1504 Section in Dodd-Frank Wall Street Reform Act requiring companies to disclose taxes, royalties, and other payments made to the US and foreign governments
1.5 billion People living on less than $2 a day in “resource-rich” countries
$30 million Value of Malibu mansion owned by Teodoro Nguema Obiang, son of oil-rich Equatorial Guinea’s dictator
1 Number of white crystal-covered ‘Bad Tour’ gloves in Teodoro’s Michael Jackson memorabilia collection valued at $3 million (See “U.S. vs. One Crystal-Covered ‘Bad Tour’ Glove” court filing.)
270 Days after enactment that Congress required the SEC to issue a final rule (regulation) to implement the law
559 Days since Dodd-Frank enacted into law by President Obama
289 Days that the SEC has been in violation of the law
13 Months after Dodd-Frank that the European Commission issued a legislative proposal that would place a similar requirement on oil and mining companies
0 Host country laws oil companies have been able to cite that would prohibit disclosure of payment information as required by Dodd-Frank
3 Commissioners eligible to vote on the final rule (Chairwoman Schapiro and Commissioner Paredes are recused because of conflicts of interest.)
$50 million Estimated amount Exxon says that it would cost to comply with law, even though it provides no backing data for the estimate and presumably already collects and tracks payment information
$41 billion Exxon’s 2011 profits—a 35% increase over 2010
$100,000 Cost Barrick Gold, world’s largest gold producer, says it would cost them to comply
$1.2 trillion Approximate combined assets under management of investors who have told SEC to issue a strong final rule
3 Companies and industry associations (Shell, Exxon and API) who say that payment disclosure “could allow terrorists” to target a project
2 Nigerian oil workers unions who say it would actually make them safer
5 Companies who met SEC Commissioner Gallagher on December 2, 2011, to lobby for a weak final rule—Shell, Exxon, Chevron, ConocoPhillips, and Occidental
15 Oil and mining companies who “support” the voluntary Extractive Industries Transparency Initiative (EITI) program who are also members of American Petroleum Institute (API). API has threatened to sue the SEC to keep payment info secret.
5 Companies on the EITI board who are also API members
11 Luxury sports cars worth at least $5 million belonging to Teodoro seized by French police in Paris as part of an investigation into possible corruption
20 Days after auto seizure that President Obiang scored his son a UNESCO envoy post in Paris
$5,000 Teodoro’s reported monthly government salary as Equatorial Guinea’s minister of agriculture
2010 Year Equatorial Guinea was expelled from EITI for failing to meet its minimum transparency requirements
5 Companies producing oil and gas in Equatorial Guinea who will be covered by Dodd-Frank (Exxon, Marathon, Hess, Noble, and Mitsui produce the vast majority of oil and gas in Equatorial Guinea. The first four are members of the American Petroleum Institute. API sent a letter to the SEC on January 19 saying it would be unlawful to issue a final rule to implement the Dodd-Frank provision.)
No data Percent of Equatorial Guinea’s population living below the poverty line. An estimated 60 percent lived on less than $1 a day according to a 2006 UN report.
700,000 Population in Equatorial Guinea still in the dark about the country’s finances and waiting for full implementation of Dodd-Frank Section 1504
Posts Tagged ‘gas’
1504 Section in Dodd-Frank Wall Street Reform Act requiring companies to disclose taxes, royalties, and other payments made to the US and foreign governments
For almost two decades, communities from the Ecuadorian Amazon have been fighting a long-shot legal battle against Chevron-Texaco for the billions of gallons of oil and toxic wastes dumped into their lands and water (well described in a recent New Yorker piece by Patrick Radden Keefe). With last week’s decision by an Ecuadorian Appellate Court upholding an $18 billion judgment (see prior Oxfam blogging on the case here and here), these communities may finally have what they need to hold the company accountable. Because Chevron has no operations in Ecuador, plaintiffs will need to have the judgment enforced elsewhere. With this decision in hand, they can seek Chevron assets in dozens of countries, including the United States. A memo drafted by plaintiff lawyers details the many options now available to them.
