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| The EU wants to track mining royalties paid to foreign nations |
Brussels is
considering new laws to force both privately owned and publicly listed oil, gas
and mining companies to report all payments to foreign governments.
Anti-corruption groups say the regulations are long overdue.
Companies
could be forced to come clean on how much they pay foreign governments to
secure oil, gas, coal and other raw materials, under proposals presented Tuesday
by the European Union's executive.
The
legislation - aimed at curbing corruption between poor countries' governments
and EU firms - would apply to privately owned as well as publicly listed
companies in the extractive industries, the European Commission said in a
statement.
"Reporting
taxes, royalties and bonuses that a multinational pays to a host government
will show a company's financial impact in host countries," the Commission
said in a statement.
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| NGOs like Transparency International have welcomed the amendments |
"This
more transparent approach would encourage more sustainable business," it
predicted.
Long
awaited
Anti-corruption
campaign group Transparency International said the proposals, which still need
to be endorsed by EU governments and the European Parliament, were long
overdue.
In a
statement, it said its researchers had found that only one out of 12 European
companies operating in Libya had publicly disclosed their payments to the
discredited regime of deposed leader Moammar Gadhafi.
Irish rock
star Bono - speaking as co-founder of the anti-poverty group One - praised the
EU for joining "the fight by the citizens of poor countries to ensure
their natural resource wealth turns into actual wealth for the people - and
doesn't line the pockets of dodgy dictators or distant exploiters."
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| Timber companies will be among those affected |
Improved
transparency
Diarmid
O’Sullivan from the non-governmental organization Global Witness explained the
historic problem of mineral exploitation: "In all the countries that are
rich in natural resources, like Indonesia, (and where) you don't have any
public accountability over taxes that the companies pay to government, you have
problems like corruption and tax fraud, and the countries really don't benefit."
In 2004,
the European Commission tightened the directives on transparency, but did not
require detailed project and country-level reporting. The proposed amendments
would force companies to give more detailed information and complement
legislation passed in the United States last year, as part of the Dodd Frank
financial reform act.
They would
also bolster the work of the Extractive Industries Transparency Initiative
(EITI), which sees governments, companies and civil society groups track and
disclose cash flows to citizens in 30 countries.
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| European companies pay royalties to poor governments, but where does the money go? |
"Now
the Commission has decided to require country-by-country and project-by-project
reporting by all these oil, gas and mining companies," O'Sullivan told
Deutsche Welle.
"What's
coming out of that is a recognition that it's in European interests that the
developing countries are prosperous and stable, and you can't do that without
curbing corruption. So they're using the regulatory organizations to create
requirements of transparency."
Still
unclear
But a group
of companies has objected to the rules, saying that it was commercially and
politically sensitive to force disclosure on a project-by-project basis.
In a letter
signed by Anglo American, BHP Billiton, Rio Tinto, Xstrata, BG Group, BP,
Repsol, Shell and Total, the companies complained that the rules failed to
define what constituted a project.
"One
example is oil or gas fields which cross borders, where governments are understandably
careful to safeguard the confidentiality of the terms they offer to
investors," they wrote, according to a copy of the letter seen by Reuters.
"Further
damage to competitiveness will be caused by the additional cost and
administrative burden of project-level reporting," they said.
Author: Ben Knight
Editor: Sam Edmonds
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