http://thehill.com/ [Washington D.C.]
Groups representing more than 1,300 mining companies, including some of the largest in the world, are backing mandatory disclosure of payments to governments, similar to a rule created by the 2010 Dodd-Frank Act.
Canadian mining industry associations and civil society organizations recently released recommendations to the Canadian government after nearly a year and a half of consultation and negotiation.
These recommendations, modeled after Section 1504 of Dodd-Frank, are aimed at reversing the resource curse – where countries with abundant natural resources suffer from severe poverty, instability and corruption. Seven of the ten lowest-scoring countries in the UN Human Development Index, which measures life expectancy, income and education, rely on oil and mineral revenues for a majority of their exports.
A 2013 report by the Africa Progress Panel, chaired by former UN Secretary General Kofi Annan, estimated that Africa alone loses $63 billion every year to corruption. Shedding light on secretive resource deals will help track this money and stem the flow of corruption.
The recommendations would require that all mining companies listed on Canadian stock exchanges disclose the payments they make to governments where they operate. Two key features of the mining industry recommendations are that disclosures should be public and should be released at the project level. Public disclosures will enable citizens of oil and mineral rich countries to see for themselves the amount of money flowing into government coffers and will empower investors to assess the extent of a company’s country-level risk exposure before they put up their hard-earned money.
Project level disclosures provide local communities with critical information needed to demand basic public services like health, education and sanitation from deadbeat national governments, while providing an important public relations tool for companies who wish to maintain their social license to operate and make clear to communities around their projects that they are paying what is due.
If the Canadian government takes on the mining industry’s policy recommendations, the global footprint would be enormous. Nearly 60 percent of the world’s mining companies are listed on Canadian exchanges, and Canadian mining companies are invested in projects spanning 100 countries. The disclosure policies they recommend have the potential to drastically improve the lives of millions of people around the world.
In short, this is a big deal.
By now, the benefits of transparency enjoyed by governments, communities, businesses, and investors are well-documented and widely accepted by almost everyone.
In the few short years since the groundbreaking transparency provision known as Section 1504 of the Dodd-Frank Act was enacted into law in the United States, countries and international organizations have lined up to develop and enact similar policies of their own. Last year alone saw the European Union and Norway pass payment transparency laws, with the United Kingdom committing to fast track the law. At the G8, world leaders pledged to adopt and enact policies that would make it significantly more difficult for corrupt governments of resource-rich countries to steal from their citizens.
Industry is increasingly recognizing the value of transparency. The Canadian recommendations are significant because of the constructive role played by the Canadian mining industry, which has been a key actor in the drive for greater transparency. It’s not just morality driving this movement: “Transparency makes good business sense,” according to Guy Elliott, the chief financial officer of mining giant Rio Tinto.
Unfortunately, the oil and gas industry in the United States is standing in the way of this movement. While Canadian miners worked with civil society to develop common-sense recommendations, the oil and gas industry chose not to participate in the process. At the time, Canada’s oil and gas sector said that transparency was not a priority for them. Meanwhile, when the landmark pro-transparency legislation was passed in the U.S., the oil and gas industry here sued to try to overturn the law and block its implementation.
The wind is at the back of transparency in the extractives sector. Increasingly, the world is demanding that industry’s dealings with government move out of the shadows and into the light. The oil and gas industry is stubbornly clinging to its disproved argument that it can’t comply with these regulations. But while the world moves towards transparency, their fight is stopping citizens from holding their governments accountable and ending the injustice of poverty. And that’s a tragedy.
Morgan joined Publish What You Pay United States in August 2013 to lead and coordinate the coalition’s advocacy for improved policies within the U.S. government, multinational companies, and international financial institutions, and to support work on the Extractive Industry Transparency Initiative (EITI). Previously, Morgan worked at Global Witness, conducting advocacy and research on the extractive sector of Afghanistan, conflict minerals in the eastern Democratic Republic of Congo and the development of the governance systems for Uganda’s emerging oil sector.
For the original version of this article, click here: http://thehill.com/blogs/congress-blog/economy-budget/196034-reverse-the-resource-curse