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Johannesburg - Murky deals between resource companies and
governments in Africa and elsewhere face tougher scrutiny after US authorities
clarify disclosure rules next month, although intense lobbying by industry
giants may have ensured the changes are limited.
The rules require energy and mining firms with US listings
to disclose payments to foreign governments. Enacted two years ago under the
Wall Street Reform Act, the US Securities and Exchange Commission (SEC) has not
finalised the requirements, frustrating investors and activists alike.
On Monday, however, the SEC said it would vote on them on
August 22.
The stakes have been especially high in Africa, where vast
oil and mineral wealth has not translated into wider prosperity, a state of
affairs widely referred to as the “resource curse”.
That takes several guises. Sometimes oil or mining crowd out
other industries, or a country’s economy dances to the beat of volatile
commodity or energy markets.
As governments tend to control access to natural resources,
graft becomes a problem if states become addicted to the spoils that can be
reaped from the resource sector.
The payment disclosure rules were widely hailed as the most
sweeping measures yet to try and tackle the problem as they hit the primary
cause: opaque deals between governments and industry.
But two years of foot-dragging have raised concerns the
final rules will be rendered toothless after a barrage of lobbying, from the
oil industry in particular.
One point of contention has been whether or not exemptions
should be made if a country has laws that forbid a company from disclosing the
payments it makes to the government.
US oil lobbyists, who have claimed this kind of legislation
exists in countries such as Angola, have been pushing for such exemptions.
However, Brazilian oil giant Petrobras, which will fall
under the new rules because of a US secondary listing and operates in Angola,
has said it was not aware of any country with a curb on official disclosure.
Project by project
Another area that has stirred controversy revolves around
how a project is defined.
The legislation calls for project-by-project details of
payments to foreign governments, a provision welcomed by some investors and
anti-poverty campaigners but resisted by industry groups such as the American
Petroleum Institute (API).
Among the objections API raised last year in a lengthy
submission was that project-by-project payment disclosure could “identify the
location of the firms’ most important personnel and their most important capital
assets.”
“Given the current state of affairs in Chad, Nigeria and
other oil-rich states, it would seem intuitively obvious that handing
criminals, terrorists or partisans in the Chadian or Nigerian conflicts the
financial equivalent of a roadmap ... would be unwise,” it said.
These concerns are certainly legitimate. But a project could
be defined all the way up to the country or regional level, so a mineral trend
- deposits running through several countries - could be construed as a project.
Anti-graft campaigners have said defining a project so
widely would dilute its transparency aims as corruption often bubbles at the
micro-level and payments could be hidden th ere.
Investors are also anxious to see if the SEC will allow
disclosure requirements on payments to foreign governments to be “furnished”
rather than filed. If they are furnished, the information would be presented in
an attachment to the annual report, and not filed in the body.
Analysts have said this will have implications for
shareholders. For example, if such a payment was found to have been materially
misstated and resulted in a loss to investors, under US law they would have no
legal recourse if it was furnished rather than filed in the body of the report.
If a filed disclosure were misstated, investors would have
legal recourse.
Regardless of what the SEC decides, it will at least finally
be providing clarity for investors on an issue that has been closely followed
by lobbyists, boardrooms and activists.
Whether or not the final rules actually improve transparency in the obscure world of oil and mining payments to governments is another matter.
