Why is Tax Justice central to the accountability agenda in the extractives sector?

On 20 April 2018 PWYP hosted a webinar on tax and extractives as part of our ongoing engagement with PWYP members around the world to inform the PWYP 2020-2025 global strategy.

Kwesi Obeng kicked off the conversation with a presentation of the key ideas in his discussion paper, with respondents Daniel Mule (Senior Policy Advisor on tax and extractives at Oxfam US) and Mona Thowsen (Secretary General PWYP Norway) picking up and exploring some of those themes in the context of their work at national and global levels.

Following the webinar, Elisa Peter, Executive Director and Stephanie Rochford, Director of Member Engagement, sat down to discuss what we learned and how some of the discussion might be reflected in PWYP’s strategic planning for 2020 to 2025.

– – – – –

Stephanie: Tax Justice is an umbrella concept that covers a wide range of issues – from the misguided use of tax incentives by governments to attract investment, to the need for cost-related data disclosure (in addition to payment data), to the use of tax havens by multinational companies that divert potential tax revenues, to questions relating to mineral quality and quantity, to the rights of communities (who are the ones most impacted by extractive activities) to access services and livelihoods. What are the themes that you felt resonated most strongly with our members during the discussion?

Elisa: Well it’s clear that members already see PWYP’s work to date as a contribution to a broad Tax Justice movement, given PWYP’s mission to ensure that any benefit (including tax revenues) derived from resource extraction is shared sustainably and equitably. I think that really came out clearly in this conversation – PWYP’s work at national and global levels is happening in the context of a Tax Justice agenda. This includes not only our flagship PWYP campaign on payment disclosure, but also the more recent push for beneficial ownership data, including through the EITI Standard; as well as the calls of many of our coalitions in the ‘home’ countries of multinational extractive companies for more transparency on tax through extended country by country reporting, as Mona from PWYP Norway pointed out. So, really, the question is not so much if but rather how PWYP can situate itself more strategically to work with other actors in the Tax Justice movement in a way that will enhance our respective impact and build on PWYP’s strengths as a global network of civil society activists.

Stephanie: Yes, PWYP’s strength and unique value absolutely lies in our member organisations – and many of them are human rights defenders. To what extent do you see an opportunity for PWYP to bring the rights of communities to the fore by incorporating aspects of the Tax Justice agenda more explicitly into our global strategy?

Elisa: That’s something that I think is becoming more evident: there’s a clear demand to look not only at the revenue collection aspect of a fair tax system but also how those taxes are then spent in a way that meets the needs of citizens, acknowledging that those needs will be very different depending on gender, class, poverty levels and many other factors. The example of Oxfam’s “Even it up” campaign can be a really useful one for PWYP to take inspiration from! Even if a country is able to capture the fair share of revenues generated by extraction through a solid fiscal regime, it is essential that the spending of these revenues is then managed effectively to alleviate poverty and end extreme inequality. Only when all these pieces are in place can natural resource exploitation be a force for good.

Stephanie: On that note, the question of the explicit link between tax and gender equality was posed during the discussion. Maybe that’s an angle where PWYP can add value at a global level?

Elisa: I was really pleased that this question of how tax relates to gender came up, particularly in light of the recent launch of our gender and EITI pilot project, which recognises that the transparency and accountability movement as a whole has not paid sufficient attention to the different ways in which women and men are able to participate in calling for and using extractives data. Kwesi’s response clearly highlighted that tax is absolutely gender discriminatory: for example, when tax breaks are offered for the benefit of corporations and their investors, the result is a reduced provision of the services that women tend to rely heavily on (such as healthcare, etc). So I definitely would like to see us continue to reflect on how we can do more as a movement to recognise and address the specific ways in which women are impacted by seemingly far removed macroeconomics decisions like tax policies.

Stephanie: Mukasiri Sibanda from PWYP Zimbabwe was unfortunately not able to join the webinar today, but he has eloquently expressed the need to ensure that the focus of PWYP’s work, as well as that of the Tax Justice movement, should be rooted in the rights of communities in resource rich countries to access services such as education, healthcare, infrastructure etc.

