Resource Companies Step Up Opposition Against Anti-Corruption Rules
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
A group of natural resources companies, including Royal Dutch Shell and BHP Billiton, are set to oppose new anti-corruption and transparency rules put forward by the US and the EU, claimed a report by the Financial Times on Sunday, after a Shell spokesman lambasted the proposals to have“limited impact and unclear benefits”.
A group of natural resources companies, including Royal Dutch Shell and BHP Billiton, are set to oppose new anti-corruption and transparency rules put forward by the US and the EU, claimed a report by the Financial Times on Sunday, after a Shell spokesman lambasted the proposals to have“limited impact and unclear benefits”.
According to FT, Shell’s chief financial officer, Simon Henry, had written to UK business minister Norman Lamb last week in order to detail the group’s concerns at the proposals, which would see companies forced to disclose any form of payments made to governments in the countries that they operate in.
The new legislations are likely to impose stricter reporting requirements for the companies as well – with accounting for government payments set to be based on a project-by-project basis.
Both the US and the EU claim that the proposed rules would enable for greater transparency – particularly in countries whereby corrupt governments could keep corporate payments to themselves rather than reinvest them locally for public benefit.
Related: World Corruption Special Report
Related: Oil, Sex and Corporate/ Government Corruption
[quote]“Corrupt and poorly negotiated resource extraction deals lose billions from the revenue bases of developing countries,” said Jamie Drummond, head of the One Campaign seeking greater disclosure, to FT.[/quote]Still, the union of resource companies argue that the new conditions would be unfair to their companies, while violating local rules in certain countries, where information on resource payments are meant to be kept confidential for reasons of national security.
Some companies, such as Shell, have also come forward with alternatives that they claim would enable transparency while ensuring that neither business nor government values are undermined.
According to Henry’s letter to Lamb, payments made by resource companies should be broken down into national, regional, and local levels of governments instead; while “a single, absolute disclosure threshold” should be implemented that would “reflect the fact that in Shell’s case we paid more than $20 billion in direct taxes to governments in 2011, and collected close to $100 billion in duties and VAT on behalf of governments.”
BHP Billiton, added that it was “concerned that project-by-project reporting is unlikely to increase transparency or help combat corruption”.
But the companies’ lobbying attempts are likely to face strong opposition from other investors as well, with billionaires such as George Soros and Bill Gates supporting the move towards transparency.
[quote]“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,” said Soros in an interview with FT.[/quote]Related: Capitalism’s Pallbearers: The Companies That Run, & Could Destroy, The Global Economy
“Africa’s natural resources were worth $246 billion in exports in 2009, which is six times greater than development assistance to the continent in that year ($44 billion)… Little of this value remained in Africa,” added Gates in a letter written earlier this month to the US Securities and Exchange Commission.
