Secretary of State Hillary Rodham Clinton predicted Thursday that proposed rules to require certain oil, gas and mining companies to disclose their payments to host governments would have a “profound effect” on curbing corruption and boosting transparency in foreign nations.
The rules, which were supposed to be made final in April 2011 but are still being written, would require oil, gas and mining companies listed with the Securities and Exchange Commission to disclose payments to host nations where they extract resources for commercial purposes. She and other supporters of the disclosure rules have argued the increased transparency they feel the rules would bring would help curb the “resource curse” — where certain resource-rich countries especially in Africa and Asia suffer from high levels of corruption, poverty and instability.
“We do think it will have a very profound effect on our ability to try to help manage some of the worst practices that we see in the extractive industry and in the relationships with governments at local and national levels around the world,” Clinton said in a speech in Washington on Thursday.
But the oil and gas industry has lobbied fiercely against the rules, arguing they would put U.S. companies at a competitive disadvantage to other firms that wouldn’t face disclosure. Companies such as Shell and Chevron and the industry’s leading lobbying group, the American Petroleum Institute, seek exemptions to limit the information and circumstances for which disclosure is required.
Advocates of the rules, including human-rights and anti-poverty activists, respond that the industry’s concerns are exaggerated and that the rules could actually help produce a more stable operating environment for companies.
Clinton has become arguably the Obama administration’s highest profile advocate of the rules, calling on the SEC, which must issue the rules under the Dodd-Frank financial reform law, to “go as far as possible” with them and ensure they reflect the intent of the law.
The SEC has received some pressure from Congress to insert exemptions. Republicans including Sen. John Cornyn of Texas have raised concerns about the rule’s impact on the U.S. companies and also have pressed the SEC to provide exemptions industry seeks.
Sen. Mary Landrieu, D-La., told the SEC in a recent letter the commission could formulate the rules “in such a way so as to avoid placing U.S. companies at a competitive disadvantage, while still promoting increased disclosure and transparency.”
Sen. Ben Cardin, D-Md., who co-authored the Dodd-Frank provision requiring the rules with Sen. Richard Lugar, R-Ind., has said exemptions would go against the intent of the statute and limit the rules’ effectiveness in stemming corruption.
“It’s not what side you take,” Cardin told Fuel Fix this week. “It’s what the statute says. It’s what Congress did.”