The Politics of Poverty

Ideas and analysis from Oxfam America's policy experts

Let the sunshine in: A call to African governments to urge US government to protect anti-corruption rule

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Source: http://bit.ly/2ksqhsD

The annulment of 1504 will have dire consequences on oil, mining, and gas transparency efforts in Africa.

Today, Congress will be voting on whether to keep or throw out a key regulation, the Cardin-Lugar Amendment aka Section 1504.  If Congress votes to annul, US oil, gas and mining companies will be allowed to keep secret their payments to foreign governments, opening the window for corruption at home and abroad. On top of that, the US would be out of step with similar laws passed in countries like Canada, Norway and the European Union and would come up short against international norms that have the support of governments and companies all around the world. And the move would undo years of bipartisan cooperation and legislative process.

With the former CEO of ExxonMobil, Rex Tillerson, likely to become the next Secretary of State, these moves are sending shockwaves of concern and alarm globally.

The Cardin-Lugar Amendment is particularly critical for places like Africa. With the future of US foreign assistance in limbo, it is ever more critical that Africa governments be able to better manage their own resources and that the African people have the information they need to hold their government accountable. During the rule-making process for Section 1504, African CSOs poured in mountains of evidence, like this one from Ghana, for why the rule was essential for the responsible governance and development of their countries.

Mining and oil/gas play an enormous role in Ghana’s economy. As one of the largest gold producer in Africa, Ghana is host to several mines operated by US-listed companies including Newmont, AngloGold Ashanti and Gold Fields, which operates the country’s largest gold mine.  Lucrative quantities of offshore oil and gas are also being exploited by US-listed companies including Kosmos Energy and Anadarko. The CEO of Newmont and the Senior Vice President of Kosmos Energy both publicly support payment disclosure and Section 1504.  Both sectors combined bring in several billion dollars of government revenue each year. Section 1504 would be absolutely necessary for the Ghanaian public and civil society to be able to monitor government revenue reporting and rout out corruption.

Ghana itself is settling into a new administration with presidential elections having concluded late last year. The country is at a pivotal moment as it seeks to manage its economic crisis. The public is calling on the new government to capitalize on its oil, gas and mining riches rather than squander it. The new ruling party has made promises for “transparent, accountable and efficient management of the country’s petroleum resources for the benefit of all Ghanaians.” Disclosure of payments from resource companies, as would be required by Section 1504, is a vital part of this process.  With Section 1504 on the line, policy experts in Ghana are again speaking out.

Below is a statement from Dr. Mohammed Amin Adam, the Executive Director of the Africa Centre for Energy Policy, a leading African think tank on energy governance.  The press release can also be found here.

AFRICAN GOVERNMENT MUST CONDEMN EFFORT TO ANNUL THE SEC RULES ON TRANSPARENCY IN THE EXTRACTIVE SECTOR.

PRESS RELEASE, 1ST FEBRUARY 2017

The Africa Centre for Energy Policy (ACEP) is saddened by the attempt by US Republican Senators to darken the global effort to ensure transparency in the governance of the extractive sector by repealing the rules on the Dodd Frank Act. Today, the US, European Union, Canada and Norway, have rules that require their companies operating abroad to disclose payments made through taxes, royalties, contract fees and all other payments for infrastructure development and Corporate Social Responsibility to host government.

Ironically, this global effort was initiated by the US through the Dodd Frank Act in 2010 and subsequent regulations by the Securities and Exchange Commission (SEC) through the Cardin-Lugar Transparency Rule in 2016, which provides express requirement on US companies to disclose payments to host governments.

The development of regulation on the section 1504 of Dodd Frank Act witnessed strong opposition from the business interests in the US which saw the America Petroleum Institute (API) taking the matter to court. The SEC and civil society organisations led by Oxfam America, as the Intervenor, defended the case for three years until it was thrown out in April 2016, to pave the way for Cardin-Lugar Transparency Rules to come into force.

Having failed in court, Some Republican Senators, including the Majority Leader Mitch McConnell have file a Congressional Review Act, seeking to annul the SEC rule on the Dodd Frank Act. This represents a travesty of important effort to improve on governance of extractive resource in poor countries where the secrecy around resource rents activates bribery, greed, corruption, extreme poverty and many other social injustices.

Ghana, like many other countries, has been a direct beneficiary of SEC rules through contracts and payment disclosures which empowers citizens to demand accountability from their government. This “U-turn” proposed by the Senators is only an attempt to entrench minority business interest against that of the suffering masses who live the “paradox of plenty” daily.

ACEP would like to call on African governments to individually and/or collectively condemn this move by minority business interest to influence US Congress to roll back transparency efforts. The world cannot suddenly deviate from the reality that corruption and secrecy is at the heart of mismanagement of extractive resource. We also call on the Africa Union to develop its own rule to regulate companies operating in our countries to disclose payment, contracts and beneficial ownership information as a condition precedent for operating in Africa.

Signed

Dr. Mohammed Amin Adam
Executive Director

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