On February 3, the Republican-led Senate used an obscure procedural tool to end a bipartisan provision meant to fight corruption and overseas oil bribery, a rule opposed by Rex Tillerson as head of ExxonMobil...
The Securities and Exchange Commission’s (SEC) transparency rule, part of the 2010 Dodd-Frank financial reform bill, was created to reduce corruption by requiring drilling and mining companies to disclose royalties and other payments made to governments in exchange for oil, gas, and mining extractions. Critics say overturning the rule could threaten national security.
Written by Sen. Ben Cardin (D-MD) and Sen. Richard Lugar (R-IN), the transparency rule mandated that extractive companies listed on the U.S. Stock Exchange — including Exxon, Chevron, and several Chinese oil conglomerates — publish details of the hundreds of billions of dollars paid for the rights to a nation’s natural resources.
The transparency rule was implemented in 2016 with broad support from community leaders throughout the world. It took years to finalize due to lawsuits by the petroleum industry and the U.S. Chamber of Commerce. The industry argued that disclosures would hurt publicly traded companies competing with foreign or state-run companies and that reporting would be burdensome.
Voting strictly along party lines, the Senate decision to repeal the transparency rule followed a similar vote in the House and was accomplished with a little-used parliamentary provision called the Congressional Review Act (CRA). The CRA, until this month used only once in two decades, allows the majority party to push fast repeal of regulations without writing a new bill.
This came the same week Rex Tillerson, a fierce opponent of the rule while CEO of ExxonMobil, was confirmed as Secretary of State and the same week the U.S. Department of Treasury eased sanctions against the Russian intelligence agency FSB.
The transparency rule was a step to increase accountability in countries with a history of government corruption, according to its co-author Sen. Cardin.
In many cases a huge gulf exists between what companies say they paid a government and what the government tells its citizens it received. Human rights groups like Oxfam International backed the Cardin-Lugar rule, as it’s also known, saying it was a tool for fighting poverty by preventing leaders of corrupt governments line their pockets with money from large oil companies.
Congress’ move to gut the Cardin-Lugar rule sets the U.S. apart from a global trend toward greater accountability in how revenues from resource extractions are managed. The UK, Canada, Norway, and all 27 members of the European Union have laws requiring their oil, gas, and mining companies to disclose their payments to governments, and the UK and Canadian laws were modeled on the Cardin-Lugar provision.
The fact that so many oil companies around the world are disclosing payments invalidates the claim that the Cardin-Luger rule puts companies at a competitive disadvantage, Jana Morgan, co-founder and director of Publish What You Pay Coalition, told DeSmog.
“The oil industry has also claimed that host country laws exist that would prevent disclosure, and that would force U.S. firms to stop doing business there,” Morgan said. “The oil industry has yet to provide credible evidence to support that assertion either.”
Morgan says that it speaks poorly about the U.S. when thirty countries around the world have implemented similar regulations.
Morgan and other supporters of the transparency rule say the CRA is a blunt tool that also prohibits government bodies like the SEC from creating similar rules in the future. “Undoing a regulation that took six years to create with no debate is an insult to our democracy,” Morgan said.
DeSmog contacted Exxon, API, and the U.S. Chamber of Commerce, but none provided comments for this story.
At Exxon Tillerson Fought Transparency Rule
In his Senate confirmation hearings, Rex Tillerson was never asked directly whether he would support or oppose repealing the Cardin-Lugar transparency rule as Secretary of State. But as Exxon-Mobil CEO, he did everything in his power to kill the rule.
In 2010, Tillerson flew to D.C. to visit to the amendment’s Republican co-author, then-Sen. Richard Lugar.
Jay Branegan, who in 2010 was a staffer on the Senate Foreign Relations Committee, which developed the legislation, told DeSmog that a colleague, one of Lugar’s top aides, characterized the meeting with Tillerson as a lobbying effort to scuttle transparency.
“They talked for about half an hour, and among other things, Tillerson said the rule would hurt Exxon’s relations with Russia,” Branegan told DeSmog. Branegan added that neither Lugar nor his aide shared the reasons why Tillerson thought it would hurt relations.
Branegan, now a senior fellow at the Lugar Center, said that to his knowledge, Tillerson was the only oil company executive to visit Lugar regarding the transparency rule, and he didn’t know if other companies had visited other senators.
Foreign Corruption Could Affect U.S. National Security
In addition to depriving some of the world’s poorest people of natural resource wealth that is rightfully theirs, oil money that is pocketed by kleptocratic leaders can breed extremist movements in these countries, according to some experts.
Lt. Col. Jodi Vittori, an adjunct professor at Georgetown University and author of the book Terrorist Financing and Resourcing, wrote a blog post denouncing the repeal of the transparency rule, saying that it puts troops serving overseas in greater danger.
“Many corrupt governments outsource their security, using the money from the oil, gas, and mining projects to pay off a variety of militias, warlords, and private security companies. These militias and warlords use some of the money to pay and equip their private armed forces. And they do so right where American troops are stationed today, placing these troops in harm’s way.”
The anti-corruption organization Global Witness published a fact sheet on how lack of transparency can increase the risk of crime and terrorism on a regional and global scale.
Zorka Milin, senior legal advisor for Global Witness, told DeSmog that the Exxon-Russia connection is a big factor in the overturning of the Cardin-Lugar rule.
“Exxon has to pay for the right to extract oil in Russia,” Milin said. “If it is publicly known how much Russia is being paid, the Russian public would likely be upset.”
Exxon has been pushing to drill in the Russian Arctic for years, but couldn’t do so with the sanctions imposed by the U.S. Now with a Russia-friendly president and Secretary of State, it is widely speculated that Russia will soon have that opportunity.
Milin also speculated that Exxon could be trying to prevent disclosure of taxes, in a break from many companies that do so voluntarily through the Extractive Industries Transparency Initiative.
What’s most infuriating to Milin is that most Republican members of Congress appear to have no idea of what they’ve just voted for.
“They’re doing the bidding of big oil without understanding the corruption this will lead to. Because of the process [through the CRA] there was no debate,” said Milin.
Milin added that if President Trump really cared about the threat of terrorism as he’s said, he would not sign this legislation.
However, Congressional watchers expect him to sign the rollback of the transparency rule and two other Obama-era environmental regulations into law this week.
By Larry Buhl
Tuesday, February 7, 2017 - 16:44
original story HERE
Donate to help end Global Warming
To help do something about the climate change and global warming emergency, click here.
Sign up for our free Global Warming Blog by clicking here. (In your email, you will receive critical news, research, and the warning signs for the next global warming disaster.)
To share this blog post: Go to the Share button to the left below.