July 14, 2011
Monique Perry Danziger, +1 202 293 0740 ext. 222
Global Financial Integrity Urges SEC to Issue Final Rule on Cardin-Lugar Provision of Dodd Frank Wall Street Reform Act, as Signed into Law July 2010
WASHINGTON, DC – One year out from passage of the Dodd-Frank Wall Street Reform Act and three months after it was supposed to come into effect, a key anti-corruption and transparency measure—the Cardin-Lugar provision (Section 1504)—is still sitting on the Securities and Exchange Commission’s (SEC) drafting board. The provision to require oil, gas, and mineral companies to disclose payments made to foreign governments is considered an historic move towards shedding light on the operations of a multi-billion dollar industry.
“Cardin-Lugar requires all U.S. and foreign oil, gas and mining companies, which must report to the SEC, to publicly report how much they pay governments for the extraction of their oil, gas and minerals,” said Global Financial Integrity Legal Counsel and Director of Government Affairs Heather Lowe. “This is expected to impact approximately 90 percent of internationally operating oil companies and help combat everything from undisclosed investor risk to tax evasion to corruption. It is a game changer, put simply, for anti-corruption and good governance efforts worldwide.”
“Requiring these companies to report on payments made will benefit investors,” noted Ms. Lowe. “Being able to determine if a company is engaging in best business practices and having a clearer picture of their risk profile enables savvy, informed investing choices.”
In order for Cardin-Lugar to go into effect, the SEC has to issue implementing rules, but they have not yet done so. The statutory deadline for issuing a formal rule passed in mid-April, which has left companies and Cardin-Lugar proponents with a great deal of uncertainty as to when the law will become effective. This same week, Senator Carl Levin introduced the Stop Tax Haven Abuse Act, with a novel provision that would require all SEC-registered corporations to report their employees, sales, purchases, and financing arrangements on a country-by-country basis on their annual report.
“The SEC needs to issue rules for Cardin-Lugar and get the ball rolling,” said Ms. Lowe. “Secrecy and lack of accountability is bad business. Data about the payments made to foreign governments by oil, gas, and mineral companies are key pieces of information for investors, anti-corruption advocates and US tax collectors. Congress has required that this information be made publicly available, and the SEC needs to get the rules in place in time for companies to prepare for the 2012 fiscal year.”
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Global Financial Integrity (GFI) is a Washington, DC-based research and advocacy organization which promotes transparency in the international financial system.
For additional information please visit www.gfip.org.