Transparency
Oil transparency law could be a boon for US taxpayers
Interior Department says Dodd-Frank Provision – “Could be Very Useful”
By Ian Gary, August 18th, 2011
Reposted from Oxfam America
Last year, when Oxfam and allies were celebrating the passage of the Dodd-Frank Wall Street Reform Act and the provision on oil and mining payment transparency, we were largely focused on the impact that these new disclosures would have on resource-rich developing countries. It turns out, though, that there could be a big financial benefit for the US Treasury and a country struggling with record deficits.
Few realize that the oil and mining payment disclosure provision – section 1504 or the “Cardin-Lugar” provision – requires reporting by companies in every country of operation, including reporting of payments in the US from production on Federal lands and offshore oil and gas production on the Outer Continental Shelf. The US Interior Department has just told the Securities and Exchange Commission (SEC) that implementation of this provision could be “very useful” in its work to collect oil and gas revenues inside the US. The Office of Natural Resource Revenue (ONRR) – charged with collecting and disbursing more than $10 billion in oil and gas revenues each year – has written to the SEC to say that how the agency implements the provision could help them “ensure that energy companies are reporting correctly and paying every dollar due to the American taxpayer.”
Photo caption: President Obama Signs the Dodd-Frank Wall Street Reform and Consumer Protection Act. Photo by Leader Nancy Pelosi, available under a Creative Commons Attribution-Noncommercial license.
Chevron/Shell Middle Management in favor of Transparency Law
An association of Chevron and Shell middle management in Nigeria came out in support of transparency principles promoted by JINN through Publish What You Pay coalition work. July 27, 2011
JINN spearheaded the passage of local ordinances in the Cities of Richmond, Berkeley and Oakland in support of and in the lead up to the signing of the new U.S. transparency law (The Dodd Frank Act) that requires all extractive industries that file with the Securities and Exchange Commission to disclose their payments to foreign governments on a project by project, country by country basis.
The Petroleum & Natural Gas Senior Staff Association of Nigeria has submitted a comment to the SEC, with help from the United Steelworkers.
See The Petroleum & Natural Gas Senior Staff Association of Nigeria comments PDF here
Highlights:
· Represents 21,000 senior and middle management employees working with Chevron and Shell Nigerian affiliates/subsidiaries, among others
· Sees Dodd-Frank as a “great opportunity for our members and all Nigerians to obtain information to combat corruption and to demand accountability for responsible resource use.”
· Disagrees with industry claim that transparency would jeopardize employee safety:
“We strongly disagree and, instead, believe that enhanced transparency would in fact enhance employee safety, especially in volatile places like Nigeria’s Niger Delta The often opaque investment environment in Nigeria leads to the conflict between communities and Oil Companies with our members caught In the middle-even being victims of kidnapping. Revenue transparency, Including project-level payment disclosure will help create incentiyes for investment that benefits communities alleviating much of the violence in the volatile Niger Delta and improving the safety of our members.”
· Supports PWYP’s proposals, including the definition of project as lease/license or other concession-level arrangement
USAID letter to SEC supports PWYP and JINN recommended transparency principles
This email from The Publish What You Pay Coalition, of which JINN is a member, summarizes the highlights of a letter from USAID sent to the SEC in support of the transparency principles relating to payments made by oil extractive industries to governments:
From: pwyp-usa-bounces@list.publishwhatyoupay.org
Sent: Friday, July 22, 2011 10:17 AM
Subject: [PWYP-USA] INFO: USAID supports strong Cardin-Lugar/1504 rules inletter to SEC
Dear all,
The U.S. Agency for International Development (USAID) sent a letter to the SEC in support of Cardin-Lugar/Section 1504 of Dodd-Frank and most of the PWYP arguments. It was sent by Eric Postel, Assistant Administrator, Bureau for Economic Growth, Agriculture, and Trade.
This is a great endorsement! It is also fitting that it was posted yesterday on the anniversary of Obama signing Cardin-Lugar into law. See here: http://www.sec.gov/comments/s7-42-10/s74210-101.pdf
Highlights:
· USAID believes that rules support US foreign policy goals, especially USAID’s assistance to resource-rich countries:
o “Our overarching belief is that the enforcement of the proposed rules contributes towards U.S. Government foreign policy goals of supporting stable and democratic governments, with a particular emphasis on USAID’s role in providing assistance to resource-rich countries in support of economic growth, good governance, transparency, and building civil society.”
