The next time you fill up your car or buy a gold necklace for your mother, you may be surprised to learn that the companies that brought you these products made massive payments to foreign governments in order to have access to the oil or precious metals.
These millions and even billions of dollars in payments are shrouded in secrecy and are extremely vulnerable to theft and corruption. As a result, in many poor countries that source the oil and minerals you use every day, only a few elites benefit by siphoning off bribes and mismanaging revenues.
More than 1.5 billion people in resource-rich countries live on less than $2 per day, while nearly $1 trillion is lost in developing countries each year due to corruption. The best tool citizens and investors around the world have to fight this secrecy is being stalled by our own government – but a Boston anti-poverty group is suing to fix that.
We at Oxfam America will be appearing in court today opposite the Securities and Exchange Commission (SEC), which has yet to finish the rule to put an oil and mining transparency law Congress passed with bipartisan support nearly five years ago into force. The SEC has repeatedly delayed implementation of the rule despite being required by Congress to finish it within 270 days. Years later, thousands of citizens from all over the world, investors, and even the oil industry are calling on them to finish it as soon as possible.
The rule in question is Section 1504 of the 2010 Dodd-Frank Act, which requires US oil, gas, and mining companies to disclose the payments they make to governments for access to natural resources in every country where they operate. This will provide investors and citizens in these countries with crucial information about transactions worth billions of dollars every year. Since these natural resources are often found in poor countries with weak institutions or instability, payments made by US-listed companies could be stolen by corrupt bureaucrats or simply wasted instead of being invested on roads, schools, hospitals and programs to reduce poverty. According to the OECD, the extractive industries are the most vulnerable to bribery and corruption.
Congress passed Section 1504 to give investors and citizens the information they need to track this money and shine a light on corruption. With payments out in the open, citizens can hold their governments accountable for how they spend these payments, and companies can be held accountable for paying what is due. Armed with that information, activists can push for more of that money to be spent back in their communities, helping to fight poverty by building roads, schools, and hospitals.
The momentum is in our favor, as the mining industry now supports transparency laws, and many foreign oil companies have recently started disclosing this information, with no competitive harm.
By passing this law five years ago, the US led the pack on transparency. But now, similar laws are in place in Canada, the European Union, and Norway, covering American Petroleum Institute members like Shell and BP. This all makes the SEC’s job much easier and provides a clear international standard for them to follow.
We’re hoping the Court will issue a timeline that the SEC has to stick to, to get this vital rule done promptly. Since we sued the SEC last September, they have pushed back their deadline twice. Now the SEC tells the Court they may not even act until spring 2016. Or they could delay further. Congress gave the SEC a timeline, and the SEC is required to stick to it.
For more than 15 years, Oxfam America has been supporting communities and watchdog groups around the world that are fighting for oil and mining transparency. We’re joined by investors with more than $5.6 trillion in assets calling for a rule – including Boston-based investment companies like Boston Common, Trillium and Walden.
We’re on the verge of a watershed moment for transparency, but the SEC needs to do its part. Investors and citizens of resource-rich countries simply can’t wait any longer for this crucial information.