Today, Congresswoman Maxine Waters (D-CA), Ranking Member of the Committee on Financial Services, spoke strongly against H.J. Res. 41, a Congressional Review Act resolution designed to roll back important anti-corruption rules.
H.J. Res. 41 would repeal Section 1504 of Dodd-Frank, which requires oil, gas, and mining companies to publicly disclose payments made to foreign governments for access to their natural resources. This disclosure helps fight corruption in the extractive industries sector, provides investors with crucial information on their investments, and enables citizens to demand greater accountability from their governments for spending that serves the public interest.
Waters made the following comments on the House Floor:
Mr. Speaker, H.J. Res. 41 would roll back the SEC’s rule that implemented an important Congressional mandate in Dodd-Frank requiring oil, gas, and mining companies to publicly disclose payments made to foreign governments for access to their natural resources.
That rule helps fight corruption in the extractive industries sector, provides investors with crucial information on their investments, and enables citizens to demand greater accountability from their governments for spending that serves the public interest. It also helps to diminish the political instability in resource-rich countries, which is not only a threat to investment, but also to our own national security.
Specifically, the disclosure rule enables shareholders to make better-informed assessments of opportunity costs, threats to corporate reputation, and the long-term prospects of the companies in which they invest.
In addition, opening the extractive industries to greater public scrutiny is key to increasing civil society participation in resource-rich countries, which are often underdeveloped countries that are politically unstable, rife with corruption, with a history of civil conflict fueled, in part, by natural resources.
Moreover, the SEC’s rule is a reasonable disclosure and places no limits or restrictions on who companies can pay money to, how much, or what for. After five years of robust debate and input, the final rule accommodated a number of industry concerns, providing companies with a generous four-year phase-in period and a case-by-case exemption process for companies that face implementation challenges. The SEC also allowed companies to comply with the disclosure by using a report prepared for other substantially similar disclosure regimes, which include regimes in the European Union and Canada.
Nevertheless, Republicans continue to claim that the SEC’s rule is harmful and puts American companies at a competitive disadvantage to their foreign competitors.
Well, Mr. Speaker, they are entitled to their own set of opinions, but they are not entitled to their own set of facts.
The truth is that U.S. companies are not the only ones required to make these disclosures. Many foreign companies must report under the U.S. rules, including a number of state-owned oil companies such as China’s Petrochina and Sinopec and Brazil’s Petrobras.
Also, after the SEC issued its initial rule in 2012, the rest of the world followed our lead, establishing a global standard for the public disclosure of extractive payments companies make to governments.
A wave of transparency laws have been adopted in foreign markets that mirror the U.S. law. This includes legislation in the European Union (EU), Norway, and Canada, which are all now in force. These laws cover the vast majority of oil, gas and mining companies that compete with U.S. firms.
Now, leading global oil companies like BP, Shell, and Total, as well as Russia’s state-owned companies, Gazprom, Rosneft, and Lukoil, are entering their second year of reporting under EU rules without any negative impact.
So contrary to Republican claims, U.S. and foreign companies already compete on a more level playing field here and abroad. Therefore, rolling back the SEC’s disclosure rule would directly undermine the interests of extractive companies in having a level playing field.
Worse, once the rule is nullified by this resolution, the SEC would not be able to put another rule in place that is “substantially similar.” This would create different reporting regimes, directly contravening what companies have requested from the SEC.
And, the SEC final rule accommodated industry concerns by including a generous phase-in period. US-listed companies are not required to report until 2019. The rule also provides for case-by-case exemptions if covered companies face any implementation issues.
Therefore, the Rule does not put U.S. companies at a competitive disadvantage, nor does it impose an unreasonable compliance burden.
I would also point out to my Republican colleagues the importance of the SEC’s disclosure rule in protecting U.S. national security and energy security interests.
Specifically, it helps protect U.S. national security interests by helping prevent the corruption, secrecy, and government abuse that has catalyzed conflict, instability, and violent extremist movements in Africa, the Middle East and beyond.
As ISIS demonstrated, non-state actors can benefit from trading natural resources in order to finance their operations; project-level disclosures in the rule will make hiding imports from non-state actors more difficult, thereby limiting their ability finance themselves with natural resource revenues.
Corruption and mismanagement of oil revenues destabilizes regions and leads to conflict. And, resource-rich countries like Venezuela, Iraq, and Angola are considered to be among the top 10 countries perceived to be most corrupt according to Transparency International.
In addition, transparency of Russian companies and its extractive industry is critical. The SEC’s rule would create transparency of Exxon and other company payments to the Russian government. Gazprom, Rosneft and Lukoil are already disclosing under the UK rules, and BP has already reported payments to the Russian government. The SEC’s disclosure rule will make a crucial contribution, as Russian citizens seek to follow the money received by their government.
A vote to roll back the SEC’s resource extraction disclosures would be a vote to abandon U.S. leadership in the fight against global corruption. I strongly urge my colleagues to oppose H.J. Res. 41.