European Union lawmakers have agreed to push for stringent new rules
requiring oil and mining companies to report in greater detail the
payments they make to foreign governments, setting the bloc on track to
match similar rules adopted recently in the U.S.
The European Parliament's Legal Affairs Committee agreed
Tuesday to compel giants such as Rio Tinto PLC (RIO) or BP PLC (BP) to
report all payments in excess of 80,000 euros ($105,000) to governments
and local authorities in the countries where they operate. The committee
also decided that the payments should be broken down for single
projects--a mine or an oil field, for example.
The decision apes rules adopted in August by the U.S.
Securities and Exchange Commission. The SEC's move has in the last weeks
encouraged Parliament's push for detailed reporting, after EU
governments had initially agreed on a softer approach.
At stake is transparency in the billions of dollars that oil,
gas and mining companies pay to governments and local authorities.
Project-level reporting means that each company has to report payments
for contracts, licenses, leases, concessions and similar agreements to
foreign governments. This could include payments for pipeline transit
fees, dividends and rental fees, with the idea that anyone would be able
to find, online, the amount of money that a company pays to a certain
authority, and hold that authority accountable for what it does with
that money.
But extractive companies consider that the level of detail
would turn into an administrative burden, and that even in their
internal accounts payments aren't broken down to the detail proposed by
the EU. They also want to keep such details confidential because they
consider them business sensitive.
Companies also say that disclosing the amount paid by project
could create tensions in the countries of operation, because it would
highlight differences in payments within regions, or how much different
central governments retain, or even open divisions where fields stretch
across contested borders, like in the Caspian Sea.
However, a person in the industry said that after the SEC's
decision, companies that are listed both in the EU and the U.S. may
prefer to have a common set of rules, even if they are more stringent,
rather than different, bureaucratically-challenging standards.
Arlene McCarthy, the Parliament member who is steering the
legislation through the assembly, said Tuesday that the proposal had
been propelled by the SEC's decision.
"If we want global rules, we can't come out with a weaker
standard," she said. The ruling in the U.S. proved that "our argument
for strong rules was the right one," she said.
Tuesday's vote will trigger a challenging negotiation with EU
member states, who will have to agree on a common text before it can
become law. These negotiations will likely begin next week, Ms. McCarthy
said.
Transparency International said the vote was an important step toward holding governments accountable for their spending.
"The result of this vote in the European Parliament will be
welcomed by millions in resource-rich developing countries who have been
deprived of stolen oil and gas funds," said Jana Mittermaier, direction
of the organization's European Union office, in a statement.
Rio Tinto wasn't immediately available for comment. BP declined to comment.