Anti-corruption campaigners urge the UK Government to divorce itself from industry guidelines that would create transparency black-holes
Oil and mining bodies together with companies such as BP and Royal Dutch Shell have drafted industry compliance guidelines that weaken the impact of new UK anti-corruption laws. (1) A coalition of over 800 organisations including Global Witness, CAFOD, Oxfam, Christian Aid and ONE are urging the Government to reject industry’s proposed guidelines which suggest that the law allows companies to keep certain payments secret. (2)
The UK transparency law aims to cut corruption by forcing UK-based extractive companies to publish highly detailed reports of their payments to governments – such as taxes, royalties and licence fees – broken down by each of their projects worldwide; these payments are worth billions of pounds each year. Disclosure provides citizens in resource-rich but impoverished countries with the means to “follow the money” and hold governments and companies to account.
However, the draft industry guidelines suggest that companies can lump projects together when they report, and withhold from public view certain crucial payments they make as part of joint ventures. The result is that billions of pounds worth of payments will remain hidden from view and vulnerable to corruption.
Industry claims that their guidance is a reasonable interpretation of regulations; however, Global Witness believes that the draft industry guidelines go against the letter and intent of the law (3). EU legal expert Paul Lasok QC, Head of Monckton Chambers agrees, calling the guidelines “highly unsatisfactory … to the extent of being positively misleading” and states that they guide companies to report in a manner that could be “in breach of the regulations”. (4)
In addition, this week’s disclosures by Norwegian oil major Statoil under a similar law show that the UK industry guidelines are not fit for purpose. “Statoil’s highly detailed report puts the UK industry’s approach to shame,” said Dominic Eagleton, Senior Campaigner at Global Witness. (5)
Global Witness applauds the UK Government’s record for leading on extractives transparency up to this point. Lib-Dem Business Minister Jo Swinson and Department for Business officials championed the law, and the Prime Minister made the issue a top priority during his G8 Presidency in 2013. (6) “The UK has established a strong transparency law. The Government must stand firm against big business and divorce itself from industry guidelines that would allow companies to continue making payments in secret” says Eagleton.
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Contact: Dominic Eagleton - +44 7738 713 016 / [email protected]
Notes
(1) The Reports on Payments To Governments Regulations 2014 require UK-domiciled and UK-listed extractive companies, such as Royal Dutch Shell, BP, Rio Tinto, Anglo American, Total and BHP Billiton, to publish the payments they make to governments for all countries of operation on a project-by-project basis: bit.ly/12RGpb2.
The industry guidelines are being produced by the International Association of Oil and Gas Producers and the International Council on Mining and Metals. A draft of the industry guidelines from November 2014 is available here: bit.ly/1uB1nRo. The document has been modified slightly since November.
(2) Global Witness, CAFOD, Oxfam, Christian Aid and ONE are members of the Publish What You Pay collation, which promotes greater transparency in the global extractive industries and is made up of over 800 civil society organisations from more than 60 countries: bit.ly/1wQQSRQ.
(3) The industry guidelines state that companies can artificially group together distinct projects and report on them as a single project. For more information please see http://bit.ly/1x9c2L0. The guidelines also state that if a company makes payments indirectly to a government via a partner company in the same joint venture project, these payments do not have to be disclosed. A legal opinion obtained by Global Witness states unequivocally that both these elements of the guidelines go against the letter and intent of the law.
(4) Opinion, In the Matter of Global Witness and in the Matter of Draft Industry Guidance Concerning the Reports on Payments to Governments Regulations 2014: bit.ly/1x9gutc
(5) Statoil’s report interprets the definition of project in line with the Norwegian regulations, and discloses payments from joint venture projects that are made indirectly via a project partner company: bit.ly/1MQK8Ht.
(6) The UK Prime Minister David Cameron called on G8 member states to introduce similar laws during the UK’s Presidency of the G8 in 2013: bit.ly/1NUK771. G8 member states committed to making progress towards establishing common extractives transparency laws in the final G8 2013 communiqué: http://bit.ly/1pIwoFP (para 36).