Natural Resource Governance Institute commends UK government, calls for action in US
NEW YORK and LONDON, 1 December 2014—The Natural Resource Governance Institute has commended the UK’s new payment disclosure requirements for oil, gas and mining companies. The recently enacted UK Reports on Payments to Governments Regulations 2014 come into force today.
"These tough new rules will shine a light on billions of dollars in payments that the extractive industry makes to governments around the world," NRGI president Daniel Kaufmann said. "This much-needed legislation will bring greater openness to an industry which has typically been shrouded in secrecy, and will assist citizens in demanding that their governments use public funds to fight poverty and contribute to sustained economic growth, rather than lose these crucial revenues to corruption or mismanagement."
The regulations, adopted by parliament and signed into law last week, implement a key provision of the European Union’s 2013 Accounting Directive, which requires all large oil, gas, mining and logging companies registered in the EU to publish the payments they make to all governments around the world. Companies must report the information at the project level (rather than aggregate them for each country of operation), and no exemptions will be granted to companies under any circumstances. These provisions are critical, as information that is not granular is of little use to oversight actors who seek to use data to hold governments and companies accountable.
Some of the world’s largest oil and mining companies are registered in the UK: BP, Royal Dutch Shell, Anglo American, BHP Billiton and Rio Tinto included. Many foreign companies, including Russian giants Gazprom, Rosneft and Lukoil, raise capital on the London Stock Exchange.
Today the UK becomes the first EU country to implement the European requirements, honoring Prime Minister David Cameron’s 2013 G8 promise to "quickly implement" legislation in this area. France will soon finalize its own law and the other 26 EU member states must have laws in place by July 2015. Outside the EU, Norway already has a similar law in place, and the Canadian and Swiss governments are currently formulating their own rules.
The United States has had a law on the books since 2010, having included the requirement as Section 1504 of the Dodd Frank Act, but a legal challenge from the oil lobby has forced the US Securities and Exchange Commission to rewrite its rules in order to give effect to the law. The SEC expects to propose a new rule only at the end of 2015. Investors with over $6.4 trillion in assets under management have called for the swift adoption of US rules requiring public disclosure of project-level payment information.
"With the UK leading the way and a number other countries following close behind, inaction in the United States is regrettable," said Oxford University professor and NRGI governing board member Sir Paul Collier. "Given this significant progress in the UK, I hope the SEC will now accelerate its timetable to ensure that more citizens and investors around the world can access this crucial information on payments to governments."
For more information contact:
Director of Communications
Natural Resource Governance Institute
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Notes for editors:
- Companies must report on financial years starting from 1 January 2015. Each company making payments over the materiality threshold (£86,000) must file a report with the UK registrar of companies ("Companies House") within 11 months of the end of their financial year. Companies that fail to report fully, truthfully and accurately may face criminal penalties. See a fact sheet on the regulations here: http://publishwhatyoupay.org/resources/fact-sheet-uk-reports-payments-governments-regulations-2014
- The UK Reports on Payments to Governments Regulations 2014 implements Chapter 10 of the EU Accounting Directive which regulates the provision of financial information by all limited liability companies registered in the European Economic Area (EEA): http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:32013L0034
- The UK Financial Conduct Authority (FCA) will soon extend the disclosure requirements to all oil, gas, mining and logging companies listed on EU regulated markets in the UK, regardless of whether those companies are registered in the EU or EEA. The FCA’s upcoming rules will implement Article 6 "Report on payments to governments" of the revised EU Transparency Directive: http://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1415872329209&uri=CELEX:32013L0050
- The UK, along with France, Germany and Italy, pledged to "quickly implement" the EU Accounting and Transparency Directives at the 2013 G8 leaders’ summit: https://www.gov.uk/government/publications/2013-lough-erne-g8-leaders-communique (paragraph 38).
- Natural resource exports from Africa were worth $438 billion in 2012, dwarfing aid flows to the entire continent of $51 billion in the same year.
- Companies House will make the payment reports freely available online in open and machine-readable data format. NRGI is working with Companies House, industry and other civil society organizations to design a common reporting template.
The Natural Resource Governance Institute, an independent, non-profit organization, helps people to realize the benefits of their countries’ oil, gas and mineral wealth through applied research, and innovative approaches to capacity development, technical advice and advocacy. We work with government ministries, civil society organizations, journalists, legislatures, private sector actors, and international institutions to promote accountable and effective governance in the extractive industries. Learn more at www.resourcegovernance.org.