Revenue Watch Tells Lawmakers: Disclosure Fosters Security and Economic Stability

SEC Rule Change for Extractive Industries Will Protect U.S. Interests and Combat Corruption Abroad

CONTACT: Jed Miller, jmiller@revenuewatch.org

WASHINGTON, D.C.—In testimony on Thursday before the House Committee on Financial Services, the Revenue Watch Institute urged lawmakers to bolster energy security at home and fight corruption abroad through new reporting standards for the oil, gas and mining industries.

	RWI Director Karin Lissakers (l.) testifies in support of the EITD Act, with witnesses Faith Stevelman, Robert Jenkins and Alan Detheridge.

The low-cost rule changes in H.R. 6066, the Extractive Industries Transparency Disclosure Act (EITD), would require companies to report payments to governments with greater detail, in an industry where closed-door deals and corruption undermine trust in local leaders and stability in the investment climate.

"Information is the lifeblood of healthy markets," said Karin Lissakers, Director of Revenue Watch. "United States investors face increasingly greater risk from our dependence on resources in unstable countries. With this bill, we can reduce that risk by improving government accountability abroad and leveling the playing field for U.S. companies."

The bill, introduced by committee chairman Barney Frank (D-Ma.), would change the reporting requirements for all foreign and domestic companies listed on the Securities and Exchange Commission, including 27 of the 30 top international oil and gas companies.

"The chance that any company would lose competitive advantage is small," said Lissakers. "With 90% of the major players listed, the coverage will be too broad."

According to Sarah Pray of the Publish What You Pay US coalition, the bill reinforces the global standards recommended by the Extractive Industries Transparency Initiative (EITI). "The two efforts buttress each other," said Pray. "The bill standardizes disclosure for companies whether or not they operate in EITI countries, but the EITI, with its requirement that company payments be reconciled with government revenues, remains essential."

F&C Asset Management chairman Robert Jenkins told committee members that transparency enhances the business climate by informing investors' calculation of risk. "Thus can transparency breed confidence, confidence reputation and reputation a lower cost of capital," said Jenkins.

Revenue Watch's director also emphasized that the paradoxical relationship between natural resource wealth and conflict, poverty and crisis—the so-called "resource curse"—is not limited to one region or continent, with examples ranging from Myanmar to Turkmenistan, from D.R. Congo and Liberia to Bolivia and Peru.

"Today's commodity boom should be a windfall for all resource-rich countries," said Lissakers, "but if historical patterns continue, the boom is likely to bypass a majority of the people in those countries. The transparency measures in the EITD Act can help to reverse this curse by equipping the citizens of these nations with greater insight and oversight of their extractive industries."

To learn more about the Extractive Industries Transparency Disclosure Act and the international campaign for revenue transparency, please go to www.OpentheBooks.org, or contact Sarah Pray of Publish What You Pay US at (202) 721-5623 or spray@pwypusa.org.

READ MORE ABOUT THE EITD ACT

• WEBCAST: H.R. 6066, The Extractive Industries Transparency Disclosure Act, June 26, 2008 (U.S. House of Representatives)
• Testimony of Karin Lissakers to the U.S. House Committee on Financial Services (as submitted), June 26, 2008 (pdf)
• PWYP US: Financial Services Committee Hears Evidence for SEC Rule Change
• Congress Presses Oil Companies to Halt Secret Payments (Global Witness)
• Fact Sheet: The Extractive Industries Transparency Disclosure Act (Global Witness, pdf)
• Ten Reasons the EITD Act Is Good for Companies, Governments and the United States (pdf)
• House Committee on Financial Services: Frank Introduces Extractive Industries Transparency Disclosure Act (U.S. House of Representatives)