By Raymond C. Offenheiser
The opinions expressed are his own.
For most of us, this July 15th will be the start of just another hot summer weekend. But for many, the day marks the one-year anniversary of Congressional approval of a landmark law that will lift the veil of secrecy on billions of dollars that flow every year from oil and mining companies to governments around the world.
Tucked into the massive Dodd-Frank Wall Street Reform and Consumer Protection Act is a provision requiring oil, gas and mining companies reporting to the US Securities and Exchange Commission (SEC) to disclose the payments they make to host governments.
From rural villagers in Africa to investors on Wall Street, the groundbreaking law casts the transparency net far and wide, arming the public with information it can use to track the amount of money governments receive from oil and mining companies. The provision, backed by a bipartisan group including Senators Lugar and Cardin, among others, requires annual reporting of taxes, royalties and other payments, and covers a broad range of US, European, Chinese, Brazilian and other companies. By law, the final regulation from the SEC — the regulatory agency responsible for implementing the law — should have been issued in April. However, no final rule has been issued.
One of the reasons for the financial crisis was a lack of public information about the real risks of investments. In the case of the oil and mining industries, investors need to know how and whether companies are exposed to political and expropriation risks in volatile resource-rich countries. In some places, companies can make up front payments of over a billion dollars before a drop of oil is produced and this information is not disclosed to investors. This disclosure provision — in addition to providing useful information to citizens in resource-rich countries — also provides valuable information to investors on how to assess risk. This is part of the SEC’s core mandate. As a display of investor interest, investors representing more than $1.2 trillion in assets under management, including TIAA-CREF and others, have called on the SEC to implement strong rules for this provision.
We at Oxfam America joined NGOs in the Publish What You Pay coalition, faith groups and investors representing over $1.2 trillion in assets to commend the SEC for drafting a regulation in December that followed Congressional intent. Industry and other stakeholders have had plenty of time to comment on the draft — the SEC even extended the comment period.