When you place the companies’ claims next to the actual facts, it’s clear that what Big Oil really fears is public scrutiny of its questionable dealings, rather than competitive injury to its operations.

This guest blog post by Jonathan Kaufman is cross posted with permission from EarthRights International.

Are wild claims “facts”? Oil companies would like you to believe so. Spend some time perusing the avalanche of submissions that oil and gas companies have sent into the Securities and Exchange Commission (SEC) trying to water down forthcoming rules requiring them to publish their payments to the governments where they operate, and you’ll notice that they have one thing in common: a nearly complete lack of facts to back up their wild claims.

EarthRights International (ERI) advocates for strong rules because our community partners in Burma and elsewhere want to use payment information to hold their governments accountable for the wealth received from resource extraction. But the companies complain that if they have to disclose their payments as Congress has mandated, they’ll lose contracts to less transparent competitors and could be forced to violate foreign restrictions on disclosure. Their lawyers and lobbyists have done their job well – nothing keeps regulators off your back like an appeal to their fear of losing out to the Chinese or crippling American enterprise in uncertain economic times. Yet their submissions are curiously devoid of evidence; instead of providing facts, the companies pose hypotheticals, speak in generalities, and float widely varying estimates of compliance costs with no explanation.

Meticulous research by Publish What You Pay coalition (PWYP) members has shown that these scare tactics are just smoke and mirrors. When you place the companies’ claims next to the actual facts, it’s clear that what Big Oil really fears is public scrutiny of its questionable dealings, rather than competitive injury to its operations. The SEC must show that it’s not “in bed” with Exxon and Chevron and their friends and issue rules that comply with the law.

ERI recently submitted a letter to the SEC comparing unsupported industry allegations with the facts that PWYP has put in the record. A sample of the most glaring of these comparisons speaks for itself on how misleading and potentially damaging the companies’ submissions can be:

Industry claim #1: Unless the SEC grants an exemption to avoid disclosing payments made to countries that prohibit disclosures by law, the new rules will force companies to violate those laws and threaten billions of dollars in projects in the relevant countries.

Facts: Of just four countries identified by industry as having disclosure prohibition laws, three clearly do not prohibit disclosure, and there is no evidence of a legal prohibition in the fourth. In fact, at least two companies already disclose many of their payments in at least two of these countries, and one admits in the record that it knows of no prohibition.

Why it matters: An exemption for foreign laws would give secretive states – think China, Iran, and Burma – an incentive to pass laws prohibiting disclosure, giving them a veto over the U.S. Congress and cutting off information from the countries where it’s most vital.

Industry claim #2: It would cost big money to make the changes to corporate accounting systems that would be necessary to capture and disclose all payments at the project level.

Facts: Two industry associations actually admit that no company has done an in-depth cost estimate. Companies’ “guesstimates” range from hundreds of millions of dollars to “de minimis” (negligible) amounts, and at least one mining company says it already tracks most of the information and discloses it on a voluntary basis. Moreover, companies need to record government payments anyway, in order to comply with U.S. anti-corruption laws.

The bottom line: Companies are using these inflated estimates in order to erode the clear standards Congress wrote into the law. If they can convince the SEC that it’s too expensive to implement the rules according to the plain language of the law, they hope the agency will re-define key terms in order reduce the amount of information disclosed.

Industry claim #3: Producers covered by the new rules will lose out to less transparent companies, such as national oil companies from China, Russia, and Iran, because some host governments will prefer to deal with companies that don’t publish their payments.

Facts: Companies covered by the new rules have continued to beat out non-covered Asian oil producers for contracts in some of the world’s most opaque countries, even after the passage of the disclosure law. Transparency requirements haven’t deterred companies from listing either in the U.S. or on the Hong Kong Stock Exchange (which also requires payment disclosures). And in the section of their annual reports where they have to report significant prospective financial risks, no company has seen fit to warn its investors that the disclosure law poses any danger to its bottom line.

What it’s really about: This is a thinly-veiled threat to sue the SEC over a particular type of cost-benefit analysis that the companies claim the agency is required to do, and to seek to have the rules vacated in court if industry doesn’t like them.

Of course, these three examples only scratch the surface of the companies’ unfounded allegations. As ERI shows in its submission, companies also use strategic misdirection to mislead the Commission on technical definitional issues (e.g., what is a “project”?) and on the legal implications of publishing false information, among other things.

For many of us who are watching this largely behind-the-scenes drama unfold, it’s obvious that industry is hoping to intimidate the SEC into issuing weak rules, and if the companies don’t get their way, they plan to sue the agency. (In fact, they more or less announced this intention in a recent submission.) If the SEC ends up in court, though, it will have to defend its decisions based on the words Congress wrote and the facts in the record. Fortunately for the supporters of payment transparency, the statutory language and the facts are completely in accord in this case, and they point to robust, project-level reporting of payments, with no exemptions.