The Extractive Industries Transparency Initiative (EITI) adopted new standards intended to increase transparency in the oil, gas and mining industries. The new rules were announced in Sydney ahead of the EITI board meeting. Ironically, several of the major oil companies who sit on the EITI board are part of a U.S. lawsuit that seeks to weaken transparency legislation in the U.S. Inter Press Service describes the “disconnect”:
On the one hand, several of the world’s largest oil companies – including ExxonMobil, Shell and Chevron – sit on the EITI board and are thus inferred to be in agreement with the newly revised transparency rules.
On the other hand, these companies are currently part of a lawsuit here attempting to dismantle Section 1504 of the Dodd-Frank Act, the legislation on which the new EITI standards are mostly closely based.
“Protection of the law is essential for investors to asses a company’s risk and for communities in resource-rich countries to hold governments to account,” Ian Gary, senior policy manager of Oxfam America’s oil, gas and mining programme, said from Sydney.
“This lawsuit is wholly incompatible with the industry’s transparency commitments and support of payment disclosure through [EITI]. It is unacceptable that oil companies should receive reputation benefits by supporting a transparency initiative while at the same time fighting a landmark payment disclosure law in U.S. courts.”
At Shell’s annual meeting, held May 21st in the Hague, Global Witness called on the company to drop its support for the lawsuit:
While the UK uses its G8 Presidency to advance a global transparency standard for oil and mining companies, the lawsuit seeks to stifle disclosure and move the industry in the opposite direction.
Shell is a leading member of the American Petroleum Institute (API), an oil industry lobby group that has filed a legal challenge against the U.S. Securities and Exchange Commission to strike down Section 1504 of the Dodd-Frank Act. The Act compels U.S.-listed oil, gas and mining companies to publish their revenue payments to governments, such as taxes, royalties and licence fees, as a means of combating corruption and poverty in resource-rich countries. Shell is covered by the regulation as it lists shares in the U.S. as well as in the EU.
Last week the UK Prime Minister David Cameron called on G8 leaders to move towards a global standard for extractive companies to report details of their payments to governments “without exception.” The statement came three days after the influential Africa Progress Panel urged all countries to adopt mandatory disclosure rules for oil and mining firms. The Panel’s report concludes that many of the charges against the Dodd-Frank legislation “stretch credibility”, while Kofi Annan, the Panel’s chair, suggested the litigation “is surely an act of strategic folly.”