Elisa: Yes, and Daniel noted that greater participation in, and oversight of, expenditure of extractive revenues is a critical aspect of PWYP’s larger theory of change; but there are also a lot of challenges for PWYP members when it comes to looking at extractive revenues.

Stephanie: That’s true – unlike the issue of tax administration and collection, questions relating to expenditure of extractive revenues ultimately move into the realm of public financial management more broadly, since it’s rare to see ring-fenced budgets which would allow extractive revenue expenditure to be tracked. So the question of accountability here goes beyond extractives.

Elisa: I don’t think there’s a clear answer on how to handle this challenge – as a movement we will need to wrestle with the extent to which PWYP should, or is in a position to, focus our efforts on wider questions of public financial management.

Stephanie: And we have an all too timely example of why that’s not a conversation that PWYP can shy away from…

Elisa: Yes, the arrest of PWYP Niger national coordinator and Board member, Ali Idrissa, came about as a result of peacefully protesting against a finance law that they argue will foster corruption and facilitate tax breaks for the elite. Ali’s arrest brings home the realities of the powerful interests at play when it comes to natural resource extraction, and that accountability – natural resource justice – is not yet achieved and is going to be a hard won battle.

Stephanie: Yes, and this is something that we hope our new strategy will reflect as well – how PWYP members can create spaces to hold those powers to account. In terms of where we go next with our strategic planning in the context of Tax Justice in particular, what are some of the ideas that we want to bring to the PWYP Global Council when they meet in a couple of weeks to refine the 2020-2025 strategic priorities?

Elisa: There were a few key ideas from each of the participants that I found really exciting. For example, thinking about how we can leverage the power of the PWYP collective to tackle issues relating to tax incentives (something that Don Hubert clearly identifies as an entry point for engagement in the PWYP Canada report, “Many Ways to Lose a Billion”). Equally, there seem to be a few windows of opportunity to engage with corporate actors (for example, building on the work of the BTeam to develop responsible tax principles); or with multilateral institutions like the World Bank who are in a position to influence discriminatory tax systems. And there was a suggestion to develop more case studies that evidence the ways in which tax evasion and abuse in the extractive sector is facilitated, and the impact it has.

Stephanie: I agree, those were all really interesting aspects to consider. In addition, there was a clear message on the webinar that we need to capitalise on PWYP’s work over the past 16 years to make payment and contract information available, and to equip our members to use that information to make the evidence-based case for the equitable and sustainable management of the extractive sector.

Elisa: Absolutely – and we will continue that call for transparency which is what provides us with the evidence base to push for change.

– – – – –

Thanks to all those who joined the webinar and contributed your questions and comments. You can find a summary of the first webinar on The Future of Extraction here.

And if you missed the webinar you can catch up by watching the recoding below:

Further webinars on tax and extractives are taking place in French and Russian this week.

Further reading:

Putting extractives data to use: unpacking payments to governments’ reports

This post was originally posted by PWYP Canada on their website.

In May/June of 2017 the first Extractive Sector Transparency Measures Act (ESTMA) reports were publicly filed in Canada, which for the first time gave the public access to data on project level royalty, tax, and other payments made by oil, gas, and mining companies to extract natural resources. With over 400 unique companies disclosing data, this represents an unprecedented opportunity to better understand revenues flows in the global extractive sector.

In response to this reporting, PWYP-Canada launched a new work program to do three things: 1) create a database of the payment data; 2) analyze several reports at the project level to better understand the project, corporate structure, and basis of reporting; and 3) use the aggregate data to undertake several country/regional-level analyses.

The second activity has led to a series of mini-case studies focused on the mining sector. We focused on the mining sector for several reasons: the majority of Canadian companies with international operations are mining companies, and Canadian mining companies disclose significantly more project-level data than oil and gas companies. These mini-case studies focus on individual mines or projects and have several broad objectives:

  1. They unpack the payments disclosed in ESTMA reports and provide further information from communications with the company and company filings about the payments.
  2. They provide some context for the project, including the history of the mine, an overview of the mining code, some information about the corporate structure, and a brief overview of any pertinent issues related to the mine (lawsuits, significant social unrest).
  3. They provide an analysis of the company reports that can help to inform civil society advocacy efforts in-country.