· On exemptions: They support no exemptions of any kind; believe host country law exemptions would be used by “every opaque government seeking to hid some or all of its revenue streams”
· On project definition:
o Urge SEC to define ‘project’ to maximize disclosure & comparability (SEC had asked in its rule proposal whether ‘project’ should be defined at all)
o They don’t propose a definition, but urge them to adopt one that covers “the full breadth of oil, gas and mining activities without exemption for scope, size or ownership.”
· On the information to be reported, USAID supports (among other items):
o cash and in-kind payments
o Activities: “commercial development” should include full life cycle – cites the clarity in the statute and emphasizes that exploration, extracting and export should not be excluded
o Payment types: The proposed definition of payments with no exclusions for payment types, and urges inclusion of social and community payments and payments in-lieu or in-kind
o Entities subject: Emphasize Section’s intent to 1) capture broadest array of issuers possible and 2) minimize possibilities for companies to change ownership/reporting structures to avoid disclosure
Urge SEC definitions of “subsidiary”, “control”, “entity under the control of”, and “consolidated” to be consistent with this intent
o “Foreign government definition”:
Supports subnational government reporting
Should include “departments, agencies, instrumentalities, companies or subnational governments, including states, provinces, counties, districts, municipalities or other levels”
o Recommends data be filed vs. furnished to allow the public to file claims
· Says 1504 is complementary to EITI
· Says this law can “contribute to the efficient and effective use of U.S. development dollars and complement U.S. development strategies by ensuring resource extraction dollars benefits the developing country rather than increase the wealth of particular individuals.”
· “…these efforts better not only the lives of the citizens of developing countries, but also our own citizens through more secure and stable global economies and partnerships.”
· Recommendations are in line with USAID Anti-Corruption Strategy which recommends “fostering industry-specific transparency initiatives that help reduce the risks of the ‘resource curse’ and level the playing field for economic competition.”
Please share widely and use this letter in your lobbying to demonstrate the critical support of USAID, and the confirmation that Cardin-Lugar/1504 will underpin the U.S. development policy.
Let me know if you have any questions.
Thanks!
Isabel
Isabel Munilla
Director, Publish What You Pay United States
1100 15th Street NW, Suite 600, Washington DC, 20005
office +1 202 496 1179
skype isabel.munilla
www.pwypusa.org
Last minute oil deal is expensive for Nigeria
Just two days before the federal cabinet dissolved to allow President Goodluck Jonathan appoint a fresh one in recognition of his new electoral mandate, officials in charge of our oil and gas resources secretly signed a deal assigning production rights in at least two large oil blocks to a shadowy company with no prior experience and no fixed address.
Under the direction and with the approval of then petroleum minister Diezani Allison-Madueke, the officials with a magic wave of a pen effectively transferred hundreds of millions of US dollars – possibly billions – in public assets to private individuals without a public tender.
The deal is in apparent violation of Nigeria’s Public Procurement Act, which forbids no-tender bids for the procurement of goods and services by any government-owned institution under penalty of imprisonment.
The former Speaker of the House of Representatives, Dimeji Bankole, has been arrested and remains in detention in part for allegedly violating the same law. Mr Bankole faces up to 10 years in prison if found guilty of those particular charges.
The man at the heart of this strange and secretive deal is one Jide Omokore, chairman of a company not yet a year old and which has never produced a barrel of oil. The company, Atlantic Energy Drilling Concept Limited, is the beneficiary of this gift by Mrs Allison-Madueke. For paying to the Nigerian Petroleum Development Company, a fully owned subsidiary of the Nigerian National Petroleum Company (of which Mrs Allison-Madueke, as minister, was chairman) an initial “entrance fee” of slightly more than $50 million for each of the two oil fields, Atlantic now has effective control of the NPDC’s 55 percent stake in the oil block. These are rick blocks known in the industry as OML 30 and 34.
Shell, the giant multinational that produces around 50 percent of all of Nigeria’s crude, is the beneficial owner of the remaining 45 percent of the blocks. Shell had subjected its share of these oil blocks to an open and transparent competitive bidding process, fetching up to $1.3 billion in a single field. By comparison, Mrs Allison-Madueke’s no-bid approach via a so-called “Strategic Alliance Agreement” fetches the federation account an upfront cash payment of little more than $50 million. The true market value, if the Shell approach had been followed, would have been upwards of $1.5 billion.
