LONDON/NEW YORK, 25 October 2011 – The European Commission’s formal proposal today to require companies to disclose payments to governments for oil, gas and minerals gives vital help to citizens in the Middle East and other countries rich in natural resources, the Revenue Watch Institute said.
“Congratulations to the Commission for its leadership in making these proposals, which will aid economic development in many fragile states and also strengthen the global financial system by bringing greater transparency to a major sector of the world economy,” said Karin Lissakers, director of Revenue Watch. “When the European Union strengthens these proposals and turns them into law, investors and citizens in countries rich in natural resources will have more of the information needed to hold governments as well as companies accountable."
George Soros, founder of the Open Society Foundations, a Revenue Watch funder, said the proposals can bring greater openness to every resource-rich country. “This is a welcomed step by the Commission to bring greater transparency to an industry that can help many countries finance their own development.“
As proposed by the Commission, the EU would require publicly traded companies and large private companies to make public their payments to governments for extracting oil, gas and minerals, and to report that information country-by-country and project-by-project, with limited exceptions. As of August, the publicly traded oil and mineral companies listed on EU stock exchanges had a combined valuation of €889 billion ($1.2 trillion). The laws would also apply to companies logging forests.
“EU lawmakers can improve the proposals to make even more information public, to help societies get a fair deal for their natural resources,” said Vanessa Herringshaw, director of advocacy at Revenue Watch. “This is the opportunity for the EU to guarantee far greater openness for countries rich in natural resources.”
In proposing greater disclosure, the Commission has taken action similar to that of the United States, which approved a disclosure measure in July 2010 as part of the Dodd-Frank financial reform legislation. It requires companies listed with the Securities and Exchange Commission (SEC) to report country-by-country and project-by-project how much they pay governments for access to oil, gas and minerals. Though the law required the SEC to publish final rules for the measures in the first half of 2011, the SEC has yet to publish the rules.
In the European Union, the EU parliament and Council will review the European Commission’s proposed rules before agreeing on a final version for adoption.
Vanessa Herringshaw (London)
Robert Ruby (New York)
Head of Communications