The mini-cases are an experiment. The power of this type of analysis is untested, but at a minimum, we hope that they will provide the community of data users with more information about how payments and payments to governments reports are calculated. At a maximum, we hope these cases are used to inform new, more in-depth analysis and in-country advocacy campaigns.

Resources

To conduct the research for these mini-cases, the researcher drew upon several filings made by public Canadian mining companies:

  • Annual Information Forms (Company websites under investors or through SEDAR)
  • Technical Reports
  • The researcher also examined other more generic company reporting:

  • Annual reports
  • Corporate social responsibility (CSR) reports
  • Financial statements
  • Corporate presentations
  • The researcher also looked for general information about the fiscal regime in the country, examining:

  • The mining code or a description of the mining code by global legal or accounting firms
  • Extractive Industries Transparency Initiative (EITI) reports, where available
  • Publicly available contracts (resourcecontracts.org)
  • Information about the company on the Business and Human Rights Resource Centre.
  • The researcher was also provided a guide, in draft form, put together by Global Witness and Resources for Development Consulting which provides different methodologies for analyzing payments to government reports. This methodology provides guidance on how to conduct a royalty verification and audit. This process, at its simplest, involves determining three things:

    • Production sold that year
    • The average sales price (use the price disclosed by the company if available)
    • The royalty rate

    Hypothetical Example: Royalty Verification in the Gold Sector
    2000 oz sold x 1200 USD/oz (average price) x 4% royalty

    Royalty Verification or Audit

    A royalty verification involves several methodological assumptions:

    1. The royalty is based production.
    2. The royalty payment was calculated based on production during the year the payment was made (royalty paid in 2016 = calculated based on 2016 production).
    3. The royalty is fixed (i.e. not a variable rate royalty).
    4. The royalty payment has no deductions for costs accrued during production by the company.

    For a description of different types of royalties see Mining Contracts: How to Read and Understand Them (pg. 68-73).

    Were the assumptions true in the cases we looked at?

    1. Almost all the royalties we looked at were based on production (and not profit)
    2. Many were not paid on production/sales from the year when the ESTMA payment was made. For example, in one case cash payments disclosed in the ESTMA report were based on the first three quarters of 2016 and the last quarter of 2015. Given that the company disclosed project level production on a quarterly basis, we were able to tailor the royalty verification to this scenario.
    3. A few varied depending on the sales price. In these cases, there was sometimes sufficient data to tailor the royalty verification to this scenario.
    4. Several had allowable deductions for transportation and refining. Unfortunately, it is nearly impossible to verify allowable cost deductions from a royalty payment, as it would require further information about those costs and how they are calculated.

    Regardless of whether the assumptions proved to be true, royalty verifications are an important tool that civil society can use to audit royalty payments.

    Single Asset Companies

    Many of the companies we looked at were single asset companies or had only one asset in the country we looked at. Single asset companies are easier to analyze because their corporate reporting is based on production from only one project, thus the majority of the corporate data is already relevant to the project under examination.

    Cash versus Accruals

    It is important to remember that payments to governments reports are based on cash payments made in the company’s fiscal year to the relevant governments. In contrast, a company’s financial statements are based on accruals accounting. The accrual method of accounting, which is the most popular, records revenues and expenses when they are earned, regardless of when the money is received or paid. Thus we cannot expect a company’s financial statements to mirror their payments to government reports. Nevertheless, large discrepancies may warrant further investigation.

    Structure

    The structure and the information contained in the mini-cases can and should be subject to feedback. It may be that future mini-cases will have a different structure based on stakeholder feedback. However, the first are structured as follows:

    • Company background and key financial data
    • Corporate structure – flagging any concerns (tax haven subsidiaries, etc.) where applicable (found in a company’s Annual Information Form filed on www.sedar.com)
    • A description of the project and a map
    • Brief overview of mining in the country and any relevant issues (tax disputes, social unrest, lawsuits)
    • An overview of the payments in the ESTMA report
    • A royalty verification (projects selected were all in production and included royalty payments)
    • A description of the payments in the ESTMA reports, including any notes and further detail provided by company reports and company communications
    • Citations
    The Development Process

    To build the mini-cases, the researcher first put together an initial draft of the report, which was reviewed by the PWYP-Canada Director, who provided feedback and further guidance. For any type of analysis, expert peer review is a crucial step in the process. The second (sometimes third) draft was sent to a civil society stakeholder and the company for their review. Feedback from these exchanges was incorporated and at times, follow up questions were sent.

