Wednesday

5th Oct 2022

Oil and gas giants forced to publish payments under new rules

  • Multinational firms collude with resource-rich but corrupt countries (Photo: Julien Harneis)

Oil and gas giants will be required to publish all payments they make to governments, under EU transparency rules backed on Wednesday by the European Parliament.

The reforms, which are included in the EU's Accounting and Transparency directives agreed by MEPs and government ministers, will require companies in the extractive and logging sector to publish an annual report disclosing the details of tax, bonuses and other payments made to governments for every project they operate, over a threshold of €100,000.

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The rules, which will be implemented in 2015, will apply to all listed and large unlisted companies registered in the EU without exemption.

Politicians and corporate governance activists claim that the rules could end the "resource curse" with countries unable to reap the benefits of their natural and mineral resources

Similar rules were agreed for US-listed extractive corporations last year as part of the so called Dodd-Frank bill reforming the financial sector.

Arlene McCarthy, the British centre-left MEP who piloted the legislation through parliament, said that the legislation in Europe and the US would cover over 70 percent of the extractive industry.

Speaking with reporters following the vote, which backed the two bills by 657 votes to 17 and 655 to 18 respectively, McCarthy added that the EU had "set the bar high for other jurisdictions" and had "set the way for global standards" following 18 months of negotiations.

MEPs also voted to scrap reporting exemptions in countries if disclosure would breach local law, widely seen as a potential loophole to allow corrupt governments to collude with multinationals. McCarthy commented that the so-called criminal exemptions clause would leave "a perverse incentive for countries to introduce them. We would end up with a string of secrecy laws."

In a warning to industry, she added that "company boards will be culpable if they do not respect the legislation".

For his part, single market commissioner Michel Barnier said that the vote marked the end of a "struggle" by the parliament and commission in forcing companies "to say what they pay in tax, where they pay it and to whom".

Leading NGOs also welcomed the news.

Catherine Olier, Oxfam’s EU policy advisor, called it "a critical step forward in the fight against corruption and tax dodging that will help ordinary people in the developing world harness their countries’ natural resource wealth".

Meanwhile, the Canadian government revealed on Wednesday (12 June) that it would put in place mandatory reporting requirements for its own extractive sector.

Exclusive

EU officials were warned of risk over issuing financial warning

The European watchdog for systemic economic risk last week warned of "severe" threats to financial stability — but internal notes show top-level officials expressed "strong concerns" over the "timing" of such a warning, fearing publication could further destabilise financial markets.

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