EU: Extractive Industries to Publicly Disclose Payments to Governments Under New Legislation
New EU legislation, which will come into force later this year, requires all companies listed on EU stock exchanges (and all large unlisted companies that are registered in the EU) to publish contractual payments made to governments in the form of taxes, royalties and other payments, and to also report their earnings in the countries in which they operate. Payments will be reported by country, and by project within that country. The threshold for disclosure of payments for each project is EUR 100,000.
This legislation follows last year's ruling by the US Securities and Exchange Commission which required US listed oil, gas and mining companies to publish payments to governments in a bid to deter corruption. The EU legislation expands upon the US legislation to include the forestry industry.
The impact of this legislation for citizens of countries in which these extractive industries operate is that they will have the requisite information to be able to challenge both companies and governments about the deals that are made, and will know how much money such deals are generating for the public budget.
Jana Mittermaier, Director of the Transparency International EU Office, said that EU leaders must now encourage their counterparts at the G8 and G20 to enact similar legislation so that all citizens can hold governments to account for their use of natural resource revenues and in order for there to be "a level playing field" for extractive companies.
A 2011 Transparency International report on revenue transparency in oil and gas companies revealed poor performance on country-by-country reporting, whereby companies published limited or no data about their operations in a particular country. Under the new legislation, it is expected that companies will be more accountable for both their contribution to the economies of the countries in which they operate, and the profits that are made.