Voluntary Initiatives to enhance Transparency in the Extractive Industries

The management of the resource revenues from extractive industries in African countries is often in the hands of only a few élites, a small minority of individuals, who control the property of the state.

 

Transnational corporations competing for access to African resources are often complicit in maintaining the rules established by those élites and help them stay in power. They are unwilling to give information about their revenues and what they pay to whom. If citizens know how much their government receives from the extraction of the country's natural resources, it becomes much easier to monitor how the revenue is spent.

 

The link between the resource curse[1] and transparency, or rather the lack of it, is strong. In virtually every case, with the exception of Norway, countries rich in energy resources demonstrate high levels of corruption and low levels of transparency. There is a clear link between the lack of transparency/accountability and the impact of the resource curse, which is why a series of initiatives have been launched to create greater transparency and avoid the curse.

 

The Revenue Watch Institute

 

The Revenue Watch Institute was originally launched by George Soros' Open Society Institute to monitor resource-rich government revenues and expenditures. It became a fully-fledged independent institution in 2006. The goal of the institute is to guarantee public access to information about public finances in resource-rich countries, increasing transparent and accountable governance at the national level.

 

It founds national watchdog organisations and trains journalists, companies, government agencies and intergovernmental organisations. It also works with the World Bank among others. It funds and produces research and publications, supports advocacy movements, and provides grants and capacity building funds. It funds national NGOs designed to keep track of national revenues and expenditures.

 

On the website of the Revenue Watch Institute (www.revenuewatch.org), there are the studies the institute has carried out, the latest news on relevant events, and a country by country overview of resource-rich countries. Of particular interest is the Revenue Watch Index which measures and compares the information governments disclose about the oil, gas and mining industries. The results for Sub-Saharan Africa can be found here.

 

Publish What You Pay (PWYP)

The Publish What You Pay (PWYP) coalition was founded in 2002. It includes more than 300 non-governmental organisations in over 65 countries, advocating the public disclosure of royalties, bonuses and taxes paid by companies involved in the oil, gas and mining industries. The International Secretariat of AEFJN in Brussels is also a member of PWYP.

 

PWYP promotes the establishment of independent national monitoring bodies comprised of representatives from national parliaments, industry, civil society and international financial institutions such as the IMF and the World Bank. PWYP's nature as an advocacy movement and its focus on corporate spending and revenue differentiate it from the Revenue Watch Institute.

 

One of the successes of PWYP was to convince the World Bank to insist on setting up a Chad-Cameroon Petroleum Oversight Committee before agreeing to fund the Chad-Cameroon pipeline. The committee played a major role in the recording and reporting of progress and problems associated with the project, showing the value of such committees holding governments accountable. Similar activities in other countries increase the accountability of private companies, thereby enhancing corporate accountability.

 

The website of PWYP (www.publishwhatyoupay.org) contains a detailed news archive divided by country as well as an overview of the member organisations from each country with their contact details.

 

Extractive Industries Transparency Initiative (EITI)

 

The Extractive Industries Transparency Initiative (EITI) was founded in 2002 by the then British Prime Minister Tony Blair. EITI constituents include countries, companies, industry associations, intergovernmental organisations and private investors. National membership in the organisation requires a formal declaration of government commitment to key principles, including recognition that resource revenues should benefit all the citizens and a commitment to full and complete transparency.

 

EITI can revoke membership or label a country as non-cooperative if it does not meet certain criteria. These criteria include a regular publication by companies to governments of oil, gas and mining revenues, and the involvement of civil society.

 

Critics of EITI have pointed out that commitments to EITI are often only rhetorical and that some member states have failed to form the required multi-stakeholder committees. In some cases the civil society organisations present in these committees are too weak to participate effectively or are even phantom organisations created by the national government in order to fill the committee with their own men.

 

On the website of EITI (www.eiti.org) the reports of those countries, which submitted them can be found together with a series of guidance documents for civil society organisations.

 

Conclusions

The main limit of the initiatives mentioned above is that they are voluntary, which allows countries and companies which do not want to disclose their revenues simply not to participate. The good news is that international donors like the World Bank are increasingly insisting on transparency and disclosures before granting loans. However, voluntary measures alone are not enough and what is needed is a legal obligation to disclose. In this sense, a major victory was obtained this summer when the Dodd-Frank Act in the United States required multinationals quoted on Wall Street to disclose their payments to foreign governments and purchasers of minerals originating from conflict zones to prove that this did not contribute to the enrichment of armed groups.[2] Unfortunately, there have also been setbacks. In October the Canadian parliament narrowly defeated a bill (the so-called C-300 Bill) which had proposed giving the government authority to investigate complaints against resources companies operating abroad and to withhold public money from offenders.

 

 

 

Thomas Lazzeri