The European Parliament in session
The fight for greater transparency in the oil, gas and mining sectors has been won and lost many times over the last four years, leaving companies to operate in a business-as-usual world.
The goal is to have a common standard that will allow extractive companies to report how much they pay governments for access to their resources, regardless of what stock exchange they are listed on. Citizens should be able to use this information to track the profits from mines and oil wells and make sure their political representatives are spending resource revenues wisely.
But, writing a rule that will cover the three biggest stock exchanges for extractive companies—Toronto, New York and London—is not easy. And now that the E.U. Commission has opened consultations on what it will accept from companies reporting in other countries, the doors are open for further negotiation and, possibly, a less coherent standard.
The United States passed a law in 2010 as part of the Dodd Frank Wall Street Reform and Consumer Protection Act that will require oil, gas and mining companies to publicly disclose how much they pay governments for access to their resources.
The European Commission followed suit in 2013 with a law that will require all companies listed on European stock exchanges to disclose payments over €100,000 to all levels of governments, in all countries, for all projects, without exemptions by November 2015.
This is considered the gold standard for payment disclosure because it provides a level of granularity that citizens need if they are going to inquire about specific projects, says Colin Tinto, a campaigner at U.K.-based Global Witness, an organization that looks at the economic networks behind conflict and corruption.
Before the E.U. members could implement the law, the American Petroleum Institute challenged the U.S. rule in court, saying it would place an undue burden on the industry and affect competition. The U.S. District Court for the District of Columbia sent the rule back to the U.S. Securities and Exchange Commission with the understanding that it can either rewrite the rule or provide a better justification. The final rule is scheduled to come up for discussion some time before March 2015.
In the meantime, the Canadian government has begun working on its own payment transparency law to be implemented by April 2015. Natural Resources Canada (NRCan) has been working with provincial and territorial governments, industry, civil society and Aboriginal groups to design the law.
To make things easier on companies listed on multiple stock exchanges, the Canadian government is working with the U.S. and E.U. to align its law with the existing international standards and to ensure that there is a level playing field for companies operating domestically and abroad, says Jacinthe Perras, spokesperson for the NRCan.
But, some Canadian companies do not like the way the E.U. law has been written and Talisman Energy Inc., a Canadian oil and gas company, is calling for a different standard altogether.
“We do not believe that trying to draft Canadian rule so that they are ‘equivalent’ with the most severe set of rules currently proposed is of any service to Canadian companies,” the company says in its letter to NRCan.
Instead, Talisman is calling for anonymous country-by-country reporting with exemptions in countries where it is forbidden to reveal how much companies have paid governments.
The suggestion that Canada can pass a different rule and have it accepted in the E.U. is a misunderstanding of the law and would make it impossible to declare equivalency between the two reporting standards, says Tinto.
The Commission has yet to announce an official position on what it will require from companies that want to report in other countries.
“We have not taken a decision yet,” says Didier Millerot, spokesperson for the Commission. “We cannot say that if Canada allows for exemptions in its legislation that we won’t accept it. We have to look at the Canadian system as a whole…. This is also a political decision.”
A global transparency standard would allow for comparison and make it easier for citizens to access, use and interpret information, says Claire Woodside, Director of PWYP Canada, the global network of organizations pushing for transparency in the oil, gas and mining industries.
Any efforts to keep company names a secret or to make exemptions for certain countries will increase opportunities for the theft and mismanagement of revenues, which robs citizens of the economic benefits of natural resource wealth, she added.
Brent Anderson, Manager of External Relations at Talisman says, “the Canadian government should take care of its own citizens and companies first, and foreign citizens should be protected by their own countries’ laws.”
When assessing a third-country rule, Millerot says, the Commission would be looking to see whether the laws aim to achieve the same end result.
“It’s a transparency instrument that is there to empower citizens, stakeholders, NGOs and all those working towards more transparency and to encourage better use of natural resources by the countries that are sitting on them,” he added.
“That’s the first, indispensable step: that we understand each other and we know where we are going,” he says.