analysisBy Richard Lee
It has been a long time coming but the United States Securities and Exchange Commission (SEC) has finally approved regulations under Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which should encourage greater transparency in the extractive industries.
The decision, which was taken last week after two years of debate and delay, has been warmly welcomed by civil society in Angola - a country renowned for its oil and its oil-related corruption.
Earlier this year, a group of Angolan citizens and civil society organisations had called on the SEC to finalise the process and issue strong and rigorous rules in accordance with the intent of the law - so as to curb corruption, promote transparency and allow citizens in resource-rich countries to hold their governments and multinational companies to account.
"Information is a critical and powerful tool for combating corruption and promoting transparency and accountability," said Elias Isaac, the Angola Director for the Open Society Initiative for Southern Africa (OSISA), who was one of the signatories on the letter to the SEC. "We applaud the SEC for not caving in to the greedy pressure and irresponsibility of multinationals, and for adopting a strong and rigorous rule that will increase the possibility of transparency in Angola's opaque oil and mining sectors."
The law mandates oil companies registered with the SEC - which in Angola includes Chevron, ExxonMobil, BP and Cobalt - to disclose all payments over US$100,000 that are made to foreign governments for the development of oil, gas and mining activities on a project-by-project level, including taxes, royalties, fees, dividends, production entitlements, in-kind payments, infrastructure improvements and bonuses.
It took the SEC almost two years to finalise and issue the rule because of concerted and sustained pressure from powerful and well-financed industry lobby groups, notably the American Petroleum Institute and the US Chamber of Commerce. These lobby groups sought to weaken the rule by limiting payment disclosure to an aggregated basis by country, and by exempting disclosure in countries that prohibit this kind of transparency and public information - citing Angola as an example.
But the lobby groups did not succeed in sabotaging the law (although they have already delayed its implementation substantially) and oil and mining companies will now have to get used to disclosing payments that they - and the governments they pay - have routinely kept secret.
"The majority of Angola's poor citizens are excluded from participating in and benefiting from the riches earned from oil and mining activities - as this wealth is monopolised by multinationals, the government and a handful of individuals connected to the dominant political system," said Isaac. "Increased transparency is one step toward more political and fiscal accountability and ensuring that State funds, which are public funds, are not used as private property, but for the benefit of all Angolans."
The law mandates companies to report all payment information on an annual basis. This previously unavailable - and critically important - data will start being published on the SEC website in October 2013.
In addition, the European Union will consider similar transparency legislation for the extractive industries next month. If the European legislation is also approved, it would mean that a majority of the world's biggest extractive companies would be required to disclose their payments to governments in resource-rich countries.
"These legal international steps are major milestones in the promotion of transparency in the global extractives industry," said Isaac. "And here in Angola, they will help to promote political and fiscal accountability and socio-economic justice - and give a much needed boost to efforts to eradicate poverty."
Chevron in Angola