All 28 EU member states will have to introduce payment disclosure legislation for extractive companies by July 2015, but the UK has committed to fast-track the law's implementation so that it will be in force by 2015, not simply introduced
LONDON (Thomson Reuters Foundation) – The British government committed on Thursday to implement by 2015 a European law that will make UK-listed and UK-registered oil, gas, mining and logging firms declare the payments that they make to governments worldwide.
The EU legislation, passed by the European Parliament in June, echoes tough legislation passed in the United States last year, which subsequently led to a successful court challenge brought by the American Petroleum Institute (API), the industry body for the U.S. oil and natural gas industry.
Campaign groups who pushed for the EU legislation to be introduced and pressured European lawmakers not to let it be watered down, welcomed the announcement, which is part of efforts to end poverty in resource-rich nations by ensuring their wealth is shared.
“At last people will have clear information about what London-listed extractive companies pay to foreign governments whether in the form of taxes, royalties, licences and other payments,” Melissa Lawson, policy advisor on governance and anti-corruption at campaign group Tearfund said in a statement.
“This means poor communities – often exploited by their own governments and unscrupulous businesses – will know what is paid and be able to ask the right questions of their MPs and officials about how that money is spent. It is a real result for them that should make a difference to the lives of many people who lack basic services,” Lawson added.
The commitment to fast-track the EU law was made in a series of open government and transparency pledges as part of the UK’s membership of the Open Government Partnership (OGP), an international initiative that aims to make governments more accountable.
All 28 EU member states are required to introduce payment disclosure legislation for extractive companies by July 2015, under the adopted EU Accounting Directive. However, the UK has committed to fast-track the implementation so that the law will be in force by 2015, not simply introduced.
The EU law orders firms to report payments at project as well as country level, beginning at a threshold of 100,000 euros ($130,000), higher than some campaigners had hoped, but far below the million-dollar level resource firms had said was practical.
The EU deal goes further than the U.S. law in that it includes the logging sector and covers large unlisted EU companies, as well as listed firms.
However, the exact rules governing the U.S law remain in the balance after trade groups, including the API and the U.S. Chamber of Commerce, filed a legal challenge alleging that the U.S. Securities and Exchange Commission (SEC) had misinterpreted the law.
U.S. District Judge John Bates agreed with the trade groups and in July asked the SEC to reissue the rules that govern the law.
“European legislators emphatically rejected exemptions, and have set the standard for project-level reporting,” Brendan O’Donnell, a campaigner at anti-corruption watchdog Global Witness, said in a statement on Thursday.
“To avoid burdening industry with inconsistent reporting regimes and ensure a level playing field, the SEC must re-issue a payment disclosure rule that matches the EU legislation,” he added.
Canada’s Prime Minister Stephen Harper pledged in June, at a summit of the Group of 8 (G8) leading economies, to push forward mandatory reporting requirements for Canadian energy and mining companies.
The U.K. is currently lead co-chair of the OGP alongside Indonesia and civil society representatives. Its two-day meeting began on Thursday.
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