Publicly traded oil, gas and mining companies will be required to disclose their payments to foreign governments, according to a provision contained within the landmark financial reform legislation passed by the Senate on Thursday.
The provision will require companies to report on their filings with the Securities and Exchange Commission (SEC) their payments to foreign governments for their extraction of oil, gas and minerals on a country-by-country and project-by-project basis.
"This provision is a critical part of the increased transparency and corporate responsibility that we are striving to achieve in the financial industry. Given the catastrophic events in the Gulf of Mexico, oil companies, in particular, should well understand that secrecy fosters instability, corruption and greater risk," said Sen. Benjamin L. Cardin, Maryland Democrat who co-introduced the measure with Sen. Richard G. Lugar. "We now have the tools to help people in resource-rich countries hold their leaders accountable for the money made from their oil, gas and minerals."
Mr. Lugar, Indiana Republican, spoke in favor of the measure when it was offered as an amendment to the Senate financial reform bill in late May.
"Too often, oil money intended for a nation's poor ends up lining the pockets of the rich or is squandered on showcase projects instead of productive investments," he said at the time.
The legislation should go a long way to ending the secrecy surrounding companies's payments to foreign countries, its supporters contend.
"The law would have a huge impact in a country like Equatorial Guinea, where all the major oil companies operating would have to file. The country is known for its corruption and lack of transparency in its management of its oil revenues," said Ian Gary, senior policy manager for extractive industries for Oxfam America, an international nonprofit relief and development group that has been pushing for the law.
The legislation applies to oil, gas and mining companies registered with the SEC and covers more than 90 percent of internationally operating oil companies and many of the top international mining companies, according to Oxfam America.
"This not only includes American companies but also many foreign companies, such as Shell and BP, as well as companies from emerging markets such as China, India, Brazil, and Russia," Oxfam officials said.
The measure would not apply to a number of large nationally owned oil companies, most of which operate only in their own countries and not internationally.
Oxfam and others praised Congress for passing the legislation.
"Secrecy of oil, gas and mining company payments to governments fosters government corruption and violent conflict in resource-rich countries that are home to more than half of the world's poorest people," Oxfam America President Raymond C. Offenheiser Jr. said. "Instability in these regions poses a long-term threat to national security, foreign policy, and economic interests in the United States."
Another supporter who praised the legislation was Bono, lead singer for the band U2 and co-founder of the anti-poverty group ONE.
"This proposal is a great lever to support more transparency and healthier governance in poor countries," he said. "It will empower activists, media and good-governance watchdogs, both south of the equator and north, to ensure the continents vast riches end up in service of its people, not lining the pocket of some kleptocrat."
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