Chevron has gone to unprecedented lengths in fighting this case and its public response to the ruling shows no sign of wavering. Last year, Chevron managed to convince a US federal judge to block enforcement of the case anywhere in the world! That decision—a gross overreach—was fortunately overturned by the US Court of Appeals, making last week’s ruling all the more significant. Chevron continues to litigate the case in the United States and in The Hague, but its prospects for escape are rapidly diminishing. With Chevron also facing a multi-billion dollar lawsuit by the Brazilian government over a recent spill, settling the Ecuador case has to be high on people’s minds.
Kathryn Martorana was the former extractive industries campaign coordinator at Oxfam America.
As global demand for energy and natural resources continues to grow, oil and mining companies are moving into remote areas of the world. Mining impacts men and women differently because of their roles and relationships in the family and community. Projects can bring benefits to the community in terms of revenues and jobs, but they can also have severe negative impacts on rights of local communities, particularly women, deepening their vulnerability to poverty. Experience and research indicates that social and environmental risks of mining often fall heavily on the women, elderly, and children.
Oxfam America is getting ready to kick off a 10-day Gender Justice and Mining Tour. Starting on November 5, women representatives from Peruvian and Ghanaian civil society groups will speak at university, diaspora, and policy events in Washington, DC, New Jersey, and Massachusetts, with the intention of spreading awareness about the rights of women and the continued roles they play in advocating for fair and accountable practices around oil and mining operations.
Across the globe, women in oil and mining-affected communities are making their voices heard by raising awareness in their communities, disseminating information among women, and generating alliances with local social organizations, communities, and local authorities to counter the negative impacts of mining. In Ghana, Peru, Guatemala, and Cambodia, women advocates are standing up for their rights and holding their governments accountable for fair compensation, equitable access to water, and proper distribution of revenues. In La Oroya, Peru, Rosa Amaro, President of the Movement for the Health of La Oroya, is seeking to hold US-based Doe Run corporation accountable for polluting the Peruvian town with high lead levels, forcing residents to leave their homes, an area now named one of the ten most polluted areas in the world.
Women in rural communities, being responsible for traditional duties such as preparing food, raising children, and tending to a farm, often feel the presence of mining operations most acutely. When human rights and environmental standards are not respected, mining operations can have detrimental impact on the surrounding environment, as seen in La Oroya. Lack of prior consultation with a community, water contamination, and forced relocation can subject women to walking miles to find alternate water sources and arable land to farm, leading to reduced time for other chores, education, and leisure. Traditionally marginalized from decision-making, it is often exceptionally difficult for women to advocate for their rights within their community.
Oxfam America’s Peru office has been supporting women’s organizations such as the Movement for the Health of La Oroya and CooperAccion for over a decade around the environmental clean-up of La Oroya.
It is our hope that the Oxfam America Speakers Tour will foster a deeper understanding of the impact of mining on women and bring larger visibility to their plight.
This blog post was written by Emily Greenspan, extractive industries policy and advocacy advisor who authored Oxfam America’s report “Watching the Watchdogs”.
In recent decades, extractive industry companies increasingly have extended their reach to more remote and sensitive areas, as well as to more politically risky environments, in search of oil, gas, and other natural resources. At the same time, local communities, NGOs, and others increasingly demand more accountability of the corporations managing projects with the potential to cause serious environmental and social harm.
Within this context, expert panels – consisting of experienced, “independent” or third-party individuals who provide recommendations to project sponsors on social and environmental issues – have emerged as one approach to mitigate project risk for companies and communities. But in an era where public image can have a very real bottom line impact on corporate revenues, and given that expert panels typically have only advisory authority (a bark with not much bite), are these panels being used by companies and international financial institutions for image rather than for constructive advice?
With the rebel takeover of Tripoli recently, questions are swirling about how the new authorities will manage Libya’s significant oil and gas wealth. Pre-war Libya relied on oil and gas revenues for more than 80% of government revenue in 2010 and rebuilding the country and building new, democratic institutions will, for the foreseeable future, have to be on the back of these revenues.
The country has 44 billion barrels of proven reserves and companies are already knocking on the doors of the National Transitional Council (NTC) in order to get access to Libya’s hydrocarbon riches. As I explain further below, the NTC is also prepared to honor existing contracts with oil and gas companies. But the benefit to the Libyan people will depend on how these revenues are managed.
