August 21, 2012
Clark Gascoigne, +1 202 293 0740 ext. 222
Dodd-Frank Sec. 1504 a Historic Measure for Stability, Accountability, Transparency
Vote will Enable Provision to Take Effect
WASHINGTON, DC – More than two years after the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the U.S. Securities and Exchange Commission (SEC) is scheduled to vote tomorrow morning, August 22, 2012, on implementing regulations for Section 1504 of the bill, which requires companies operating in the oil, gas, and mining sectors to publicly report on the payments they make to foreign governments on a project-by-project basis. The release of the regulations will enable Section 1504 to take effect, and the effected companies will shortly need to begin reporting as required by law.
Section 1504, also known as the Cardin-Lugar provision, has garnered praise from civil society groups around the world as an historic measure to bring increased stability, accountability, and transparency to a multi-billion dollar, global industry.
“Cardin-Lugar will help combat everything from undisclosed investor risk to tax evasion to corruption,” said Heather Lowe, Legal Counsel and Director of Government Affairs at Global Financial Integrity (GFI), a Washington DC-based research and advocacy organization that supports the measures. “It is a game changer, put simply, for good corporate governance efforts worldwide as well as for governance efforts in the countries in which extractive companies operate.”
GFI estimates that developing countries lose roughly $1 trillion per year to crime, corruption and tax evasion, much of which is facilitated by opacity in the global financial system. The organization explained that the transparency measures included in Sec. 1504 could help significantly curtail these illicit outflows.
For example, Libya—the tenth biggest oil exporter worldwide—lost $43.32 billion in illicit outflows from 2000-2009, according to GFI’s research. Over the weekend, Najwa al-Beshti, the former head of contracts at Libya’s state-owned oil company, wrote in The New York Times that she witnessed “systemic underpricing of oil and the discounting of prices for select foreign companies.” Ms. al-Beshti goes on to argue that Section 1504 “can help prevent such corruption from happening again,” thereby helping to “prevent future tyrants from emerging.”
“Implementation of strong Cardin-Lugar regulations will help curtail corruption, money laundering, and corporate tax evasion in Libya, Angola, Nigeria and elsewhere,” added Lowe. “It’s a significant advancement for the developing world and for investors.”
Global Financial Integrity is a member of the Publish What You Pay Coalition, which is sponsoring a conference call for journalists to discuss the final rules at 10am on Thursday, August 23, 2012—the morning after the rules are to be released. The panel—made up of experts from Publish What You Pay US, Oxfam America, ONE, Revenue Watch Institute, and Global Witness—will provide an in-depth analysis of the rules, explaining specific rule requirements and their implications for investors, civil society groups, citizens in resource-rich countries and the United States, as well as forthcoming European Union rules. Accredited journalists interested in calling into the conference call briefing should contact Clark Gascoigne at email@example.com or +1 202-293-0740 ext. 222.
+1 202-293-0740 ext.222
Notes to Editors:
- Click here to read GFI Director Raymond Baker and Global Witness’s Corinna Gilfillan’s CNN op-ed, “More reform for oil industry needed,” August 7, 2012.
- Click here to read Najwa al-Beshti’s New York Times Op-Ed, “A Libyan’s Plea to the S.E.C.,” from August 18, 2012.
- Click here to see a slide-show on the costs of corruption for the top ten oil exporting countries in the world compiled by GFI for the Huffington Post.
- GFI is a member of the Publish What You Pay U.S. (PWYP) coalition. PWYP is part of a global civil society coalition that helps citizens of resource-rich developing countries hold their governments accountable for the management of revenues from the oil, gas and mining industries. Natural resource revenues are an important source of income for governments of over 50 developing countries. When properly managed these revenues should serve as a basis for poverty reduction, economic growth and development rather than exacerbating corruption, conflict and social divisiveness.
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.gfintegrity.org.