Fiscal Transparency and Good Governance: Ensuring that communities bearing the burden receive the profits – Salome Boyd

Salome BoydPsalm 72:3-4 May the mountains bring prosperity to the people, the hills the fruit of righteousness. May he defend the afflicted among the people and save the children of the needy; may he crush the oppressor.

Luke 12:2-3 There is nothing concealed that will not be disclosed, or hidden that will not be made known. What you have said in the dark will be heard in the daylight, and what you have whispered in the ear in the inner rooms will be proclaimed from the roofs.

Multinational corporations extracting oil, minerals, and timber around the globe, and the trade agreements under which they operate, claim that their economic activities will bring socio-economic development to host countries and communities. However, empirical evidence indicates otherwise. The paradox of the resource-curse – that the communities that bear the burden of resource development and extraction rarely benefit from the economic gains of said extraction – exemplifies this injustice. Corruption and insufficient protective measures conspire to put host communities at risk. Extracting operations often result in a decrease in the livability of these areas.

For example, it is remarkable that a resource-rich country such as Equatorial Guinea, which has a billion dollar oil industry and one of the highest per capita incomes in the world, still has 77 percent of its population living below the poverty line and ranked 144th on the Human Development Index in 2013. In fact, some of the world’s most resource rich countries are ranked lowest on this Index.

Ideally, mining and other extraction operations should stimulate the local economy with higher employment and economic returns, while higher tax revenues should lead to better infrastructure and social services. While a wealth in natural resources has the potential to increase quality of life for host communities, in reality the taxes and royalties paid by the company to the host government are not passing into the local economies of the surrounding communities. Profits are often pocketed by corrupt officials or redistributed elsewhere.

What does our faith call us to do?

As stewards inheriting this world, God calls on us to care for our brothers and sisters, not only in our immediate surroundings, but also across the globe. As a church, we must be more than charitable, but we must also use our voice to tackle the root causes of injustice, testify with the marginalized, and strengthen the powerless (Isaiah 40:29), as we seek to bring righteousness and peace to this world. God expects us not only to be just and righteous, but for those with power to do the same to speak out in solidarity with those whose voices are silenced.

In response to this calling, the Presbyterian Church (U.S.A.) helps form structures that empower communities and individuals who often have no voice in the decisions that affect their lives. The 208th General Assembly (1996) of the PC(USA) restated this commitment in Hope for a Global Future, that calls for greater openness in cross-border transactions and encouraged the U.S. government and multinational companies to disclose corrupt practices.

For these reasons, the Presbyterian Church (U.S.A.) joined the Publish What You Pay (PWYP) coalition as the first faith-based organization in 2008 as they campaign for more transparency within the oil and mining industries. Today working with over 800 other anti-corruption, faith-based, and human rights organizations in more than 70 countries, this campaign has seen great successes.

In 2010, PWYP members rejoiced when the U.S. Congress passed Section 1504 of the Dodd-Frank Act into law, which requires oil, gas and mining companies to disclose what they pay to host governments to extract natural resources. The purpose of this law is to empower citizens of resource-rich countries, by providing them with information necessary for holding their governments and extracting companies accountable, and to enable investors to assess accurately risks and make well-informed decisions. This information will also be useful to churches and organizations as they decide what kind of economic activity they wish to support.

However, the campaign has not ended yet. Five years later, after a lawsuit and considerable pressure from various stakeholders, government agencies, extracting companies, investors, and civil society are still waiting to hear from the U.S. Securities and Exchange Commission (SEC) how this law will be implemented.

PWYP members have been gathering evidence for the SEC, highlighting that the objective of this law cannot be achieved unless they release a strong-rule requiring company- and project-specific, public disclosure of these payments without pre-determined exemptions. Only by having project-level disclosure can host communities keep track of how much money their government is receiving from extracting companies, how much of that is being reinvested into their own communities, and whether or not they are receiving the royalties and revenues they are legally owed. This will also allow citizens of these resource-rich countries to compare what companies pay to extract in their country to what is paid in other countries.

What now?

While the U.S. once played a leading role in this demand for transparency, our government is now lagging behind other nations and intergovernmental institutions that have already published and, in some cases, already implemented strong rules for project-level, public disclosure from oil, mining, and logging companies.

While the American Petroleum Institute and the U.S. Chamber of Commerce argue against the need for such disclosure and fear a threat to their market position, it is interesting that the Canadian mining companies were the driving force in requesting their government to implement a law modeling the regulation proposed by the SEC in 2012, which would require project-level, public disclosure. These Canadian companies argued that such disclosure could increase trust amongst community members where they operate.

The European Union also looked to the rule proposed by the SEC in 2012, when designing the EU Transparency and Accounting Directive. In March 2015, the Norwegian oil company Statoil was the first to voluntarily make their yearly financial report available to the public.

At this time, it is important that we continue to put pressure on the U.S. government to stop stalling and publish a strong rule that will empower communities and investors. The U.S. has the opportunity again to play a leading role in this movement for transparency and good governance.

 

Salome Boyd joined the OPW staff in January 2015 as an intern in the PC(USA) Office of Public Witness (OPW), in Washington, DC, after completing studies in Regional Development and Innovation from Van Hall Larenstein University of Applied Sciences in the Netherlands. During her time in the OPW, Salome is focusing on issues of economic justice and is currently working with Publish What You Pay, as they research and push for the Securities and Exchange Commission (SEC) to implement a strong regulation for transparency within extractive industries.

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