Written evidence submitted by Publish
What You Pay
MAIN POINTS
Many countries in Africa and other developing
regions will not achieve the MDGs by 2015, and this is in large
part due to secrecy and corruption in the oil, gas and mining
industries. Disclosure of revenue payments made by oil, gas and
mining companies to resource-rich governments would increase accountability
and foster better use of domestic natural resources for development
in order to achieve the MDGs.
The United States adopted a law on 21 July 2010
to require all such companies regulated in the US to disclose
such payments. Noting London's pivotal role in financial markets,
the UK government should take similar steps and mandate similar
disclosure requirements for UK-listed companies.
Taking such steps would help deliver on the
MDG Summit outcomes which stress the need for measures to combat
corruption and include specific commitments to enhancing disclosure
practices and promoting transparency in financial information.
KEY OUTCOMES
FROM THE
SUMMIT
1. The MDG Summit outcome document adopted
by the General Assembly by consensus on 22 September 2010 included
the following "action agenda" and commitments related
to fighting corruption and promoting financial transparency:
2. The MDG Summit outcome document stressed
that "fighting corruption at both the national and international
levels is a priority and that corruption is a serious barrier
to effective resource mobilization and allocation and diverts
resources away from activities that are vital for poverty eradication,
the fight against hunger and sustainable development."[36]
3. In 2008, exports of oil and minerals
from Africa were worth roughly $393 billionnine times the
value of international aid ($44 billion). Ironically, countries
rich in natural resources are more likely to suffer conflict and
poverty than their resource-poor neighbours, as the revenues are
fought over, mismanaged and misappropriated under a veil of secrecy.
Information about extractive industry revenues is critical for
curbing corruption and fostering the better use of these domestic
resources for development.
4. Notwithstanding the UK government's laudable
commitment to reaching 0.7% of GNI in aid by 2013 (reaffirmed
at the MDG Summit), the fact is that the burden on the UK's aid
budget could be reduced at a time of severe fiscal austerity if
developing countries were able to achieve sustainable growth by
mobilising revenues from the sale of their natural resources.
5. Mobilising revenues from domestic natural
resources through disclosure of payments made by oil, gas and
mining companies to governments is crucial to ensuring sustainable
growth in developing countries as citizens are empowered, through
financial transparency, to hold governments to account for the
use of these revenues.
6. At the MDG Summit the UK government placed
an emphasis on improving maternal and child health as well as
tackling preventable diseases such as malaria. Aid plays an important
role but since natural resource revenues dwarf development aid
flows, it is these domestic resources which will ultimately underpin
a country's economic development and ability to meet the MDGs
including improving child and maternal health and tackling malaria.
7. Mobilising domestic resources for development
would ensure that developing countries are able to secure and
deliver the Summit outcomes for themselves. The MDG Summit outcome
document reaffirms that national ownership and leadership are
indispensable in the development process but that "development
efforts at the national level need to be supported by an enabling
national and international environment that complements national
actions and strategies." A critical part of creating this
enabling environment would be for the UK government to adopt legislation
requiring UK-listed oil, gas and mining companies to disclose
their payments the governments of resource-rich developing countries.
8. The MDG Summit outcome document specifically
committed Heads of State and Government to accelerating progress
on Developing a Global Partnership for Development (MDG 8) through:
"Enhancing and strengthening domestic
resource mobilization and fiscal space, including, where appropriate,
through modernized tax systems, more efficient tax collection,
broadening the tax base and effectively combating tax evasion
and capital flight."
"Implementing measures to curtail
illicit financial flows at all levels, enhancing disclosure
practices and promoting transparency in financial information."[37]
DFID'S ROLE
IN DELIVERING
AGREED STRATEGIES
9. The Publish What You Pay coalition urges
the Secretary of State for International Development to champion
extractive industry transparency regulations for UK-listed companies.
10. A new precedent in extractive industry
transparency has recently been set by legislation in the United
States. Provision 1504 (Disclosure of Payments by Resource Extraction
Issuers) contained in the new Dodd-Frank Wall Street Reform and
Consumer Protection Act, passed in July 2010, requires oil, gas
and mining companies registered with the Securities and Exchange
Commission (SEC) to publicly report how much they pay each government
for access to their oil, gas and minerals.[38]
The law requires the information to be presented annually on a
countryand project-specific basis. It must be filed in
an electronic format and the SEC must make this publicly available
in a single on-line database.
11. President Obama raised this historic
step in his speech to the UN MDG Summit on 22 September:
"
We are leading a global effort
to combat corruption, which in many places is the single greatest
barrier to prosperity, and which is a profound violation of human
rights. That's why we now require oil, gas and mining companies
that raise capital in the United States to disclose all payments
they make to foreign governments. And it's why I urged the G20
to put corruption on its agenda and make it harder for corrupt
officials to steal from their own people and stifle their nation's
development."[39]
12. The UK government could help accelerate
progress on achieving the MDGs by introducing similar reporting
requirements for UK-listed companies. This would mean that companies
that are currently not listed with the SEC would be covered by
the same reporting requirements, creating a more level and transparent
playing field for business. The information from company financial
reports, if disaggregated to the level of each country, will be
a vital tool in building such accountability, giving citizens
essential data with which to hold their governments accountable
for the revenues mobilised and how they are used.
13. A reporting requirement for UK-listed
companies would cover important energy and mineral suppliers that
are not listed on the SEC including Russian oil and gas companies
like Gazprom, Rosneft and Lukoil, as well as large mining companies
like Anglo American and Xstrata. These companies pay large sums
of money to resource-rich countries for the sale of oil, gas and
minerals which could serve as a basis for economic growth and
poverty reduction.
14. With the UK's important role in global
financial markets, adoption of country-specific reporting requirements
like the US law would greatly contribute to making payment disclosure
an international norm. The UK should also promote similar standards
in the European Union and other jurisdictions around the world.
The inclusion of country by country reporting in the International
Financial Reporting Standard for mineral extraction which is currently
being developed by the International Accounting Standards Board
would ensure the most universal coverage.
15. Introducing regulation to improve transparency
and fight corruption fits well with the Coalition Government's
domestic and international agenda of transparency, accountability
and good governance.
October 2010
36 MDG Summit outcome document, paragraph 52. Back
37
MDG Summit outcome document, paragraphs 78(i) and 78 (j). Back
38
See http://thomas.loc.gov/cgi-bin/cpquery/?&dbname=cp111&sid=cp111G9Nkr&refer=&r_n=hr517.111&item=&&&
sel=TOC_2843491& Back
39
http://www.whitehouse.gov/the-press-office/2010/09/22/remarks-president-millennium-development-goals-summit-new-york-new-york Back
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