Thursday

13th May 2021

EU to agree transparency rules for oil and mining firms

  • Oil and mineral companies will have to report payments to governments (Photo: ezioman)

EU officials will meet Tuesday evening (9 April) for what are expected to be the final talks on radical new rules cracking down on corruption between extractive companies and third world governments.

Under the deal brokered between MEPs and ministers on the Accounting and Transparency directives, all large publicly listed and non-listed extractive companies would be required to declare all payments to and from governments over €100,000 on a country-by-country basis.

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The payments, which will also cover a range of payments in kind such as preferential tax rates and the free use of buildings, would have to be published for each individual project.

Under the final compromise text, “projects" are defined as "operational activities that are governed by a single contract, license, lease, concession or similar legal agreements and form the basis for payment liabilities with a government."

The project definition is regarded as a victory for MEPs - documents seen by this website indicate that the French and UK governments attempted to water down the definition of a project at various stages in the negotiations.

The actions of multi-nationals in the extractive and logging industries are an emotionally charged issue.

EU lawmakers emphasised the need to put an end to the so-called "resource curse" - whereby countries have remained poor despite being rich in natural and mineral resources due, in part, to high-level corruption.

The negotiations have also seen a concerted lobbying campaign by extractive and oil companies to water down the effects of legislation.

Lawmakers also rejected proposals seeking to exempt companies from reporting requirements if disclosure of the material involves breaking the criminal law in the host country.

The "criminal exemptions" amendment, which was pushed in Council by a handful of countries led by Italy, Spain and Hungary, was widely seen by transparency campaigners as a loophole that could be used by companies and governments to avoid disclosure.

But a Council source told EUobserver that "no evidence has materialised that there are any examples of criminal exemption laws" in any extractive host country they looked at.

British Labour MEP Arlene McCarthy, who has led the parliament's negotiating team on the bills together with legal affairs committee chairman Klaus Hehne-Lehne, a German centre-right deputy, told this website that industry lobbyists had "failed to make a convincing case" for the exemptions.

"It's unclear why they have been seeking to water down rules for a robust reporting system and for exemptions when industry has failed to provide evidence of countries where such disclosure is a criminal offence or illegal," she added.

That said, governments are expected to block a proposal supported by MEPs to extend the scope of the legislation to cover the communications sector and construction.

Meanwhile, the European Commission will also be expected to review the new regime by 2016.

Although the Irish presidency is confident that an overall deal will be struck, unanimous agreement among member states is unlikely.

A Council source indicated that at least one country plans to oppose the deal over the removal of the criminal exemptions clause, while others are unhappy with the proposed revisions to accounting rules.

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