The United States appears to be backing away from a global effort to reduce corruption connected to drilling and mining in typically poor, resource-rich countries, according to groups involved in the process.
Such a move would mark the second time this year the Trump administration has taken action to shield U.S. energy companies from efforts to promote transparency.
Nonprofit groups involved in implementing the voluntary Extractive Industries Transparency Initiative (EITI) say the Department of the Interior is pulling back from the global anti-corruption effort — an accusation the agency flatly denies.
But Interior appears to have halted its work on the project.
Interior officials canceled all of the remaining scheduled meetings with nonprofit and industry groups linked to EITI, saying they cost too much at a time when government agencies are being asked to trim expenses, according to people who were on a call with the department this month. Weekly subcommittee meetings by phone were also canceled.
Last month, congressional Republicans repealed a related U.S. rule that would have required drillers and miners listed on U.S. stock exchanges to disclose payments to foreign governments.
‘Death Knell’ for program
The goal of both EITI and the U.S. rule repealed last month is to make it easier for watchdogs to assure that countries’ natural resource wealth trickles down to regular people, rather than enriching only a small group of elites — a common dynamic in countries that depend on raw material exports, sometimes called the “resource curse.”
The Department of the Interior’s Office of Natural Resources Revenue manages efforts by the United States to comply with EITI reporting standards, which began in 2011.
To be sure, energy companies remain subject to strict reporting and auditing rules imposed by the U.S. government, but the EITI is largely seen as an effort to lead by example and shape the norms of countries.
Democratic Sen. Ben Cardin and former Republican Sen. Richard Lugar, the lawmakers behind the scuttled U.S. rule, said implementing EITI standards at home would have shown that the United States “walk the talk.
“What will those countries, or countries planning to join, say now at this American retreat away from transparency and accountability? Such a retreat is a retreat from our values, which give America its strength and its moral leadership in the world,” they said in a statement Monday.
Department of the Interior press secretary Heather Swift told CNBC that Cardin and Lugar had gotten “bad information.”
“No decision has been made on applying for validation under the EITI standard, and the U.S. is not even scheduled to begin the validation process until April of 2018 (per the EITI International Board schedule published regularly),” the department said in a statement to CNBC.
Interior could very well resume its effort to become EITI compliant, but 15 nonprofit groups involved in the implementation said in a statement that the agency’s move to halt its work signaled the “death knell” for the U.S. effort.
Multiple nonprofit representatives disputed Swift’s assertion in comments to CNBC. They said the Office of Natural Resources Revenue made it clear during a March 9 conference call that it was ending its efforts to comply with EITI.
Interior officials told the groups U.S. energy companies refused to furnish tax documents required under EITI standards. As such, the EITI Board is likely to reject the companies’ reports, the officials said, according to Jana Morgan, U.S. director of Publish What You Pay, a group that promotes transparency and a member of the EITI advisory committee.
Limited participation from US industry
The issue of disclosing tax payments has been a matter of dispute throughout the process, Morgan and others said.
While industry groups and companies have publicly supported EITI, “the issue has been they refuse to provide some of the key information to satisfy some of the most basic information, specifically around tax information here in the United States,” said Zorka Milin, senior legal advisor at Global Witness, another advisory committee member.
Under EITI guidelines, government agencies must consult with industry groups and relevant nonprofits as they implement the standards. By canceling the scheduled meetings, Interior has invalidated the U.S. EITI process, nonprofit groups said.
“The Department of the Interior is like … a college student saying ‘I’m not going to attend classes and I’m not going to take exams, but I’m not dropping out,'” said Jay Branegan, a senior fellow at The Lugar Center who was on the call, after seeing Swift’s comment to CNBC.
Swift told CNBC that Interior is “evaluating how to proceed with additional EITI multistakeholder meetings this year.”
The Office of Natural Resources Revenue thanked members of the advisory committee for participating in the process and for making the public “more aware of the contributions of the extractive industries to the U.S. economy and jobs,” in a letter obtained by CNBC dated March 9, the same day the conference call took place. The letter also provided a summary of the committee’s work.
Nonprofit workers who received the correspondence described the correspondence as a “goodbye letter” and a “farewell.”
The agency said in the letter, “In the long term, extractive industry transparency should not be confined to EITI reporting,” but “rather be recognized” as “an integral part of how Government manages.”
Asked for clarification by CNBC, the Department of the Interior declined to outline whether it meant the agency would drop efforts to comply with EITI in favor of incorporating some EITI standards into its own reporting requirements.
Swift said the nonprofits were either issuing deliberately misleading characterizations of the conference call or had misunderstood the Interior officials.
She further said the EITI Board in Oslo, Norway has pointed to the U.S. EITI website as “an example of the best way to make data publicly available” and approved it “as a compliant reporting system.”
That is only half true, according to the EITI Board.
The EITI Board has indeed “highlighted” the U.S. website, but it has not validated it as compliant, said Sam Bartlett, regional director for EITI who oversees implementation.
The challenge for the U.S. compliance with EITI remains securing industry participation, including getting more companies to report corporate income taxes, he said.
CNBC | Wednesday, 22 March, 2017