And we support transparency and accountability in the oil and natural gas industry. With good governance and accountability, the value generated from the natural resources of a country can flow to its people, providing a better standard of living and increasing opportunities for its citizens. As part of our commitment to honest and ethical behavior, we are an active participant in transparency and anti-corruption programs, including being a leading member of our industry’s global transparency initiative.
But in the middle of the night just before the Fourth of July recess, Congressional negotiators inserted a provision into the Financial Regulatory Reform Bill that supports neither transparency nor fair competition. There was no hearing and no debate. The provision – which would require U.S. Securities and Exchange Commission-reporting oil, natural gas, and mining companies to not only report to the SEC, but also publicly disclose payments made to foreign governments – is now buried within more than 2,000 pages of legislation that is being considered by the Senate.
What’s ironic is that supporters of this provision claim it is needed to increase transparency and accountability. Yet, the tactics used to add the measure to the bill were anything but transparent. For something this important, with such broad implications, Americans deserve a thoughtful and thorough Congressional debate, complete with a full committee hearing and a floor vote.
The amendment requires U.S.-listed companies to essentially turn over the competitively negotiated terms of their proprietary contracts to all foreign competitors who don’t have U.S. SEC reporting requirements – providing no protection for confidential information. At a time when the U.S. is concerned about international competitiveness, this would create a new competitive disadvantage. Further, mandating disclosure of financial information by companies without regard for host government consent is not the way to encourage the cooperation or accountability necessary to improve governance in resource-rich countries.
The best way to promote transparency is through measures that encourage collaboration between governments, companies, civil society, and financial institutions. A prime example is the Extractive Industries Transparency Initiative (EITI), which is dedicated to strengthening governance by improving transparency and accountability in the extractives sector. It sets forth global principles for companies to report what they pay to governments and for governments to disclose what they receive from companies. EITI has a proven track record of success. It strikes a balance between requiring disclosure and keeping confidentiality. The late-night addition to the financial reform bill would weaken the incentive for host governments to engage in multi-stakeholder initiatives like EITI.
In the non-transparent manner in which it was added, and in the way it is written, the so-called transparency provision in the Financial Regulatory Reform Bill violates these principles. In the interests of both transparency and U.S. competitiveness, it should not proceed.