New Freedom of Information Law for Nigeria
Reposted from SaharaReporters
Nigeria’s leader, Goodluck Jonathan, on Saturday signed into law the Freedom of Information Act as passed by the National Assembly. That was one day after a copy of the bill was delivered to him by the Clerk of the National Assembly, Salisu Maikasuwa.
In theory, the 18 -page document has now become the official freedom of information law by which Nigerian citizens can seek access to official information, but it remains to be tested.
The bill, which first made an appearance in the National Assembly in 1999, languished there in the years that followed as legislators squabbled over it and President Olusegun Obasanjo expressed open hostility to it. It made some progress early in 2007 and was passed by both chambers, but it was then vetoed by President Obasanjo.
After Obasanjo’s departure, the bill finally achieved some traction despite many other hurdles, and was finally passed by the National Assembly last week by the lawmakers who had watered it down considerably. Among other things, they claimed it would compromise national security.
In a joint statement today in Abuja, the Right to Know initiative, Media Rights Agenda and Open Society Foundations celebrated the FOI law as a victory for democracy, transparency, justice and development.
“With the new law, Nigerians finally have vital tools to uncover facts, fight corruption and hold officials and institutions accountable,” said Ms Ene Enonche, Coordinator of the Right to Know initiative.
Senator Levin warns SEC not to make an exception for disclosures by oil and mining companies
Sen. Carl Levin (D-Mich.) is urging the Securities and Exchange Commission not to carve out exemptions from upcoming rules that require oil and mining companies to disclose payments to foreign governments connected to projects in their countries.
Levin’s letter to the regulators this week collides with oil industry pressure on the SEC to provide substantial leeway in the regulation, which is required under last year’s Wall Street reform law.
Here’s part of Levin’s detailed Feb. 1 letter to the commission:
The proposed rule currently does not provide any reporting exceptions, including for companies operating in countries that ban disclosure of information related to their work in the jurisdiction. Exemptions for companies where laws in the host-country prohibit required reporting would contradict the purpose of the legislation and create a clear incentive for those countries, who want to prevent transparency, to pass laws against disclosure. In fact, it is precisely those jurisdictions for which investors and the public need additional transparency. Creating reporting exceptions would also risk creating loopholes that could undermine the rule’s creation of a level playing field for all covered issuers.
Levin is chairman of the Permanent Subcommittee on Investigations, and has probed the misuse of oil revenues in oil-producing countries in Africa.
The letter also covers several other aspects of the rule that requires new disclosures in company filings with the SEC. For instance, Levin argues that the final rule should define what constitutes a “project” that’s subject to the disclosure requirements.
“Without a definition, issuers are likely to define the term differently, produce information that is not comparable, and create many questions about the meaning of their disclosures,” the letter states.
Oil companies allege the SEC rule could place them at a disadvantage when competing for contracts against state-controlled Russian and Chinese firms.
The provision in the Wall Street law is aimed at ending the “resource curse” in which some energy- and mineral-rich nations in Africa and elsewhere are plagued by high levels of corruption, conflict and poverty.
TRANSPARENCY MEASURES
One of JINN’s primary campaigns is its advocacy for transparency, particularly in extractive industries’ payments to foreign governments.
As a member of the Publish What You Pay coalition, JINN is working with lead-organization Oxfam, the Sierra Club, and others to promote policies with transparency requirements.
On July 15, 2010, in a 60-39 vote, the Senate gave its final approval to the Dodd-Frank Wall Street Reform and Consumer Protection Act–with a landmark provision requiring energy and mining companies to disclose how much they pay to foreign countries and the U.S. government for oil, gas, and minerals.
The provision, based on the Energy Security Through Transparency Act (S. 1700), covers all oil, gas, and mining companies registered with the U.S. Securities and Exchange Commission. This includes the major oil operators in Nigeria: Royal Dutch/Shell, Chevron, ExxonMobil, and ENI.
For the people of the Niger Delta, this legislation will provide access to information that can be used to counter corruption and demand a fair share of revenues from oil extraction. With the amount of money that oil companies pay to the Nigerian government available to the public, people in resource-rich communities will have much-needed information to hold their leaders accountable for the money made from oil extraction from their land.
On June 30, the House of Representatives passed the same legislation that the Senate passed today. President Obama is expected to sign the bill into law next week.