    The process of receiving and incorporating feedback was lengthy, as sometimes the royalty verification needed to be completely redone. For example, in the case of the Sabodala Mine, it turns out that the payment Teranga Gold made to the Government of Senegal for royalties was for total production in 2015 and the first three financial three quarters of 2016. In other cases, a company provided information about a royalty that was previous unclear from our research. For example, Tahoe Resources provided clarity about how voluntary royalties are calculated and disclosed.

    One thing that is clear is that companies are very willing to provide feedback on the cases and to help stakeholders better understand their in-company payments.
    After integrating all the comments, the reports were finalized, formatted, and edited. You can access our completed and published case studies here, but watch this space for updates, as there are still more to come!

    Case Selection and the Limitations of the Methodology

    Some of the research conducted here was made easier because of the attributes of the cases selected:
    In Canada, mining projects have more detailed information available at the project level, than both oil and gas companies and non-Canadian-listed mining companies. This is because Canadian mining companies have to file project-level Technical Reports which are often between 100 and 300 pages and can provide information about the fiscal regime, permits, economic/social/environmental risks, and financial models.

    Canadian companies have to file Annual Information Forms (AIFs), which can be found on the company website or on SEDAR, which often include a relatively detailed organizational chart of the company structure.

    Producing projects have larger payments that allow for more analysis.

    What’s next?

    The next step for PWYP-Canada is to work with the global coalition to mobilize these reports and assess how they may be able to impact advocacy plans or integrate with existing advocacy work. We then need to determine whether another round of cases would make a valuable contribution to the space and whether our budget will allow for it. We would definitely encourage other coalitions to consider trying out this methodology themselves and would be more than happy to support these efforts. We look forward to working together to mobilize the mini-cases, assess their impact, revise the methodology, and identify new cases.

    Many ways to lose a billion

    Countries rich in oil, gas and minerals often fail to secure a fair share of their natural resource wealth. Revenue loss from the extractive sector is particularly significant given the large
    number of countries that depend on natural resource revenues for a substantial portion of their annual budgets. Companies employ a wide range of strategies to minimize their payments to
    governments. Their efforts to avoid tax are facilitated by weak institutions, inadequate policies and regulations, badly negotiated contracts, and insufficient government monitoring and auditing.

    This report, by PWYP Canada, responds to a persistent question: is my government receiving its fair share of revenues from extractive sector projects? While no single report can specify what constitutes a fair share for every resource project, by identifying and illustrating the common pathways to government revenue loss in the extractive sector, this report will help stakeholders pinpoint mechanisms and policies that can safeguard critical revenues.

    Hundreds of mining, oil and gas companies reveal payments to governments for the first time, in Canada and around the world

    PWYP Canada small

    Ottawa, Canada – June 8th, 2017

    Today, Publish What You Pay-Canada welcomes the public disclosure of hundreds of reports detailing payments to governments by Canadian extractive companies. For most companies, this represents the first time these payments have been made public.

    “With more than 1200 Canadian-listed extractive companies operating in over 100 countries, the disclosure of payments in Canada will increase the transparency of the extractive sector globally,” stated Claire Woodside, PWYP-Canada Director. “These new reports will also provide meaningful data about payment flows to federal, provincial and territorial governments in Canada, where this information has previously not been available to the public in a systematic way.”

    The reports, filed with Natural Resources Canada and posted on their website, have been made available due to the implementation of the Extractive Sector Transparency Measures Act. An Act that requires all Canadian registered and listed extractive companies to disclose payments to governments in Canada and abroad. PWYP-Canada championed the development and passage of this Act through an innovative collaboration with Canadian mining industry associations and the Natural Resource Governance Institute (NRGI).

