Disclosure is here to stay in the US

Implementation of transparency rules by SEC likely to go ahead whether or not Secretary of State Tillerson approves of them

To disclose or not to disclose? That is the question often posed by corporate players in extractive industries when determining whether to tell host country taxpayers just how much has been paid over to their governments to conclude big-ticket transactions.

For the citizens of state-recipients keen to monitor how Big Oil deals with their representatives, it’s a no-brainer — of course they want to know, and if offered a choice would seek to extend civil society supervision throughout the life cycle of schemes delivered in their name.

Certainly, the judicious application of commissions, royalties, dividends, bonus payments and billion-dollar revenue streams can have a transformative impact on livelihoods and environmental cohesion — as much in the world’s poorer neighbourhoods as the fracking fields of North Dakota.

The European Union, UK and Norway feature among 30 jurisdictions which already have disclosure requirements on their statute books, most of which have been in effect for at least a year, and the US was meant to follow suit.

Oxfam America led the pack in pushing the Securities & Exchange Commission (SEC) to implement a rule enforcing disclosure within the Dodd-Frank Wall Street Reform & Consumer Protection Act, specifically section 1504 dubbed the Cardin-Lugar provision after two redoubtable US senators.

Activists finally triumphed last summer, five years after the tortuous passage of Dodd-Frank, when the SEC published a rule set to come into force in 2018, lifting the resource curse from oil-rich countries which continued to languish in the poverty their venal politicians had prescribed.

But victory celebrations were short-lived — no-one had counted on former ExxonMobil chief executive Rex Tillerson reincarnating as US President Donald Trump’s Secretary of State, then stepping up to change the template on which reform had been predicated.

Trump moved swiftly this week to void the rule, sending officials back to the drawing board.

Republican Majority Leader Kevin McCarthy cheered on the counter-revolution, arguing that US business would be competitively disadvantaged by Cardin-Lugar — after all, that’s what Tillerson had told the American Petroleum Institute to say for years.

It is hard to see how though. Since the oil fraternity already reports to bourses sporting similar rules, including what’s left of the Seven Sisters (a term coined by ex-Eni boss Enrico Mattei back in the 1950s) with even the Russian and Asian giants constrained by listings on OECD exchanges.

Will the SEC come back next year with a revamped rule, devising a panoply of exemptions and special circumstances to dilute the mandatory reporting requirement? Possibly, but the effect will only be to delay implementation, not rescind it.

Meanwhile, the deal-making continues apace with the consequences of inaction laid bare this week, as Italian prosecutors prepare to indict Eni chief executive Claudio Descalzi and fellow travellers in Shell over graft alleged to have occurred in Nigeria more than a decade ago — before the world changed.

If the Milan court agrees before summer to have these big names stand trial before the end of 2017, the spectacle will serve to focus minds on just how much unravelling we’ve yet to see — and whose score cards might usefully be scratched in pursuit of justice.

Campaigners such as Global Witness turned up the heat this week: “Where a handful of corrupt individuals line their pockets, others must lose out, in this case depriving Nigeria’s people of a sum worth 80% of its 2015 healthcare budget — a spectacular theft allowed to happen because Shell and Eni knew their payments would remain hidden.”

Time, perhaps, for Trump to call off the dogs — after all, there are some real bad hombres still out there.