Leading up to this momentous vote, JINN successfully asked the cities of Berkeley, Oakland and Richmond, California to adopt a resolution in support of the Energy Security Through Transparency Act (which was the basis for the language that was passed today). Along with its steadfast and stellar volunteers, JINN advocated to the City Councils of these three cities for the passage of resolutions supporting the federal legislation. The City Councils of each of these cities adopted the resolutions, where were used by the lobbying team on Capitol Hill.
More information below:
FOR IMMEDIATE RELEASE
July 15, 2010
CONTACT:
Abby Rubinson, abby@justiceinnigerianow.org, (415) 990-0792
Isabel Munilla, imunilla@pwypusa.org, (202) 525-2754 / (202) 680-4606
U.S. legislation shines light on billions in oil and mineral payments
Measure sets new global standard for corporate transparency
WASHINGTON, D.C., July 15, 2010 — The Senate gave final approval today to the Dodd-Frank Wall Street Reform and Consumer Protection Act with a landmark provision requiring energy and mining companies registered with the U.S. Securities and Exchange Commission to disclose how much they pay to foreign countries and the U.S. government for oil, gas, and minerals.
This historic measure gives citizens in resource-rich countries information they need to combat corruption in the oil and mineral sector and to demand government accountability for responsible resource use. The House passed the same legislation on June 30, and it is expected to be signed into law by President Obama next week.
The provision was based on the Energy Security through Transparency Act (S. 1700), which was championed in the U.S. Senate by a bipartisan group of legislators led by Senators Benjamin Cardin (D-MD) and Richard Lugar (R-IN). Sen. Patrick Leahy (D-VT) introduced the provision as an amendment during the conference negotiations for the financial services reform bill. Critical support came from Senators Tim Johnson (D-ND), Russell Feingold (D-WI), Charles Schumer (D-NY) and Richard Durbin (D-IL). Both the Senate Banking Committee Chairman Christopher Dodd (D-CT) and the House Financial Services Committee Chairman Barney Frank (D-MA) supported the Senate amendment during conference negotiations.
“This provision is a critical part of the increased transparency and corporate responsibility that we are striving to achieve in the financial industry,” said Senator Cardin. “Given the catastrophic events in the Gulf of Mexico, oil companies, in particular, should well understand that secrecy fosters instability, corruption and greater risk. We now have the tools to help people in resource-rich countries hold their leaders accountable for the money made from their oil, gas and minerals.”
“Transparency empowers citizens, investors, regulators, and other watchdogs and is a necessary ingredient of good governance for countries and companies alike. The Cardin-Lugar amendment brings a major step in favor of increased transparency at home and abroad. It empowers investors to have a more complete view of the value of their holdings. It brings more information to global commodity markets, which would benefit price stability. Most importantly, it helps empower citizens to hold their governments to account for the decisions made by their governments in the management of valuable oil, gas, and mineral resources and revenues,” said Senator Dick Lugar, Senate Foreign Relations Committee Ranking Member in a Senate Floor Statement.
The measure is a major victory for the global Publish What You Pay coalition, which includes over 600 faith, human rights and development groups working in over 55 countries.
“This is a game changer,” said Isabel Munilla, Director of Publish What You Pay United States. “This legislation sheds light on billions in payments from oil and mineral companies and to governments. Citizens now have a powerful tool they can use to scrutinize the levels of public spending on economic development, environmental protection and health and human services.”
The measure covers hundreds of companies, including 90% of the world’s largest internationally operating oil and gas companies, and eight of the world’s ten largest mining companies. It will provide citizens in nearly every country around the globe with much needed information.
Publish What You Pay is calling on other governments to follow suit. “Citizens on the Gulf coast of the U.S., in the Niger Delta, and all around the world deserve to know how much their governments receive for the development of natural resources,” Munilla said. “That’s why we are calling on other governments, such as the United Kingdom, Canada, and Australia, to adopt similar requirements, so that we can build on the leadership of the U.S. Congress.”
For more information: www.OpentheBooks.org
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PWYP US Member Organizations: ActionAid International USA · Amnesty International USA · Bank Information Center · CARE · Catholic Relief Services · Columban Center for Advocacy and Outreach · CorpWatch · Crude Accountability · EARTHWORKS · Earthrights International · EG Justice · Environmental Defense Fund · Friends of the Earth · Gender Action · Global Financial Integrity · Global Rights · Global Witness · Globalization Challenge Initiative · Government Accountability Project · Human Rights Watch · International Budget Project · International Labor Rights Forum · Justice in Nigeria Now · ONE Campaign · Open Society Policy Center · Oxfam America · Pacific Environment · Presbyterian Church USA · Project On Government Oversight · Revenue Watch Institute · Robert F. Kennedy Center for Human Rights · Sierra Club · Sustainable Energy & Economy Network
Extractive Industries Transparency Initiative
JINN also monitors Nigeria’s compliance with respect to a voluntary initiative, the Extractive Industries Transparency Initiative (EITI).