    “Our global partners are looking forward to examining these report more closely,” said Ian Thomson of Oxfam Canada. “Many communities are impacted by large-scale Canadian resource extraction projects, but lack critical information about the revenues flowing to governments from these projects. Citizens want to know if their countries are getting a fair deal.”

    In the coming months, PWYP-Canada, with the support of NRGI, will work to create a central database of the reports, in addition to analyzing individual reports and raising awareness about the reporting more broadly.

    “Transparency in the natural resource sector is critical to accountable resource governance and to evidence-based policy-making,” stated Kady Seguin, Partnership Africa Canada, “with these reports, Canada is leading the way to a more transparent and accountable global resource sector.”

    Publish What You Pay-Canada is the national coalition of the global PWYP network. A network of over 800 civil society organizations in more than 40 countries united in their call for a more transparent and accountable extractive sector, that enables citizens to have a say over whether their resources are extracted, how they are extracted and how their extractive revenues are spent.

    Media Contact:

    Claire Woodside, Publish What You Pay Canada, cwoodside@pwyp.ca, 613-237-6768 ext 29 or 613-794- 3536, @pwypcanada

    The press release is also available here.

    Is the United States getting a good deal on its natural resources? A taxing question

    This case study began with a not-so-simple question: Is the United States getting a good deal for the depletion of its natural resources?

    Publish What You Pay – United States (PWYP-US) has worked for 13 years to open the books of oil, gas and mining companies to create a more open and accountable extractives sector. More than a decade into this effort, many of the world’s largest oil, gas and mining companies now disclose their project-level payments to governments, either voluntarily or in compliance with legal requirements. Yet, a few major US oil companies
    – namely ExxonMobil, Chevron and ConocoPhillips – remain strongly opposed to these simple financial disclosures.

    Like the citizens in resource-rich countries around the world, citizens of the United States also need to know if they are getting a good deal on their natural resources. Thoroughly answering this question, however, is incredibly complex and involves the careful analysis of contracts, as well as relevant tax and royalty regimes governing the extractives sector. As a starting point, this case study focuses on how much some of the largest extractives companies paid in taxes to the US federal government in 2015.

    This case study is part of Publish What You Pay’s Data Extractors programme, a global initiative which trains PWYP members and activists from across our network to use extractives data.

    This case study was written by Jana Morgan Director of PWYP USA as part of her Data Extractor’s project

    US Congress votes down anti-corruption rule

    This week, United States legislators chose to relinquish their country’s leadership role in the global oil, gas and mining transparency movement by undoing a landmark anti-corruption rule. Both the House of Representatives and the Senate passed a motion to roll back the bi-partisan Cardin-Lugar provision, also known as Section 1504 of the Dodd-Frank Act Section 1504, in the same week that Rex Tillerson, former head of US oil giant ExxonMobil, was confirmed as Secretary of State.

    Elisa Peter, Executive Director of Publish What You Pay (PWYP), a global civil society coalition working to promote transparency in the extractive sector, said: “This rule, which the US Congress has just repealed, played an instrumental role in the global movement towards transparency. By requiring all US-listed oil, gas and mining companies to publicly disclose the payments they make to governments around the world, the United States had demonstrated world leadership in the fight against corruption. This time is over”

    Jana Morgan, Director of Publish What You Pay-US, said: “Instead of taking on corruption as they had promised, Congress and the new administration have gutted an important anti-graft measure that helps keep Americans safer and more informed. The Cardin-Lugar rule is critical for ensuring that authoritarian regimes around the world cannot treat oil and mining revenues like state secrets, breeding corruption, distrust, and conflict that harms U.S. security and energy interests.”

    The US mandatory disclosures rule, detailed by the US Securities and Exchange Commission (SEC) after much consultation, required all oil, gas and mineral companies listed on US stock exchanges to report the royalties, bonuses, fees, taxes and other payments they make to governments, country by country and project by project.

