The SEC rule that would have required oil and gas and mining companies to disclose each year their payments to foreign governments was intended to increase transparency and prevent back-handers, bungs, and bribes from reaching those able to influence contractual decisions.
Sadly, it is the local populace that often loses out as a consequence.
The White House said the rule, which was slated to be effective next year, would have imposed “unreasonable compliance costs on American energy companies" and “placed them at risk of losing out to foreign competition.”
But if the additional costs of compliance to a multi-national, multi-billion dollar company would have been negligible, as appears likely, what was the real concern? Was it that American energy companies could lose out to corrupt competitors by effectively having their hands tie? After all, the policy underlying the rule was to try and prevent corruption.
By repealing the disclosure rule, the United States is in danger of losing the moral high ground. Some may consider America to be the world’s police force, there to intervene whenever there's a whiff of evil; others might (cynically) suggest this only happens where the Washington has a vested interest.
And yet no one can deny that the world as a whole has made massive inroads against ethically-challenged commercial behavior over the last few years, passing anti-bribery laws that, like the FCPA, reach corrupt behavior that happens overseas. The parallel enforcement action against Rolls-Royce in January by the UK Serious Fraud Office and the DOJ was just the latest example.
I am not completely naïve. I understand that regulations such as the extractive industries disclosure rule may be perceived to hinder the companies who have to abide by them. But this isn’t about corporations and their shareholders. It is about the poor who live in countries blighted by corruption.
The United States has been one of the driving forces behind the global battle against corruption. My fear is that it is now stepping back from its leadership role, and sending the wrong signals to the corporate players and indeed to other countries. There are those who still consider greasing palms to win contracts an effective business strategy.
By repealing the extractive industries disclosure rule before it even started, I belive the United States is letting the rest of the world down.