- Nigeria failed to meet the deadline for compliance with the requirement to submit its Validation report under the EITI.
- Nigeria (like Cameroon, Gabon, Ghana, Kazakhstan, Kyrgyzstan, & Timor Leste) was granted an extension until September 9, 2010, by which date a final Validation report endorsed by the multi-stakeholder group must be submitted to the Board.
- Basis for granting the extension: All these countries had submitted a draft Validation report prior to March 9th. In each of these cases, the Board (via the Validation Committee) carefully reviewed the draft Validation report. It requested further information and explanations from the Validator and the MSG. This process has enhanced the rigour and credibility of Validation, but it has also added significantly to the time needed to complete Validation. Therefore, the Board concluded that this situation was exceptional and unforeseeable, and outside the control of these countries.
RESOURCES:
JINN City Council Resolution Toolkit
Take action by calling on your city to support peace and transparency in the Niger Delta! JINN created a toolkit to help make the process easy and enjoyable. The toolkit includes
- an overview on how to pass a resolution
- a guide on how to lobby your elected officials
- background on Nigeria’s Niger Delta
- frequently asked questions
- a sample city council resolution.
Download JINN’s City Council Resolution Toolkit here.
PAST EVENTS
Event in DC, Friday May 21, 12:30pm-2pm:
US Leadership for Energy Security? The Case of Equatorial Guinea
Panel Discussion Lunch
Alfredo Okenve Ndo,
Co-Founder and Secretary-General of the Centro de Estudios e Iniciativas para el Desarrollo; Representative on the National Commission Extractive Industries Transparency Initiative
Simon Taylor
Founding Director, Global Witness – International NGO co-nominated for the Nobel Peace Prize for work on conflict diamonds, founding member of Publish What You Pay coalition and EITI
Bennett Freeman
Senior Vice President, Sustainability Research and Policy, Calvert Asset Management
Board Member Equatorial Guinea Justice
Moderator – Isabel Munilla
Director, Publish What You Pay United States
School of Advanced International Studies (SAIS)
Johns Hopkins University
Rome Building Auditorium
1619 Massachusetts Ave., NW, Washington, D.C.
Metro: Farragut North or Dupont Circle
Space is limited, please RSVP here by Wednesday May 19.
The panel discussion will highlight gaps in existing oil sector transparency efforts, and explore why U.S. government action, and in particular, transparency legislation introduced in the Senate (the Energy Security Through Transparency Act – S.1700) is a critical contribution to addressing corruption and improving the lives of the citizens of Equatorial Guinea.
The African nation of Equatorial Guinea is of critical strategic importance to the United States. Nestled in the Gulf of Guinea, the majority of its oil production comes to the U.S., and it is the third largest oil supplier to the U.S. from Africa, after Nigeria and Angola. U.S. companies dominate production there, and as a result, it is currently the fourth largest destination for overall US investment in sub-Saharan Africa. The recent oil boom has led to massive windfalls for the country, with government oil revenues going from $190 million in 1993 to $4.8 billion in 2007.
With a population of 650,000, Equatorial Guinea’s GDP per capita is on par with that of Italy and Spain. However, according to government figures, over 75% of the population lives in poverty. This is the result of rampant corruption at the highest levels. For example, oil money laundering by government elites into the U.S. has been under investigation by the U.S Congress for the past several years and was highlighted at a February 2010 hearing of the Senate Permanent Subcommittee on Investigations. Corruption has also fueled human rights abuses and led to official neglect of the government’s obligations to uphold their citizen’s social and economic rights. The government is extremely opaque, and stifles freedoms of information and association, making it nearly impossible for civil society to hold the government accountable for how it manages the country’s energy resources. While Equatorial Guinea joined the voluntary Extractive Industries Transparency Initiative (EITI), it was recently de-listed for not complying with the initiative’s requirements. Given the prominence of the U.S. role in Equatorial Guinea’s oil sector, it is critical that the U.S. government show leadership to help stem corruption.
RSVP here.
