The Financial Times back country-by-country reporting – and says oil companies should do so too

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I’ll never be objective about country-by-country reporting, and I admit it. But none the less I was very pleased to see the FT saying in an editorial this morning (and as creator of the concept I’m going to quote liberally):

In the past two years, the US Congress and the European Commission have acted boldly to clear up the murkiness in which natural resource companies’ payments to governments around the world are clouded. Lobbying efforts aimed at overturning this progress on both sides of the Atlantic should not be allowed to succeed.

In the US, the American Petroleum Institute, the lobby group for the oil industry, has mounted a rearguard action to engage regulators in a battle it lost against legislators in 2010.

In Europe, too, rule-making procedures give special interests second chances. Last year the Commission proposed similar reporting requirements, now going through the Council and the parliament. Denmark is laudably eager to get the law passed before its Council presidency ends in June. It should not be weakened along the way.

The case for public reporting has long been clear. Fuel and mineral resources hold back the development of countries that have them as often as they promote it. The concentrated wealth they entail is a breeding ground for corruption and waste. Publicity around what governments are paid for national wealth extracted from the ground is not sufficient for managing it better, or for reducing the instability of resource-rich states that also threatens the well-being of importers. But it is necessary.

Many extractive companies are happy to live with this, but the most recalcitrant demand changes. On both sides of the Atlantic the fight is on to reshape the reporting rules so that whatever is published is less informative. In particular, it is suggested that the laws’ call for reporting project-by-project details be watered down with overbroad definitions of “project”. There is no justification for this: most payments to states are calculated on a project basis anyway, so publishing such detail is no great burden.

What the rejectionist companies most seem to fear is an inability to compete against non-western companies with fewer scruples. If realistic, it would be a concern. But that case has not been proven: an ability to bribe is not the only competitive edge in the industry. Nor is it one either Europe or the US permits. Keeping it hard to expose would not make it more legal.

The position the FT is taking seems clear: this disclosure is the minimum needed to tackle corruption and waste, but not sufficient to eliminate it. To argue against that transparency though is unacceptable: it is to suggest the opacity that permits bribery and corruption is key to competition.
No it isn’t. That will always be built on the foundation of open markets. That’s why what we actually need is not just minimum disclosure for the extractive industries by full country-by-country reporting. It’s time will come; of that I am sure. We are on an inexorable march towards it.