Mining giant Rio Tinto is willing to publish investment agreements with developing countries, says head of global tax
LONDON (TrustLaw) – Mining giant Rio Tinto would in principle be happy to make public the investment agreements it negotiates with developing countries, the company’s head of global tax says.
Mining, oil and gas companies are coming under increasing pressure from governments and transparency campaigners to publish the taxes and royalties they pay to governments, but some companies fear they could be forced to reveal sensitive information.
Campaigners say the publication of such figures will help reduce corruption while allowing citizens of developing countries to better hold their governments to account.
Rio Tinto’s head of global tax, Janine Juggins, told TrustLaw that Rio was already voluntarily publishing details of many payments.
“A large number of the investment agreements ... that Rio Tinto has signed with respect to large developments in developing countries are actually public information and I think in principle, Rio would not be opposed to that,” she said when asked about Rio Tinto’s stance on contract transparency.
“There are companies in other sectors that may be more sensitive about that in terms of issues around competitiveness. I think the most important thing of all is that the process in arriving at an investment agreement is very transparent and that each party is adequately advised,” Juggins added.
The U.S. government will soon force extractive companies to publish what they pay to governments. A provision within the 2010 Dodd-Frank reform law forces companies in the oil, mining and gas industries which are listed on a U.S. stock exchange to publish their payments to the governments of the countries in which they operate.
The U.S. financial regulator, the Securities and Exchange Commission (SEC), is currently debating how best to implement the law and is expected to publish its conclusions imminently.
The European Union is also planning to enact a resource transparency law which is likely to be even further reaching than the U.S. law. The EU proposals would force European mining, oil, gas and forestry companies - both publicly listed and private - to disclose their payments to governments.
The EU proposals would make it legally binding to disclose information on payments to governments, complementing the Extractive Industries Transparency Initiative (EITI) which establishes voluntary guidelines for reporting company payments to governments.
Many resource companies - including Rio Tinto - have backed the EITI.
Both the U.S. and the EU laws have been subject to fierce lobbying from the extractive industry, with many complaining of the added cost of the disclosures and saying that companies may be forced to disclose sensitive pricing information that could benefit their competitors.
Juggins said Rio Tinto was not opposed to either the EU law or the Dodd-Frank provision.
“We very much support transparency. I think we’ve evidenced that by what we’ve done voluntarily,” Juggins said.
“All we’re saying is if you want this legislation, let’s make sure that it’s very practical and that it addresses the anti-corruption objectives. But let’s make sure that there are appropriate materiality levels, let’s not have lots of different reports,” she added.
“For a public company like us, if we’re having to report under Dodd-Frank, that quite honestly should be good enough for the EU and everywhere else,” Juggins added.
Rio Tinto drew praise from transparency campaigners when, in its March annual report, it voluntarily published the different types of taxes that it paid to both federal and local governments in 2011. Those payment disclosures are more detailed than Rio Tinto is required to disclose under its EITI commitments.
“To the best of my knowledge, nobody has gone as far as we have or approached it in quite the same way,” Juggins said.
However, the report did not break down the payments on a project-by-project basis and it also did not include payments to governments of under $1 million . Campaigners say this is the level of detail they want to see in both the Dodd-Frank and the EU laws, but Juggins argues that the cost of doing that would outweigh the anti-corruption benefits.
“Where’s the additional value that’s coming from that in terms of addressing the anti-corruption objective?” Juggins said.
“We must bear in mind that all of this compliance requires us to recruit people to deal with it and also change our systems,” she added.
“Our voluntary reporting is aimed at demonstrating what is possible for business to do realistically as a practical example of what the various legislations might be able to achieve.”
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