Today’s guest blog post is written by Emily Greenspan, extractive industries policy and advocacy advisor.
Big wins for the poor sometime come in unlikely venues. This week the International Finance Corporation (IFC)–the private sector lending arm of the World Bank Group–released its new and, in some ways, improved policies designed to protect the environment and communities. The IFC has been criticized for funding high-risk projects in sectors like oil, gas, and mining that entail serious risks for local communities. IFC’s new policies–its so-called “Sustainability Framework”–outline social and environmental requirements for the companies that it funds in order to reduce the risk associated with its projects.
Why is this important? IFC’s social and environmental policies have far reaching impact. IFC invested $18 billion in 528 projects in FY2010, including FY10 commitments of more than $1 billion in the oil, gas, mining, and chemicals industries and just under $1.6 billion in infrastructure. In many cases, its financing is relatively modest but often serves to catalyze projects and bring in other lenders. Its policies are often emulated by other international public lenders – such as export credit agencies – and by private commercial banks such as Citigroup, Barclays, Credit Suisse, and many others who belong to the Equator Principles, a set of standards for reducing social and environmental harm adopted by 72 export credit agencies and private banks. In that sense, when the IFC changes its policies, it can be big news.
For these reasons, Oxfam and other NGOs have been in the trenches over the past two years trying to wrench out improvements. IFC’s new framework includes a precedent-setting requirement that its clients secure the Free Prior and Informed Consent (FPIC) of indigenous communities prior to launching development activities expected to generate adverse impacts on their lands and natural resources. FPIC is critical to ensuring that indigenous communities participate in decision-making processes around development projects that affect their lands, cultural identity, and livelihoods. FPIC will also benefit governments and companies seeking to promote long-term sustainability and prevent conflict around high-impact development projects. Increasingly, companies and investors are beginning to acknowledge FPIC as best practice.
The IFC’s updated Sustainability Framework also promotes increased transparency in the oil, gas, and mining sectors by requiring extractive industry clients to disclose their contracts with host governments. This will help to prevent secret deals and enable citizens to hold their governments accountable for decisions regarding natural resource management. Internationally, several governments already recognize contract disclosure as best practice. Most recently, Ghana’s Ministry of Energy posted all of its petroleum contracts online in May.
These are big wins, but as with any new policy, implementation must be closely watched. We hope that IFC’s new FPIC and contract disclosure policies will set in motion a ripple effect among other international financial institutions, export credit agencies, companies, and governments, helping to reduce social conflict and increase transparency around large-scale development projects globally.
Last week, British mining company Monterrico Metals agreed to pay compensation to 33 farmers from Peru’s northern Piura department for torture and other human rights abuses suffered after a 2005 protest at the Rio Blanco copper mining project. The farmers alleged that the company, now a subsidiary of Chinese conglomerate Zijin Mining, was complicit in the violence carried out by Peruvian police. The company denies any wrongdoing (indeed, there’s no mention of the settlement on the company’s website). Oxfam produced a video which can be viewed below on the incident in 2010. The video tells the moving story of Cleofé Neyra a farmer who participated in the protest and was beaten by police.
The Rio Blanco settlement highlights the urgent need for incoming Peruvian president Ollanta Humala (who will take office on Thursday) to move quickly to address Peru’s ongoing mining-related conflicts, which are threatening the viability of the country’s mining sector. In late June, five people were killed in another round of anti-mining protests in the southern province of Puno. This followed previous mining protests in April in Arequipa in which three people were killed. This cycle of violence, which we first documented two years ago, has become untenable. Humala has the power to put a stop to it if he acts quickly and wisely and brings people into his government with the appropriate knowledge and skills.
His first order of business should be to adopt a consultation law, which will effectively regulate how indigenous communities, who often bear the brunt of mining’s impacts, are consulted prior to the commencement of mining operations. Under international law, indigenous peoples have the right to be consulted and to grant or withhold their consent for projects going forward. This doesn’t mean an automatic “veto” right, but instead means that communities get an opportunity to participate in an informed way in decision-making and that their opinions count for something in the decision that is ultimately taken. Currently (and somewhat amazingly) Peru, unlike its neighbors Bolivia and Ecuador, does not have a legal framework for guiding how these consultations should be carried out. (See a recent report we sponsored on this subject.)
