European Movement UK

Britain's future is with Europe! Join the debate and put your opinion forward!

by Arlene McCarthy MEP (@EuroMP_ArleneMc)
Following months of tough negotiations, the European Parliament has secured a deal on new disclosure requirements for the extractive and logging industries. But why do we need these rules and what difference will they make to people in the developing world?

In May 2012, documents came to light detailing how Nigerian subsidiaries of Shell and ENI agreed to pay over $1 billion to the Nigerian government in order to acquire an oil block. On the same day the Nigerian government paid the exact same sum of money to Malabu Oil and Gas, owned by convicted money-launderer and ex-oil minister Dan Atete who had given himself the oil block in the first place. Shell and ENI deny paying any money to Malabu Oil and Gas in return for the licence, and maintain that they only dealt with the Nigerian government.

If transparency rules and project-level reporting were the law, both companies would have been required to publish this payment and attribute it to the oil block in question. Communities in Nigeria could have then used this data to identify the payment and follow its passage into the government’s possession and challenge the Nigerian government as to where the money went.

The new rules will require companies active in the extractive and logging industries to publish a report detailing their payments to government annually. Payments will have to be reported at country and project level. Despite strong opposition from the Member States, this means that companies will not only have to disclose the total sum of payments to national governments, but the report will also include a breakdown of payments for each lease or license they obtain to access resources.

Achieving project-level reporting was a priority for the European Parliament negotiating team because it creates a link between a specific project, such as a mine or an oil field, and the payments relating to it. This link is critical for local citizens who need to be able to follow the money being generated in their local area; it is the only way communities in resource-rich countries are able to expose corruption and hold their governments accountable for using these revenues for development.

In 2008, exports of oil, gas and minerals from Africa were worth roughly 9 times the value of international aid to the continent ($393 billion vs $44 billion), yet many of these countries remain trapped in poverty. Developing countries around the world are being robbed of the chance to earn vital revenue from oil, gas and other mining resources.

Under the new rules, all payments above €100 000 will have to be disclosed and an anti-evasion clause will ensure that payments cannot be artificially split or aggregated.

The most difficult negotiations were over the issue of exemptions. Industry and certain Member States’ governments demanded an exemption from the reporting requirements in cases where disclosure of the information would be considered illegal in the country they are operating in. The European Parliament maintained a strong stance on this issue which would have created a vast loop hole in the new rules. The final text does not allow for exemptions from reporting payments to government.

The new law will deliver more transparency than any EU government was prepared to consider and the European Parliament has stood up to attempts to water down the proposed rules. It has been a difficult and drawn out process at the end of which we have achieved a strong EU transparency law and another step towards a global standard for multinational companies for reporting payments to governments.

After meeting with US Senators Ben Cardin and Richard Lugar who led the campaign for greater transparency in the US, I was committed to fighting for a strong EU transparency law to ensure we have global standards for multinational companies. This new law is a victory for transparency, for those who invest in these companies and most importantly for citizens and communities of resource rich countries in the developing world.

Author :
Print