    Ali Neema, National Coordinator of PWYP Iraq, commented: “Transparency rules such as Dodd-Frank Section 1504 are crucial tools to redress extreme corruption problems linked to our country’s oil sector. Undoing this rule undermines efforts worldwide to make natural resource extraction honest and fair. More worryingly, it risks fueling new terrorist threats and leaves transparency about Iraq’s oil to the whim of government ministers and officials.”

    Civil society organisations and PWYP members all over the world had called on US legislators to preserve the Dodd-Frank transparency rule. The outcome of 15 years of civil society campaigning and several years of careful deliberation by US lawmakers and officials, Cardin-Lugar has had far-reaching consequences for citizens all over the world by inspiring similar legislation now being implemented in the European Union, Canada and Norway. Companies including Shell, BP, Total and Rio Tinto are already reporting. Many of the largest oil, gas and mining companies support country- and project-level reporting, and several have indicated that they do not find the reporting requirement burdensome.

    Miles Litvinoff, National Coordinator of PWYP UK, said: “Undoing this rule may push the US back as a global champion of transparency. But other jurisdictions are proving that they take anti-corruption measures in the extractive sector seriously. The UK is now in its second year of implementing its reports-on-payments-to-governments regulations, and most in-scope companies, including foreign UK-listed companies, are complying fully with their disclosure obligations without a problem.”

    Dodd-Frank 1504 is one of the first rules attacked by US Republicans allied with the new Trump administration using the little known Congressional Review Act. ExxonMobil and Rex Tillerson are widely known to have lobbied hard against this rule. Rather than “transferring power back to the people”, as President Trump has stated he wishes to do, this move means that when it comes to US oil, gas and mining companies, citizens will be kept in the dark.

    Elisa Peter concluded: “Notwithstanding this step back, PWYP will continue to empower citizens around the world to shine the light of transparency on the oil, gas and mining sectors.”

    Open Message from PWYP Global Coalition to US-listed EITI Companies

    Download the full statement here.

    Open message from Publish What You global coalition

    To US-listed EITI-supporting companies:

    Anglo American, AngloGold Ashanti, ArcelorMittal, Barrick Gold, BHP Billiton, BP, Chevron, Conoco Philips, Eni, Exxon Mobil, Freeport-McMoran, Glencore, Goldcorp, Gold Fields, Hess Corporation, Hudbay, Iamgold, Kinross, Kosmos Energy, Marathon Oil, Newmont Mining, Noble Energy, PEMEX, Petrobras, Rio Tinto, Royal Dutch Shell, Statoil, Teck Resources, Total, and Vale SA

    Help defend the Cardin-Lugar anti-corruption rule and the global extractive industry transparency standard

    Certain US legislators are seeking to use the Congressional Review Act to void the Cardin-Lugar anti-corruption rule (Dodd-Frank Act 2010, Section 1504). To roll back this rule would be a retrogressive step for oil, gas and mining industry transparency and for the global battle against corruption.

    Country- and project-level reporting of extractive industry payments is essential for citizens in resource-rich countries to hold their governments accountable for how they use the massive revenues they receive for their finite natural resources from companies. Oil, gas and mining companies need payment disclosure to maintain their social license to operate.

    Without payment transparency, citizens cannot know how much money extractive companies pay to dictatorial and non-transparent governments such as in Angola, Equatorial Guinea, and Kazakhstan.

    Fredrik Reinfeldt, Chair of the global Extractive Industries Transparency Initiative (EITI), stated this week:

    “The [US Securities and Exchange Commission] took great care in drafting these rules in consultation with industry to ensure that they complement the EITI’s efforts and avoid unnecessary duplication.

    I would urge Congress to consider this matter thoroughly and to ensure that any action does not undermine the hard-won gains in this arena.” (http://bit.ly/2kn50RL)

    The US Government has recognized that anti-corruption measures such as Dodd-Frank 1504 are es sential to fighting terrorism.

    As a responsible US-listed and EITI–supporting extractive company, please help defend the Cardin-Lugar rule by speaking out publicly in its favor and urging the US Congress and Senate to maintain the rule intact.

