The Extractive Industries Transparency Initiative (EITI) was set up to give citizens of resource-rich countries information about how much their governments earn from natural resources in order to prevent corruption. It is a voluntary initiative, focusing on oil, gas and mining revenues.
The UK's EITI 'multi-stakeholder group', made up of representatives from UK government, extractive companies and citizens' groups, has agreed to disclose the true, beneficial, owners of oil, gas and mining companies operating in the UK in its annual EITI reports. The reports will also include project-level disclosures of petroleum revenue tax payments placed in the public domain for the first time.
These commitments put the UK at the forefront of efforts to improve corporate transparency in the extractive industries. The UK pledged in May 2013 to joining the EITI and aims to submit its formal application for candidacy in 2014.
"Ultimate beneficial owners" are the people who actually own or control a company. "In many countries and business sectors, anonymous shell companies are being abused to facilitate corruption and organised crime," said Brendan O'Donnell, who leads Global Witness's oil campaign. "Citizens have the right to know who is behind the companies exploiting their countries' natural resources. The UK is setting a good example for other countries to follow."
Beneficial ownership disclosure is "encouraged" by the International EITI Standard and a pilot scheme has been launched in 12 countries with a view to making this a requirement. Whilst not part of the pilot, the UK's EITI reports will name the real persons behind privately owned oil, gas and mining companies operating in the UK, whether directly or via a subsidiary company.
This will complement the forthcoming registry of ultimate beneficial owners of UK companies, which UK Prime Minister David Cameron has committed to establish. Public registries were also recently endorsed in the European Parliament. "It is great to see convergence around a global standard of beneficial ownership disclosure", says O'Donnell.
Agreement on project-level reporting for oil companies also reinforces global transparency standards. The disclosure requirement agreed by the UK EITI aligns with the EU Accounting and Transparency Directives, which obliges EU extractive companies to publish all payments of €100,000 and above, for each project they invest in and all countries they operate in.
"By matching EITI reporting with the EU Directives the UK is helping to create a global transparency standard that will level the playing field for business and empower citizens to follow the money from resource deals," says O'Donnell.
The UK government has committed to quickly enact the EU Directives and this month launched a consultation on the Accounting Directive with a target implementation date of October 2014.