The oil anti-corruption rule requires U.S.-listed oil, gas and mining companies to publicly report project-level payments made to governments for natural resources in every country of operation.
This rule has been repealed.
The resource curse is a paradoxical situation where countries with abundant natural resources, such as oil, gas, or precious minerals, suffer from debt, corruption and low levels of human development. In these countries, communities around oil or mining projects bear the majority of the negative impacts of extraction, but get little if any of the benefits.
Republican and Democratic members of Congress worked for over a decade to address the resource curse and mitigate its impacts. These bipartisan efforts resulted in the landmark Cardin-Lugar anti-corruption provision, also known as Section 1504 of the Dodd-Frank Act.
Due to mismanagement and corruption, billions of dollars in resource wealth disappear into the pockets of corrupt corporate and political elites every year. The oil anti-corruption rule, also known as the Cardin-Lugar Anti-Corruption rule, could put a stop to it. The June 2016 regulation requires that companies report payments made to governments, such as taxes, royalties and concession fees, for individual projects in each country of operation. The granularity of these payment disclosures allows citizens to better hold their government officials and companies accountable for the resource extraction that takes place in their countries.
The 28 member states of the European Union, Canada, and Norway have established equivalent transparency laws largely based on the Cardin-Lugar Provision. Companies like BP, Shell, Total, BHP Billiton and several other major oil, gas and mining companies are already reporting their payments. Major oil and mining companies such as Total, BHP Billiton, Rio Tinto, Statoil and Kosmos have made public their support for this critical anti-corruption regulation.
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The rule directly benefits citizens of resource-rich countries, arming them with the information necessary to hold their governments accountable. Oxfam estimates that since 2010 oil worth $1.55 trillion was produced in developing countries without sufficient transparency measures in place. The concentrated wealth generated from natural resource extraction is frequently lost to cronyism, corruption and mismanagement rather than being converted into public goods. These revenues can encourage kleptocratic regimes to hold on to power at all costs — undermining democratization and rule of law.
The Cardin-Lugar Rule can help break the unfortunate cycle that has crippled oil-rich but economically poor countries. Empowered with information about oil, gas and mining company payments to governments, citizens can ensure that natural resource revenues are used to promote the development of all citizens, rather than spirited away to benefit a few political elites. With payments in the open, companies will be deterred from making illicit transactions and will have a credible reason to refuse pressure from a host country government to do so.
Instability and violent conflict thrive in environments where bribery and corruption are unchecked. The Cardin-Lugar Rule has the potential to impede corrupt behavior, slowing the drivers that can often lead to violent extremism and conflict that are a direct threat to global security, and U.S. national and energy security.
The Cardin-Lugar Rule benefits both companies and investors. With public availability of information, companies can confidently demonstrate economic contributions to countries and local communities. These disclosures help to avoid any ambiguity in claims between governments and companies on the amounts paid, with the net result ensuring that citizens are accurately informed about how revenues are being used or misused.
Investors representing nearly $10 trillion in assets under management wrote to the U.S. Securities and Exchange Commission (SEC) in support of the Cardin-Lugar Rule. Investors highlighted that this information would allow them to better assess and mitigate risk in their investments. With greater information there can be increased trust and willingness to invest abroad and greater access to capital for US oil, gas and mining companies operating in difficult environments.
The implementation of this rule is also necessary for validation of the U.S. implementation of the Extractive Industries Transparency Initiative.
U.S. Rep. Bill Huizenga (R-Mich.) on Jan. 30, 2016 will introduce a Congressional Review Act resolution of disapproval to void the final rule for the Cardin-Lugar provision. This office claims the provision never underwent a hearing or markup and was never properly vetted by Congress. This is blatantly false. Originally a standalone bill in the U.S. House of Representatives and the U.S. Senate, the law had bipartisan support and was subject to numerous hearings, as well as reports. In fact, a major Republican-led report on corruption in the natural resource sector, commissioned by former U.S. Sen. Richard Lugar (R-Ind.) gave birth to the law itself.
The shadowy lobbyists for Big Oil, the American Petroleum Institute (API), have also actively opposed this law. The SEC originally produced an implementing rule in Aug. 2012. However, following a lawsuit the API and the U.S. Chamber of Commerce, a judge ruled on narrow, procedural grounds that the rule should be sent back to the SEC to be revised. API continues to strongly oppose the law. However, while most major oil and mining companies now support this transparency provision, Chevron and ExxonMobil remain as the only major oil companies directly opposing the Cardin-Lugar Anti-Corruption rule, and have led the charge to keep their payments in the dark.
|Industry/Group||Lobbying (2015)||Political Spending (2016)||% Political Spending to Republicans|
|Oil and gas industry||$130,031,004||$97,997,278||89%|
|U.S. Chamber||$79,205,000 (2016)||$2,9420,085 (2016)||99%|
Jana Morgan, Publish What You Pay, firstname.lastname@example.org, O: (202) 496-1189, M: (703) 795-8542
Isabel Munilla, Oxfam America, Isabel.Munilla@oxfam.org, (202) 6801-4606
Zorka Milin, Global Witness, email@example.com, (202) 621-6687
Joe Williams, Natural Resource Governance Institute, firstname.lastname@example.org, +44 77757 51170
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