Secondly, Humala needs to work with local governments and civil society to build capacity and participatory processes for deciding how mining revenues should be spent at the local level. Under Peru’s “canon minero”, half of all revenues generated by mining are supposed to go back to mining-affected areas. This sounds good in principle, but in reality this money rarely makes it back from Lima, or if it does, there is little government capacity to spend it on productive activities and so it ends up getting blown on what some in Peru call “cementos”, i.e. cement projects, like soccer stadiums, plazas and fancy government buildings (all of which have their uses but do nothing to promote poverty reduction). Building this capacity will be even more important if government revenues increase via a windfall tax on mining profits that Humala has proposed.
Third, Humala should decree that the Ministy of the Environment — and not the Ministry of Energy and Mines – should have final say over approval of environmental impact assessments (EIAs) for mining projects. EIAs, which document the potential impacts of a mining project on water, land and other resources essential for rural communities’ livelihoods, are critical information for communities’ making informed decisions about whether or not to accept mining. As of now, the Ministry of Energy and Mines retains final authority for approving these documents. This is a direct conflict of interest, and one that serves to undermine the confidence that communities have in these documents and the government’s ability to independently hold companies accountable for protecting the environment.
Fourth, the new president can work to promote what civil society groups call the “zonification” of the country, i.e. creating areas in which mining may be acceptable and others where for reasons of social and/or environmental sensitivity, it is not. The establishment of these “no go” zones can help avoid conflicts at the beginning by not allowing companies to push projects in areas where fears of their impacts will almost inevitably lead to conflict and violence.
Finally, Humala can break cleanly from his predecessor Alan Garcia and decriminalize protests against mining and other extractive projects. Garcia pursued an aggressive strategy of harassment and prosecution of mining activists, often on trumped up charges. Humala can reaffirm his government’s respect for peaceful protest as a legitimate expression of a community’s views and concerns. Protests and opposition to mining projects should never be subject to the kind of police repression and violence that occurred at Rio Blanco in 2005.
As I noted in an earlier posting, there is hope now among Peruvian civil society that Humala can help the country break out of the cycle of violence and protest that is affecting the mining sector. To do so, however, he needs to act quickly and decisively, even if that means provoking the wrath of the country’s entrenched mining elite. If he takes the right actions, he can help bring the benefits of this dynamic sector to all Peruvians, and at the same time ensure that the horrors of Rio Blanco in 2005 are never again repeated.
One year ago this week, Congress struck a huge blow against corporate and government secrecy by passing a law requiring oil, gas and mining companies to publicly report the payments they make to the US and foreign governments for the development and production of these resources. Too often, oil and mineral riches have led to corruption, violence, and wars affecting people on both sides of the pipeline–leaving communities close to production impoverished and consumers in the US relying on expensive energy from volatile regions of the world. Basic information about how much companies are paying host governments for these resources is often cloaked in secrecy.
The bipartisan Cardin-Lugar provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed by Congress on July 15, 2010, represented a big step towards changing the situation. It requires all companies reporting to the U.S. Securities and Exchange Commission (SEC) to disclose annually taxes, royalties, and other payments on a project-level in every country of operation. From rural villagers in Africa to investors on Wall Street, the groundbreaking law casts the transparency net far and wide, arming the public with information it can use to track the amount of money governments receive from oil and mining companies.
This posting first appeared on the United States Institute of Peace blog here.
From Peru to Guatemala to Ghana, many investments designed to develop natural resources – such as oil and gold – are beset by protests and conflict. Too often, these projects suffer from an “original sin” – affected communities were not adequately consulted prior to the investment decision and had little say about how and whether these projects were developed. With the inevitable environmental and social impacts that come from large-scale projects such as mines, oil pipelines, dams, it’s no wonder that protests, grievances and conflict result. In some cases, such protests shut down operations for weeks, months or years at a time. In Peru, indigenous communities blockaded a river in the southern Peruvian Amazon and occupied oil facilities for weeks during the construction of the Camisea gas project. In Nigeria, Shell, Chevron and other companies have had to forego hundreds of thousands of barrels a day in production because of community protest and conflict.
