeria agreed that the infographic would be a useful engagement and accountability tool to ask Nigerian government entities to verify Shell’s reported payments for their country’s oil and gas, and to ask about the valuation of payments in kind.

In August 2016 PWYP Nigeria sent the infographic with accompanying letters to Nigerian government entities that Shell had reported as receiving payments: the Department of Petroleum Resources, the Federal Inland Revenue Service, the Central Bank of Nigeria, the Niger Delta Development Commission and the Nigerian National Petroleum Corporation. Two months later, none of the government entities had proved responsive. The Central Bank had written twice to say it cannot provide the information requested, and the Niger Delta Development Commission failed to attend an arranged meeting. PWYP Nigeria subsequently submitted Freedom of Information requests for the information and is considering raising the issue in public via the press.

In compiling the Nigeria infographic, PWYP UK noted an anomaly in Shell’s data with regard to the valuation of certain production entitlements paid in kind. We mentioned this in a blog that was cited by an online legal article, and we began a dialogue with the company about the matter. The dialogue led to Shell providing some supplementary information but refusing to disaggregate between oil and gas payments in kind, making it impossible for data users to check its pricing of in-kind production entitlement payments. We are considering how to take this issue forward.

Tunisia

PWYP UK contacted the PWYP-affiliated Tunisian Coalition for Transparency in Energy and Mines, who confirmed that infographics along the same lines as the Nigerian example would be a useful tool for dialogue with the Tunisian government. It was agreed to focus on payments made in 2015 by BG Group (Tunisia’s largest gas producer, acquired by Shell in early 2016), mainly for gas but also partly for oil, and by Petrofac for gas.

We put relevant data and questions for the Tunisian government into two infographics. Tunisian colleagues wanted three priority questions included in the infographics: about the constitutional provision to allocate a percentage of natural resources revenues for regional development; about the government’s 2012 commitment to join the Extractive Industries Transparency Initiative (EITI); and about social responsibility payments to local authorities.

In compiling the Petrofac infographic, PWYP UK noted deficiencies in the company’s data regarding the valuation of royalties and the identity of recipient government bodies. We notified the company about this, and the company responded by publishing a corrected payments report containing the previously missing information.

The Tunisian coalition are studying Tunisia’s published resource contracts and will use points from the infographic as part of their planned forthcoming dialogue with the government. The coalition presented their work on BG Group’s and Petrofac’s disclosures at an open data workshop for Tunisian civil society and media organised by the Natural Resource Governance Institute in November 2016. PWYP UK has offered the Tunisian coalition to engage with Shell/BG Group and Petrofac headquarters to seek further information about their social responsibility payments to local authorities.

Indonesia

PWYP UK’s fellow Data Extractors PWYP Indonesia agreed that an infographic highlighting payments to Indonesian government entities by BP and Shell would be a useful engagement tool. We created an infographic combining both companies’ payments and including verification questions for the government.

Colleagues at PWYP Indonesia report that government officials have refused to verify the disclosed payments and have said that civil society must wait for the next Indonesian EITI report to check the data. PWYP UK has suggested in response that, as in Nigeria, PWYP Indonesia make a formal Freedom of Information request to pressure the government to release the information.

Iraq

The PWYP-affiliated Iraqi Transparency Alliance for Extractive Industries are also interested in using payment disclosures by Shell and BP to seek greater accountability from their government and the companies. With the need for translation into Arabic, we agreed to start with a simple summary presentation of the payments and other relevant information. The Iraqi alliance, which is particularly concerned about risks of corrupt accounting for operating costs, plans to cross-check the data with the country’s forthcoming EITI report on 2015 and and indicated that it has already identified a significant discrepancy in the tax payment data reported by Shell.

Project outcomes, impact and conclusions

PWYP UK’s Data Extractors project has been one of the first collaborations between PWYP coalitions in home and host countries to hold host governments and companies to account for specific extractive sector payments. Possibly for the first time outside the EITI, civil society in host countries has asked, or is in the process of asking, government entities to account for key payments disclosed by foreign extractive companies. And unlike in the EITI, civil society is questioning payments made no more than a year ago.

Interim outcomes in Nigeria and Indonesia have proved disappointing but not surprising in view of the major change in attitude and practice towards greater openness and accountability that we seek from host governments. It is too soon to assess even initial outcomes in Tunisia and Iraq.

At the same time, civil society engagement with the disclosed data sends an important signal to host governments that civil society is vigilant and will be ready to expose corrupt or questionable dealings. And the project has demonstrated to two companies – Shell and Petrofac – that civil society is monitoring their disclosures and expects them to fully address their legal obligations.

The project confirms that there is no simple “magic bullet” to bring about the open and accountable extractives sector that PWYP works for. Despite its urgency, the change we seek is likely to occur only incrementally over the longer term and will require persistent coordinated effort across the global PWYP coalition.

This case study was produced by Miles Litvinoff, Coordinator of PWYP UK, as part of the PWYP Data Extractors programme. As part of the programme, our members find and present complex information, using examples of companies and government data.

The PWYP blog section showcases the diverse views and experiences of PWYP members and partners around the world. All views and statements in this blog section represent those of the authors, and do not necessarily reflect those of Publish What You Pay.

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