My friends at Global Witness have issued an important press release this morning, saying:

As the scandal grows around a Nigerian oil deal involving Shell and Italian firm Eni who made a US$1.1 billion payment that ended up in the accounts of a company controlled by a corrupt former Nigerian Oil Minister, the Dutch government is coming under increasing pressure to stop supporting opt-outs in new EU legislation that would enable companies such as Shell to avoid having to publicly report these payments in certain circumstances.

While the Anglo-Dutch oil multinational Shell lies at the heart of the on-going corruption scandal, it appears that The Hague is out-of-step with the global movement towards transparency. “The Netherlands is a country we look to for high standards of global governance. Now, it has a historic opportunity to help create new EU law, aimed at preventing corruption. But if the Dutch government continues to support exemptions, it will show itself to be on the wrong side of history,” said Simon Taylor, director of Global Witness. “Anyone who looks at the payments made by Shell and Eni in Nigeria can clearly see why we need the strongest possible legislation with no exemptions.”

Support for opt-outs by the Netherlands in EU negotiations could prevent agreement on the EU Transparency Directive currently being discussed by member states. EU Parliamentarians insist that exemptions will destroy the efficacy of the proposed law. It could also prevent the creation of a new global transparency and accountability standard for the oil, gas and mining industry. When US regulators recently outlined rules for US companies they rejected exemptions outright.

This is worrying. We know the Netherlands is a major tax haven; now it seems to want to hide those who may be involved in corrupt practices. And it is doing this in open cooperation with large companies. As Global Witness also say:

Meanwhile, Shell has tried to water down the proposed EU legislation, suggesting that such transparency may be against the law in certain countries. The idea that company executives could be held criminally liable for disclosing revenue payments has also been circulated amongst Dutch officials. As a consequence, much debate in the EU has revolved around whether exemptions should be made in certain circumstances, yet no credible evidence has been produced to support these arguments. Global Witness understands that the Dutch government are at the very least considering support for exemptions to the proposed rules, such as through a “grandfathering clause,” where companies would be exempt from disclosing payments, should it be demonstrated that the national law of a country prohibits disclosure.

As Global Witness conclude:

If the EU really wants to create a credible transparency law, bringing in exemptions to disclosure is not acceptable. The EU should not create bad law by permitting exemptions, whether or not on the basis of a “grandfather clause,” which in effect provide a veto, or “Dictator's Charter”, over EU law. Exemptions would also contradict the European Commission's intention to achieve a level playing field between EU companies and those listed in the US, that will have to comply with new US legislation, Provision 1504 of the Dodd-Frank Act — which provides for no exemptions to disclosure. The rules for Provision 1504 were agreed following a nearly two-year consultation process by the US Securities & Exchange Commission (SEC), which concluded that there was no evidence to support company claims of laws prohibiting disclosure — and therefore no basis to grant exemptions to the requirement of disclosure for any company operating in any country.

Taylor added, “This opportunity to create a new global standard of transparency and accountability for the extractives sector is now at risk and depends on the choices to be made in The Hague. The Dutch government needs to rethink its support for exemptions. Otherwise, it runs the risk of being seen to be fronting for Shell, at the time when questions remain unanswered about Shell's payments for OPL-245 — the effect of which was to monetize an asset expropriated by Etete when he was Oil Minister under the notorious Nigerian dictator, General Sani Abacha. Instead, the Netherlands should live up to its reputation by supporting a strong, exemption-free EU transparency law that is consistent with the US law. The test for the law will be whether it covers the kind of payment that Shell and Eni made for OPL-245.”

The Netherlands has a left wing government at present. It is time for it to act in accordance with its principles.