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Washington, DC – In the five years since the Dodd-Frank Act passed, oil produced in developing countries was worth an estimated $1.55 trillion for those governments, according to a new analysis by Oxfam America. But because the landmark US transparency law remains delayed, any payments that flowed to governments took place with limited or no transparency.
July 21 marks five years since Section 1504 was passed, but thanks to foot dragging by the Securities and Exchange Commission (SEC) and aggressive lobbying and legal challenges by oil industry laggards, there is no implementing rule in sight. The law is meant to support US national and energy security by helping to stabilize strategically important energy markets and by stemming the flow of money into the bank accounts of corrupt elites. It will also protect investors by giving them information they can use to assess investment risks, and allows citizens in aid-dependent countries to follow the money generated by their own natural resources sector in the hopes they might graduate from US aid in the future.
“Without payment transparency, following the money and holding governments accountable is next to impossible for citizens of developing countries,” said Raymond C. Offenheiser, president of Oxfam America. “With payments for oil and mining projects out in the open, citizens can demand their governments spend these funds in the communities where drilling is taking place – using it to fight extreme poverty and build roads, schools, and hospitals. With secrecy, funds may be lost to corruption and waste, as we have historically seen in oil-rich countries still suffering from high rates of poverty and low development.”
Managed properly, revenues generated from the oil industry should be dramatically reducing poverty through investments in pro-development spending, such as education, health care and agriculture.
The estimated $1.55 trillion represents:
Such vast sums of money could be used for good, yet laggards in the oil industry have been fighting to weaken transparency rules, preventing citizens from demanding accountability and investors from being able to assess risks in their corporate holdings. The American Petroleum Institute, one of the biggest opponents of this law, spent hundreds of millions of dollars on lobbying in the past five years.
“With this huge sum at stake, it’s crucial that we have transparency for these payments,” said Ian Gary, senior policy manager at Oxfam America. “The Securities and Exchange Commission has the power to end secrecy from US-listed companies, and needs to obey the law and finish the job with strong rules. The US must resume its leadership on transparency.”
Section 1504 inspired a wave of similar mandatory sunlight provisions around the world, setting a new global standard for transparency. Today, 30 countries have adopted laws requiring public, company by company disclosure for each oil, gas and mining project following the US law, including the European Union, Canada and Norway. These laws give the SEC a clear standard to follow in implementation.
Oxfam America is calling on the Securities and Exchange Commission to finish a rule for Section 1504 by the end of this year, and ensure that the rule requires mandatory, public disclosures by company, at the project-level, for each country with no exemptions.
www.oxfamamerica.org/NoSecretDeals
