US Senate passes "game changing" reporting requirements for extractive industries
July 15, 2010
New Legislation Will Increase Transparency in Extractive Industries, Help Fight Corruption in Developing Countries
New reporting requirements a "game changer" in extractive industries sector
WASHINGTON, DC - A provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed in the Senate today, will require energy and mining companies registered with the Securities and Exchange Commission (SEC) to report payments to foreign governments for the extraction of oil, gas, and minerals on a country-by-country basis.
"Oil, gas, and mining revenues are critically important economic sectors in about 60 developing countries which, despite abundant natural resources, rank among the lowest in the world on poverty, economic growth, and governance assessments."
"With this information the citizens of these countries will be able to demand accountability for government corruption and ensure that a fair price is paid for their natural resources." This is a game changer for many of the countries suffering from the so-called "resource curse," stated Global Financial Integrity Director Raymond Baker.
The new reporting requirements will apply to petro giants such as Exxon Mobile, BP Corporation, Chevron, Conoco Philips, Royal Dutch Shell, and Hess. Taken together, the oil and gas companies expected to fall under the new regulation accounted for approximately $2.2 trillion in sales and $200 billion in profits last year.
"This is also good for business," said Mr. Baker. "The more informed an investor is on the business practices of a company operating in high-risk areas, the more equipped they are to assess the risks and strengths of their investment choices. Given the fact that nearly all internationally competitive oil, gas, and mining companies are registered with the SEC this new legislation will have a global impact on investment decisions."
Similar reporting requirements were passed last month for petroleum and mineral companies listed with the Hong Kong stock exchange (HKEx). Under the HKEx reporting requirements, oil and mineral companies applying to be listed on the HKEx must disclose significantly more details about their operations on their applications, including material taxes, royalties, and other payments made to governments on a country by country basis.
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