The good news is that there is growing international support for free, prior and informed consent (FPIC) from governments, international financial institutions, investors and the companies themselves. They recognize that it is not only a basic right for indigenous communities and a principle that should be respected for all affected communities, but it also makes bottom-line sense.
One approach to defining FPIC is proposed in the Framework for Responsible Mining, which was developed by NGOs, retailers, investors, insurers and technical experts working in the minerals sector to create a basis for developing responsible sourcing and investing policies. The definition says that consent must be obtained free of coercion or manipulation. Such consent must be secured prior to any authorization by the government or third parties, and prior to commencement of activities by a company affecting indigenous peoples’ lands, territories, and resources. Finally, the consent must be informed by meaningful participation and consultation of indigenous peoples based on the full disclosure of relevant aspects of the proposed project by the company and permit granting authority in a form that is understandable and accessible to indigenous peoples and local communities.
FPIC creates an opportunity for project sponsors to identify concerns among affected communities early in the project development process, and to adjust project planning accordingly. For example, project sponsors might reroute a pipeline to avoid a site considered sacred by local communities, and in doing so prevent conflict over the longer term.
FPIC is recognized by the 2007 UN Declaration on the Rights of Indigenous Peoples and the US reversed its position on the Declaration and finally endorsed it last December. Extractive industry companies have also begun to take more progressive positions on FPIC. In 2009, Oxfam documented public commitments to FPIC by the mining companies Rio Tinto and Xstrata, as well as project and/or country specific public commitments to FPIC by Anglo American, BHP Billiton, ConocoPhillips, Pluspetrol, and Talisman Energy. In May last year, Talisman Energy released a report that it commissioned on the feasibility of adopting an FPIC policy. The report, written by law firm Foley Hoag LLP, concludes that “in the long-term, the benefits for oil and gas companies of obtaining community agreement based on FPIC principles, and thereby both supporting their social license to operate and reducing legal and reputational risks, are likely to outweigh the substantial challenges of securing consent.” In December 2010, Talisman Energy committed to the principle of FPIC in its Global Community Relations Policy.
Importantly, the World Bank’s International Finance Corporation, its private sector lending arm – which, for example, has financed gold mines and oil projects in Peru and Ghana – has come out in support of FPIC. On May 12, the IFC announced an update to its environmental and social standards and said that it would use FPIC for projects with potential significant adverse impacts on indigenous peoples. While the full text of the new requirement has not been released, this appears to be an important step forward.
Common misconceptions about FPIC include the idea that it represents a “veto” for individuals or communities or that FPIC is very difficult to implement in practice. The FPIC process is a dynamic one and becomes oversimplified when viewed as a simple ‘yes’ or ‘no’ vote. In a scenario where the community withholds its consent, the project proponent may, for example, adjust the project design in order to further minimize impacts or relocate to another site. FPIC has also been successfully implemented in a number of cases. Recently Oxfam produced a case study on the successful implementation of FPIC in the context of a hydrocarbon exploration project in Bolivia.
The growing movement by governments, companies and lenders to respect FPIC as a norm and in practice will reduce conflicts related to some of the largest economic investments in socially and environmentally sensitive regions around the world.
Fresh support has emerged for the global movement to increase the financial transparency of oil, gas and mining operations around the world. Last Thursday, the European Commission President Barroso committed to advancing legislation in Europe, with a proposal tabled by October this year. Barroso called on the G8 to match this commitment.
On Friday the G8, in its final declaration from the Deauville, France summit, for the first time committed to mandatory disclosure laws and regulations for disclosure of payments from companies to host governments around the world. (At the last minute one G8 member pushed for “or to promoting voluntary standards” to be added to the declaration, managing to “create an oxymoron out of an opportunity”, as the Oxfam reaction to declaration said.)
Nevertheless, it is undeniable that, after the leadership role the US played with the passage of the Cardin-Lugar provision in the Dodd-Frank Wall Street Reform Act, movement is growing in Europe and elsewhere to expand the transparency net. The progress is notable in spite of the fact that the oil industry, especially, has complained that transparency regulations will put them at a competitive disadvantage against companies not covered by the rules.
How credible are these arguments? Not very.