    We look forward to seeing your company statement. Please send statements to wmardini@pwypusa.org and cc to Business & Human Rights Resource Centre, which is tracking US-listed EITI-supporting companies that do and do not make statements, at regaignon@business-humanrights.org

    Faithfully yours

    Publish What You Pay International Secretariat

    Publish What You Pay United States

    NGO Coalition on EITI Azerbaijan (Publish What You Pay-affiliated)

    Publish What You Pay Cameroon

    Publish What You Pay Canada

    Publiez Ce Que Vous Payez Guinée

    Publiez Ce Que Vous Payez Payez Senegal

    Publish What You Pay (NGO Consortium on EITI Promotion) Kyrgyzstan

    Publish What You Pay Malawi

    Publish What You Pay Mozambique

    Publish What You Pay Netherlands

    Publish What You Pay Norway

    Publish What You Pay South Africa Coalition

    Publish What You Pay Uganda

    Publish What You Pay United Kingdom

    Publish What You Pay Zambia

    Publish What You Pay member organisations:

    Africa Network for Environment and Economic Justice (ANEEJ), Nigeria

    HDC “Tree of Life”, Kyrgyz Republic

    Luta Hamutuk Institute, Timor Leste

    Lumiere Synergie pour le Developpement, Senegal

    Mineral Policy Institute, Australia

    Partnership Africa Canada

    Public Association for Assistance to Free Economy, Azerbaijan

    Public Eye (formerly Berne Declaration), Switzerland

    SWISSAID, Switzerland

    This move by the US Congress is good for Exxon, bad for everyone

    One of President Trump’s best tools to “drain the swamp” is under threat from his own side. A mere four days after he took office, Republican Congress members began attacking a key piece of anti-corruption legislation.

    This rule, the Cardin-Lugar provision (also known as Section 1504 of the Dodd-Frank Act), was a bipartisan effort to shield US citizens and shareholders from millions of their dollars vanishing to foreign oligarchs in the oil, gas and mining sector, which is particularly vulnerable to corruption. The “swamp” — a handful of lobbyists, executives and contractors who feed off such business ties — has attacked it for years.

    When the provision was born in 2010 it set an international movement in motion. United States leadership inspired similar legislation in the EU, oil-rich Norway, Canada and beyond. In total, governments enacted similar provisions in over 30 countries.

    Today these measures apply to 80 percent of the world’s largest publicly listed oil, gas and mining companies, including state-owned companies from Russia, China and Brazil. This is a win-win for resource-rich countries too: citizens from Indonesia to Zimbabwe are using these transparency laws to keep track of the funds their governments receive and ensure that oil, gas and mining revenues don’t simply vanish into private accounts held offshore, but rather contribute to shared economic growth.

    But to those in Washington D.C. the most spectacular part of the provision was its bipartisanship, at a time when such feats seemed almost impossible. Later, laws in Canada drew the full support of the mining sector. Yet a handful of oil companies seeking to keep their business dealings secret continued to oppose the law. Leading this opposition was one company, Exxon Mobil, hiding behind an oil lobbying group called the American Petroleum Institute (API).

    First API opposed the law in Congress. When that failed, they tried to water down the regulations. After that, they sued the Securities and Exchange Commission, an agency of the US Federal government, resulting in the regulation being sent back for revision, on technicalities.This delayed implementation by years — until a new rule was released in June 2016.

    Next week, Republicans in Congress plan to use an obscure law called the Congressional Review Act (CRA), in an attempt to void the implementing rule for the Cardin-Lugar provision. Despite the Cardin-Lugar provision’s long legislative history, and two robust rulemakings, the delays caused by API’s litigation makes it vulnerable to the CRA.

    In the early rush of a new administration, members of Congress are moving as quickly as they can to damage anti-corruption standards, a move which only benefit lobbyists and corporate bottom lines. The greatest damage, however, will be to the communities around the world who currently fail to benefit from their natural resources because of the conduct of the likes of ExxonMobil.

    To US citizens and the rest of the world, this offensive threatens a return to the dark days of unhinged economic and environmental crime. It means vanished millions of dollars that shareholders,

    Who Owns Oil Rights in the Gulf of Mexico? Use this tool to find out!

