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By Yin Wilczek
Dec. 1 — With a new law that came into force Dec. 1, the U.K. became the first country in the European Union to implement directives requiring companies to report the payments they make to governments to access natural resources worldwide.
The 2014 Reports on Payments to Governments Regulations, signed into law Nov. 28, require large and EU-listed oil, gas and mining companies incorporated in the U.K. to disclose annually the payments they make to governments on a country-by-country and project-by-project basis.
In the wake of the action, nongovernmental organizations are calling on authorities in other countries, including the Securities and Exchange Commission, to speed up their consideration of similar laws.
In a release, the Publish What You Pay coalition called the U.K. regulations a “major step” in the fight against global corruption.
In a similar release, Oxfam America faulted the SEC for delaying “multiple times” its own resource extraction disclosure rule.
An SEC representative declined to comment.
In September, Oxfam filed a lawsuit against the SEC for dragging its heels in implementing Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (29 CCW 290, 9/24/14). Under the provision, the commission must require the resource extractive industries to disclose payments made to governments to further the commercial development of oil, natural gas or minerals.
Last year, the U.S. District Court for the District of Columbia invalidated an SEC rule adopted in 2012, in response to a lawsuit brought by four trade groups, including the American Petroleum Institute (28 CCW 209, 7/10/13).
The SEC's latest regulatory flexibility agenda, published by the Office of Management and Budget's Office of Information and Regulatory Affairs in November, said the commission would issue a notice of proposed rulemaking under Section 1504 by October 2015. According to its spring 2014 regulatory flexibility agenda, the commission originally indicated that it anticipated proposing the rule by March 2015 (29 CCW 172, 6/4/14).
Under the new U.K. law, the first company reports—covering resource extraction payments made in 2015—will be published in 2016.
The British law is the first to implement the accounting portion of the EU's 2013 Accounting and Transparency Directives. All 28 members of the union must transpose the directives into domestic law by 2015. France, Germany and Finland are among other members considering national laws on the disclosure requirements.
According to statistics provided by Oxfam and PWYP, the EU requirements and the SEC's regulations, once finalized, would cover 65 percent of the value of resource extraction companies operating in the major capital markets. Once legislation under consideration in Canada is adopted, the resource extraction laws would cover 84 of the world's 100 largest oil and gas companies, and 58 of the world's 100 largest mining companies, the NGOs said.
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A draft version of the 2014 Reports on Payments to Governments Regulations is available at http://www.legislation.gov.uk/ukdsi/2014/9780111122235/contents.
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