Transparency Blowing in the Wind
    Category: Column By : James Kallman Read : 909 Date : Thursday, September 05, 2013 - 05:28:42

    At a joint press conference in Paris at the end of May, French and U.K. leaders said they would join some 40 other countries worldwide in agreeing to the Extractive Industries Transparency Initiative (EITI) standards, which require the full disclosure of all taxes, royalties and other fees paid by a nation's oil, gas and mining sector on their global operations. Coming as it did on the eve of the EITI Global Conference in Sydney, it provided a welcome boost to a concept that had its roots in meetings in London a decade earlier.

    Indonesia, of course, is already further down the EITI road and its first report covering state revenues from oil and gas and mining companies for 2009 was released in April. While some firms were excluded, the report did for the first time publicly reveal figures for tax and royalty contributions from the mineral and coal sectors. Initial discrepancies between payments reported and revenue received, indicative of weaknesses in the handling of information at the Directorate General of Minerals and Coal, were pared down due to EITI Indonesia conducting a physical inspection of the records maintained by the directorate. While there's room for improvement, the report's release shows that Indonesia is taking significant steps forward in government transparency.       

    The U.S., meanwhile, is still gearing up to join the multi-stakeholder committee wisely taking its time in canvassing opinion from all areas in order to create a process that fits U.S. realities and needs while still adhering to the EITI principles. However, there may be storm clouds ahead following a July court decision. Judge John Bates agreed with the American Petroleum Institute's (API) argument that the SEC had misread a law requiring disclosure of the companies' reports, and was arbitrary in denying exemptions for operations in secretive countries such as China, Qatar, Angola and Cameroon. The basic argument for secrecy was that open reporting would damage the company's competitiveness against companies from other nations that weren't so restricted. 

    There's a connection here to the haze that covered much of this part of the world in early June coming from Indonesia and covering Singapore and Malaysia. This haze sparked claim and counterclaim as to which companies' lands had the fires. When it comes to such matters for determining ultimate responsibility, these have remained opaque.

    Some progress was made in the ASEAN Sub-Regional Ministerial Steering Committee on Transboundary Haze Pollution in a July meeting that recommended establishing a “Sub-Regional Haze Monitoring System” for sharing detailed land-use and concession maps that will help to pinpoint companies and others responsible for the fires. While a step in the right direction, it fails by keeping this information restricted only to access by governments. Making the concession data public should not hamper inter-government cooperation, but would assist contract compliance between commodity producers and their corporate customers, as well as allow for independent monitoring by outside bodies. By allowing such a golden opportunity to pass, regional governments have again left transparency of action, just like the haze, blowing in the wind.