    This post is sourced from Extract-A-Fact

    Always on the lookout for interesting data, I was excited when I recently came across a comprehensive trove of data on offshore production in the Gulf of
    Mexico from the Bureau of Ocean Energy Management (BOEM).The datasets at data.boem.gov
    include:

    However, because the data is interspersed between four datasets, it is downright complicated to find out which leases a company owns, what the lease
    attributes are, and how much oil and gas has been produced from the lease. With that in mind, I have created an interactive map application that combines
    the geographic data, the ownership data, and the production data into one easy-to-use tool.

    See the full-sized map here

    This map allows the user to view:

    • the leases owned by some of the biggest leaseholders in the Gulf of Mexico
    • which leases produced oil and/or gas in 2014, 2015, and 2016, and how much
    • all the owners of a lease by percentage
    • the royalty rate on the lease

    I created the map using
    Carto, an online platform for mapping and analysis, and used their Javascript library, Carto.js, to add custom features. I cleaned and merged the BOEM data using R into a usable format for the application. The data is hosted on the Carto website at pwypusa.carto.com ; it can be viewed and downloaded there.

    Take a look at the map, hosted on our Github page at the following link: https://pwypusa.github.io/pages/gulf_explorer.html

    Organizations unite to call for Canada to take swift action to end secret companies

    Canada must take this opportunity to demonstrate global leadership and implement a public, central registry of the beneficial owners of companies and trusts

    Ottawa, Canada – December 9th, 2016

    Anonymous companies are the getaway vehicles of corruption. Today, over twenty diverse organizations from within and outside of Canada, unite to call on the Government of Canada to take action and create a central public registry of companies and trusts. By taking this action, Canada will show national and global leadership in the efforts to shed light on anonymous companies – companies whose ownership is difficult or impossible to discern. Major corruption scandals in the last decade have one thing in common: they involve individuals that use a complex web of companies and other legal entities to obscure their identity.

    Anonymous companies pose a big problem in Canada. A recent evaluation by the intergovernmental Financial Action Task Force states that in Canada “(l)egal persons and arrangements are at a high risk of misuse, and that risk is not mitigated.” Further, the Panama
    Papers reveal that Mossack Fonseca marketed Canada as a good place to register a secret company.

    “In Canada, you need to provide more information to get a library card than to set up a company,” said Alesia Nahirny, Executive Director of Transparency International Canada.

    “No Canadian wants Canada to become a hotspot for tax evasion and money laundering, yet that is the risk we face,” stated Publish What You Pay Canada Director Claire Woodside.

    “Creating a central public registry of the beneficial ownership of companies and other legal entities is global best practice. It will underpin a strong accountability regime, where authorities can more effectively identify those who evade taxes and launder money.”

    “Anonymous companies are routinely at the heart of tax evasion and aggressive tax avoidance schemes, money laundering, and fraud,” commented Dennis Howlett, Executive Director of Canadians for Tax Fairness. “Further, they serve no legitimate purpose.”

    A central registry of companies and trusts that is made available to the public in open data format will help to speed up investigations; increase government revenues by enabling more effective efforts to crack down on tax evaders; help businesses meet their anti-money laundering obligations; and enable more effective public accountability.

    “Momentum is building globally to stop the secrecy behind company ownership that enables the corrupt and other criminals to get away with crimes that rip off innocent people, businesses and the government,” said Stefanie Ostfeld of Global Witness. “At least nine countries have or are in the process of creating public registries of beneficial ownership, the European Union already requires this disclosure and is considering making it public and many more countries are considering moving in this direction.”

    Beneficial ownership transparency does not just benefit society, but also the business community. “Corporate transparency is an important part of any good business community.

    Business has a responsibility to the society within which it exists and having clear ownership is an important piece of this,” said Mike Gifford of OpenConcept Consulting Inc.

    Download the letter here.

    Media Contacts:
    Claire Woodside, Publish What You Pay Canada, cwoodside@pwyp.ca, +1 (613) 7943536, @pwypcanada

    Dennis Howlett, Canadians for Tax Fairness, dennis.howlett@taxfairness.ca, +1 (613) 863-3670, @Cdntaxfairness