U.S. senators have introduced legislation Sept. 23 to require companies to reveal payments made to U.S. and foreign governments for oil, gas and minerals in an effort to reverse the “resource curse.”
U.S. Sens. Dick Lugar (R-IN), Ben Cardin (D-MD), Chuck Schumer (D-NY), Roger Wicker (R-MS), and Russ Feingold (D-WI) are sponsoring the legislation.
Currently countries rich in natural resources and rampant with corruption can hide the financial benefits they gain from energy companies and use the revenue to further finance corruption rather than invest in their people.
The Energy Security Through Transparency (ESTT) Act:
- Requires companies listed on U.S. stock exchanges to disclose in their regular SEC filings their extractive payments to foreign governments for oil, gas and mining;
- Encourages the President to work with members of the G-8, G-20, the Organization for Economic Cooperation and Development and the Asia-Pacific Economic Cooperation to promote similar disclosure through their exchanges and jurisdictions;
- Expresses the Sense of Congress that the Administration should undertake to become an ‘implementing country’ of the Extractive Industry Transparency Initiative (we are currently a ‘supporting’ country); and
- Commits the Department of Interior to disclosing extractive payments received for resources derived from federal lands.
The legislation builds on Lugar’s report, the “Petroleum and Poverty Paradox: Assessing U.S. and International Community Efforts to Fight the Resource Curse,” and his ongoing work on energy and transparency (see: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_senate_committee_prints&docid=f:44727.pdf).
“History shows that oil, gas reserves and minerals frequently can be a bane, not a blessing, for poor countries, leading to corruption, wasteful spending, military adventurism, and instability. Too often, oil money intended for a nation’s poor lines the pockets of the rich or is squandered on showcase projects instead of productive investments,” Lugar said. “When financial markets see stable economic growth and political organization in resource rich countries, supplies are more reliable and risk premiums factored into process at the gas pump are diminished. Information is critical to maintaining healthy economies and healthy political systems.”
“Energy is one of most valuable commodities and boosting the transparency of deals between energy companies and foreign countries will help make sure crooked, unstable governments don’t horde windfalls while their citizens suffer from the effects of poverty and corruption,” said Schumer. “The best way to help the people of these nations is to start right here at home, requiring companies registered with the SEC to disclose these energy deals and ensuring that Americans don’t paying higher energy prices to finance corruption in other countries.”