New law represents a major victory after decade and a half campaign

The EU has today agreed ground-breaking new rules forcing oil, gas, mining and logging companies to publish details of the payments they make to governments for access to natural resources around the world. By providing millions of citizens in resource-rich countries with detailed information about the money generated by their natural resource sectors, the directive represents a watershed moment in the fight against corruption, and is a major victory for Publish What You Pay and Global Witness after 15 years of fighting for these measures.

The European Parliament and Council have agreed that the EU’s Accounting and Transparency Directives will require all EU-listed and large, privately owned oil, gas, mining and logging firms to disclose the payments they make to governments (Note 1). Companies will be required to publish all payments over €100,000 including taxes, royalties and licence fees and do so wherever they operate around the world. The directive brings Europe in to line with the U.S. which introduced similar financial disclosure laws in 2010 through the Dodd-Frank Act.

Crucially, the directive will require the publication of information made for each individual resource project companies invest in – thereby allowing communities to monitor payments from extraction projects in their local areas. The EU has also rejected calls from industry to include a loophole in the law which, if adopted, would have exempted companies from publishing payments in certain countries, potentially enabling illicit payments to be made unseen.

“This is a huge victory for transparency and we commend the parliamentarians and officials from the Member States and the Commission who have steadfastly championed this legislation”, said Simon Taylor, Director at Global Witness who co-launched the Publish What You Pay campaign in 2002.

“Extractive companies channel hundreds of billions of euros to governments every year in payments for natural resources, but without transparency citizens are regularly robbed of the benefits that this wealth should bring. As a result of this directive, millions of people will now be able to see how much companies pay their governments, enabling them to follow the money if they don’t see any benefits from the cash.”

The MEPs Arlene McCarthy and Klaus-Heiner Lehne championed the transparency provision in the directive with support from across the EU political spectrum including ALDE (liberals), Greens, Socialist and EPP (conservative) groupings.

“This decision marks a watershed moment for extractive industry campaigners including Global Witness, part of the 650-strong Publish What You Pay coalition of citizens’ groups that has campaigned for over a decade for exactly these measures,” said Brendan O’Donnell who leads Global Witness’s oil campaign. “We now have the basis for a global ‘publish what you pay’ transparency standard with the EU, U.S. and EITI all demanding sunshine on oil, gas and mining deals. We hope that the remaining G8 countries will agree similar measures when they meet in June.” (Note 2)

The Directives will go to plenary in Parliament for final approval, expected in June of this year.

Contact

Brussels: Brendan O’Donnell: landline +44(0) 20 7492 5898, or mobile: +44 (0) 7912 517 128; Simon Taylor: mobile: +44 (0)7957 142 121.

Notes to editors

(1) The European Commission introduced the draft directive under the leadership of Commissioner Barnier in October 2011.

(2) This EU decision builds on another recent victory for anti-corruption activists. Last month, the Extractive Industries Transparency Initiative – a voluntary scheme that also aims to cut corruption in the natural resource sector – announced a new standard that will require all 37 of its implementing countries to report extractive industry revenues on a project-by-project basis, in line with U.S. and EU legislation. The EITI is a coalition of governments, companies, civil society groups and investors that promotes a global standard of revenue transparency for the extractive industries (www.eiti.org). The EITI decided as an outcome of its International Board meeting in Oslo on 26th-27th February to require project-by-project reporting in the new EITI Standard.

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UK tried diluting EU law on mining transparency: MEP

http://www.euractiv.com/sustainability/uk-tried-diluting-eu-law-mining-n...

11 April 2013

The British government, influenced by mining company Rio Tinto, attempted to undermine an EU law that aims to bring greater transparency to the oil, gas, mining and logging sectors despite the government’s public declarations that it supports more disclosure, the European lawmaker who led the negotiations said on Wednesday (10 April).

The world’s second-largest mining company, Rio Tinto Group influenced the British government’s proposals and Britain was unhelpful in ensuring smooth progress of the legislation, Arlene McCarthy, a UK Labour politician in the European Parliament, said in an interview with TrustLaw.

The EU legislation requiring companies to make detailed disclosures of their natural resource contracts was finalised by lawmakers late Tuesday after months of deliberation. McCarthy said it now is expected to easily win full parliamentary approval before endorsement by EU member states.

“There is a general view really that they [Britain] were working very closely with Rio Tinto. Rio Tinto inspired a lot of their original proposal,” McCarthy said of the British government’s negotiating position.

Britain hued closely during the talks on Tuesday to the industry position that companies should only disclose contracts at the government level, even though Prime Minister David Cameron had given a speech about a year ago saying that Britain was committed to the higher transparency standard of project-level reporting – a stance pressed by civil society, McCarthy said.

Cameron has made transparency one of his three priorities as host of the Group of 8 meetings of major industrialised countries this year. In a speech in January in Davos, Switzerland, he explicitly called for more transparency in extractive industries as a way to combat corruption and alleviate poverty in resource-rich countries.

But McCarthy said the UK’s actions did not match his words.

“On the one hand, the rhetoric is fine, claiming that you are leading on the issues, but that certainly was not the case when it comes to practical negotiations or influencing other member countries to try and get a better deal. They did not push for anything like that at all,” she said.

Cameron is Conservative Party leader and McCarthy is from the opposition Labour Party.

Avoiding unnecessary burden on business

The UK’s Department of Business, Innovation and Skills said it consulted with a range of interested parties ahead of the vote. “We fully recognised the importance of working together with both NGOs and industry to agree a standard that improved transparency but did not impose unnecessary burdens on business,” a department spokesperson said.

Rio Tinto spokesman David Outhwaite said the company would not comment on rumour and speculation and strongly backs transparency. “We support initiatives such as the [EU] Directive that encourage better governance, prosperity and stability in the countries in which we operate,” he said.

The European law orders firms to report payments at project as well as at country level, beginning at a threshold of €100,000.

A major sticking point in the negotiations was whether companies should be excluded from complying with the regulations in countries which have national laws that industry says forbid the disclosure. However, the European lawmakers decided against allowing any exemptions, a position that Britain backed in public on Tuesday.

“It was very important that there were no exemptions,” McCarthy said.

“For us, that was a very tough battle to fight with the member states because many of them wanted to have exemptions for these situations and cases where they argue that it is prohibited in the national companies’ law where they operate to disclose that information – for which they failed to provide any evidence,” she said.

“That’s why we weren’t prepared to even countenance or negotiate on that issue,” McCarthy added.

Global rules

The European law echoes tough legislation passed in the United States last year, which has led to a court challenge brought by industry body the American Petroleum Institute (API) against the Securities and Exchange Commission (SEC), the US financial regulator.

McCarthy said that, taken together, the two sets of legislation amount to a global standard of transparency in the extractive sector.

“We are talking in these very big extractive operations about a handful of very big multinational companies and now we will have global rules and the global rules are equivalent because we’ve made sure of that by working very closely with regulators in the US,” McCarthy said.

“Of course, my hope would be that the API may see the error of their ways and drop their lawsuit and recognise that in this day and age it is time to be more transparent,” she said.