New US Transparency Rules May Help Reverse the Resource Curse
June 28, NY: On Monday, the United States Securities and Exchange Commission (SEC) announced rules requiring US-listed oil, gas, and mining companies to publicly publish what they pay governments for the right to exploit their natural resources.
These rules will help bring transparency to countries’ resource revenues – an important step for holding resource-dependent governments like that of Equatorial Guinea accountable for corruption and misuse of funds.
Equatorial Guinea is the perfect example of why such rules are needed. Oil was supposed to be manna from heaven for this small country, saddled with immense poverty. But instead, the country’s oil wealth is mired in secrecy and seems primarily to fund the lavish lifestyles of the small elite surrounding President Teodoro Obiang Nguema Mbasogo – all while the vast majority of Equatoguineans remain as poor as ever.
The new SEC rules are required under Section 1504 of the Dodd-Frank Act, passed by the US Congress after the 2008 financial crisis. The SEC had tried to implement rules in August 2012, but industry lobbyists – including the American Petroleum Institute – got a court to block them. A district court judge ordered the SEC to issue new rules that addressed some of the lobbyists’ concerns.
Section 1504 set a new standard of transparency for a sector whose revenues have long helped drive kleptocracy, conflict, and human rights abuses in too many countries. Inspired in part by the US legislation, the European Union, Norway, and Canada have already passed and implemented similar rules.
Shedding light on how much companies pay governments is the first step to ensuring public funds are used for the public good. But even this is risky in a place like Equatorial Guinea. Just this year, for example, the Equatorial Guinea government suspended the operations of a nongovernmental organization that advocates for better governance and transparency, the Center for the Study and Initiatives for Development (Centro de Estudios e Iniciativas para el Desarrollo, CEID).
It has taken six years since the passage of Dodd-Frank for the SEC to issue final rules. At least the long wait has been rewarded by strong rules in favor of transparency.
The Oslo Times International News Network