MEPs push for transparency rules on gas, oil and logging
18.09.12 @ 19:14
BRUSSELS - The European Parliament is pushing for transparency laws that would require all large gas, oil, mining and logging companies listed on EU stock exchanges or domiciled in the EU to disclose payments they make to foreign governments anywhere in the world.
Deputies on Tuesday (18 September) in the parliament's legal affairs committee unanimously voted in favour of a draft law that would require the companies in the sectors to disclose all financial transactions above an €80,000 threshold.
"It's a victory for those lobbying for fairness and justice in these areas and I think it's time the industry recognised that they are at the end of the line in terms of transparency and disclosure," Arlene McCarthy, the British centre-left MEP who drafted the parliament's position, told EUobserver.
Parliament expanded on the European Commission's original text by including forestry, construction, telecommunications and banking sectors in the mix.
Tuesday's vote means the text now has to go to "trialogue" negotiations with the commission and member states.
Should deputies get their way, companies will have to annually disclose the activities of subsidiaries, joint ventures and any other trade agreements. They will also need to report - on a country-by-country and project-by-project basis - all profits before tax, effective tax rates, total number of people employed and how much they are paid.
Sanctions for non-compliance of the rules would entail a fine of up to 10 percent of annual turnover for firms or €5 million for individual businessmen.
The proposals would entitle ordinary people to know where and how governments, for instance in the developing world, are paid by major corporations.
MEPs said exports of oil, gas and minerals from Africa were worth €300 billion in 2008. In comparison, international aid donated to the continent during the same year amounted to €33 billion.
"These communities need this kind of information. Many of them are existing on ten euros per person for clean water, for health care, and education yet they see millions being extracted in terms of natural resources and they have no idea where that money is going to," said McCarthy.
In May, the British-based NGO Global Witness reported that Shell and ENI subsidiaries in Nigeria paid over $1 billion to the Nigerian government to exploit a specific oil block.
It was later revealed in a New York court case that the Nigerian government paid the same exact amount on the same day to Malibu Oil and Gas, owned by convicted money-launderer and ex-Abacha-era oil Minister Dan Atete.
McCarthy claims that had Shell been required to report on these projects then Nigerian citizens would have been able to better scrutinise the transactions.
The Americans have already set into law a similar Obama-sponsored bill in August. The final provision of the US bill requires "resource extraction issuers" listed on US stock exchanges to disclose all payments to governments in all countries where they have operations.
Legal drafts leading up to Tuesday's EU version were riddled with exemptions, but the US law helped coerce some dissenting parliamentary deputies to remove them.
Deputies had originally toyed with a €500,000 threshold, but the US version set a $100,000 threshold which euro-deputies then used as a basis to agree on €80,000. The commission had also included an article exempting companies from respecting information requirements forbidden in some countries. Deputies cut it.
MEPs also rejected a definition of projects that was based on company reporting units as this would allow for too broad of an interpretation and could provide companies with a potential loophole.
The United States' Securities and Exchange Commission (SEC) had also recognised that basing the definition of project around a reporting unit would be contrary to the objective of greater transparency, noted McCarthy's office.
But whereas the EU proposal defines a project as activities governed by "legal agreements with a government upon which payment liabilities arise" the SEC did not provide any definition. Instead, it outlined how companies should not interpret the requirement for project-level reporting.
Industry representatives contacted by this website remained silent.
A Shell spokesman told EUoberserver by email: "We are currently reviewing the new SEC rules and will be evaluating their impact on our business; consequently, it is too early for us to comment."
Spanish-owned Repsol YPF did not comment and Exxon Mobil has yet to react to this website's query.