By Andrew Jack and Sylvia Pfeifer
Royal Dutch Shell and other natural resources companies have stepped up efforts to counteract planned anti-corruption rules that would force them to disclose payments to governments in countries where they operate.
The Anglo-Dutch group, Europe’s largest oil and gas company by market capitalisation, has put forward a series of alternatives, arguing that the current proposals will have “limited impact and unclear benefits”.
The new requirements for US and EU quoted businesses are designed to highlight regimes that receive large sums from selling oil, gas, minerals and forests but then siphon off the proceeds rather than reinvest locally for public benefit. The EU has proposed a series of amendments to existing rules on transparency, including detailing payments on a project-by-project basis. The union’s Competitiveness Council meets this week to agree a general approach.
George Soros, the billionaire hedge fund investor who has supported the “publish what you pay” campaign, told the Financial Times: “I want to know that the companies I invest in have an open and transparent relationship with governments, so that contracts are not at risk of being torn up.”
Companies have been lobbying to remove a series of conditions that they claim are onerous, unfair or in contravention of local laws and which campaigners say would undermine their value. Executives have attacked the thresholds above which they must disclose and argued that they should not be required to violate laws in countries, such as Qatar, which deem information on resource payments to be confidential for reasons of national security.
Simon Henry, chief financial officer at Shell, wrote to Norman Lamb, UK business minister, last week detailing the group’s concerns. Shell says it supports the introduction of the EU disclosure rules, but wants payments broken down into those made at the national, regional and local levels of government. In addition, the EU should define “a single, absolute disclosure threshold”, which should be set at a level “to reflect the fact that in Shell’s case we paid more than $20bn in direct taxes to governments in 2011, and collected close to $100bn in duties and VAT on behalf of governments”, Mr Henry said.
Other companies have taken a similar line. BHP Billiton,the mining group, said it was “concerned that project-by-project reporting is unlikely to increase transparency or help combat corruption”.
Bill Gates, the billionaire philanthropist, recently threw his weight behind a proposed rule included in the Dodd-Frank act which would require US extractive companies to disclose similar payments.
In a letter earlier this month to the US Securities and Exchange Commission Mr Gates wrote: “Africa’s natural resources were worth $246bn in exports in 2009, which is six times greater than development assistance to the continent in that year ($44bn)… Little of this value remained in Africa.”
Jamie Drummond, head of the One Campaign seeking greater disclosure, said: “Corrupt and poorly negotiated resource extraction deals lose billions from the revenue bases of developing countries.”
