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Page added on February 9, 2017
Oil Companies, Corrupt Governments to Benefit as Congress Guts Transparency Rule
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.
The American Petroleum Institute (API) strongly supported overturning the SEC transparency rule via the Congressional Review Act, issuing a fact sheet on it to Congress.
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.
Why Transparency?
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.
15 Comments on "Oil Companies, Corrupt Governments to Benefit as Congress Guts Transparency Rule"
Dredd on Thu, 9th Feb 2017 4:17 pm
They have come out of the closet to reveal that they don’t want to reveal any more about themselves.
They influence ‘science’ too (On Thermal Expansion & Thermal Contraction – 12).
dave thompson on Thu, 9th Feb 2017 4:33 pm
Just another fine example of the rich and powerful getting what they want.
Anonymous on Thu, 9th Feb 2017 4:49 pm
I like desmog, but uS oil giants stilled ruled the roost in washingdum under Brand Obomber(tm), every bit as much as they do now under Brand Trump(tm). Any ‘reg’s the obomber regime passed are like most all laws the uS house of corporate representation passes. Either drafted by corporations themselves, or toothless. Take your pick. If trump repeals some toothless regs that no one down there ever took seriously to begin with, I fail to see how that matters much in the end.
The idea that some promote that the uS has somehow turned a corner vis-a-vis the oil cartels influence in washingdum, is barking up the wrong tree.
Plantagenet on Thu, 9th Feb 2017 5:13 pm
This article is BS. The Congressional Review Act is not obscure—its an important act because it allows Congress to repeal ALL the regulations put in place during the last six months of the prior administration by passing once bill. This SEC rule is just one of the thousands of unnecessary regulations rushed in during the last six months of the Obama administration to be struck down using this act.
So why strike it down? The Obama starting writing new regulations like crazy after Hillary lost. These were not well thought out, otherwise they would’ve been put in place during year 1 or year 2 or year 3 or year 4 or year 5 or year 6 or year 7 of the Obama administration. The fact the Obama people waited until the end of 2016 shows this was a crappy unnecessary regulation.
CHEERS!
Ghung on Fri, 10th Feb 2017 11:58 am
So much for Trump’s de-globalisation promises, eh?
Plant said; “…thousands of unnecessary regulations rushed in during the last six months of the Obama administration…”
Got a list of those “thousands of unnecessary regulations”, Plant, or just making shit up again?
Davy on Fri, 10th Feb 2017 12:22 pm
I don’t know about you but this looks like de-globalization to me. Yeap, a good old fashion economic disaster would do the trick better than any bullshit deregulations. If someone like Fitch is worried then that is a sign Trump is doing right by me:
“Fitch Warns Trump Administration Could Lead To Global Economic Disaster”
http://tinyurl.com/hphkpon
“In a self-explanatory report titled “The Trump Administration Poses Risks to Global Sovereigns”, Fitch is sounding the alarm on the potentially negative consequences of Trump’s economic policies, even though none have been officially disclosed yet. In the report Fitch warns that “the Trump Administration represents a risk to international economic conditions and global sovereign credit fundamentals” and cautions that because “US policy predictability has diminished, with established international communication channels and relationship norms being set aside”, this raises the “prospect of sudden, unanticipated changes in US policies with potential global implications.”
Anonymous on Fri, 10th Feb 2017 2:34 pm
“Got a list of those “thousands of unnecessary regulations”, Plant, or just making shit up again?”
What do you think? Not that that puppet obomber deservers any defending, but plantatard routinely claims obomber promised X or, obomber said or did Y. Everytime I ask for source from plantatard, the silence is deafening. Id like to see a detailed list of those 1000s’ of regs too. Plantatard must have it somewhere.
sidzepp on Fri, 10th Feb 2017 2:54 pm
Just responded to a simple survey from my freshman Congressman asking if the EPA should be abolished. Simple yes or no. I responded with a two page letter hoping that it might have some effect, but the previous letters have not been responded to.
We have given the powers that be a carte blanche to do whatever they damn well please and in the last three weeks they have shown that they will do whatever they want and no one is going to stop them.
I used to believe in our Republic, but that has gone down the drain. I will enjoy my children and watch their optimism as they move forward to tackle the problems of the world and enjoy the grand children as they mature into an ever chaotic world that is spinning out of control.
makati1 on Fri, 10th Feb 2017 4:40 pm
sidzepp, The eagle is eating it’s own leg to stay alive. Niceties like large pristine parklands, clean water and air are luxuries it can no loner afford if it wants to try to dominate the world and remain the global reserve currency. (Neither are going to last much longer.)
Desperation is going to destroy what is left of America’s people and resources. Give Trump 8 years and America will be openly, a 3rd world, banana republic from top to bottom. It is already becoming that in the eyes of the rest of the world. Only brainwashed Americans cannot see it happening.
Midnight Oil on Sat, 11th Feb 2017 4:10 am
Predatory Capitalism will make America GREAT once again,…(just for a chosen few…we didn’t here Trumps full message..sSO sorry)
makati1 on Sat, 11th Feb 2017 5:01 am
Midnight, the new problem is: the predatory capitalism now only has the American citizen them selves to prey on. The rest of the world is becoming wise to the U$ and is working to take it down, financially. The taxes are going up as their income is dropping. The government teats are drying up and being pulled. The squeeze is on.
Davy on Sat, 11th Feb 2017 7:46 am
Nothing can compare to the predatory capitalism of China now. Think of how many poor Chinese have been bilked of their life savings in their stock market. What about all those workers who aren’t paid because the owners skip town and move to Vancouver leaving them unpaid. China is one big friggen predatory beast consuming the earth and you whacks points your bony fingers at the US as if they are alone.
Midnight Oil on Sat, 11th Feb 2017 7:59 am
Boy, Davy…”there is plenty of blame to go around”…Oh, I heard that from President Obama explaining why there was no prosecution of Banking/Financial after the Financial crisis of 2008!!!
Watch the Big Short flick…like we aren’t aware?
China’s billionaires could do what they did without the backing of the West’s financial Institutions… Just as before…Aldolf H couldn’t rearm Germany without their backing either…some things never change…NEXT!
Davy on Sat, 11th Feb 2017 8:24 am
WTF, MO, is this about an anti-American agenda or the truth. What do you think is discussed here by our resident self-hating American anti-Americans and nonresident Anglosphere anti-Americans? It is one big fat agenda that is solely concern with what is wrong with the US. I make an effort to get you guys to look in the mirror or consider the real nastiness that is now in Asia where now 4.5BIL people are taking up American standards of living. We can also look at the hypocrites in Europe that have 500MIL plus living an almost American lifestyle. The dirty Europeans started this mess and should be lynched for it. We beat the dead horse here with the US. I get so sick of the constant shit that I puke it back in your face. That’s what I am doing not defending what can’t be defended. If you will notice I never attack people that are objective and balance. This site is so far off into the gutter it is pathetic and it is because we have several regulars here with an anti-American bend that are extremist. Are you an extremist MO? I am one because I fight asshole and extremist on a daily basis.
Midnight Oil on Sun, 12th Feb 2017 4:07 am
Dave, gives it a rest kiddo, you need a vacation or need to get laid…probably both.