Less than a week after Guyana became a member of the Extractive Industries Transparency Initiative (EITI), the United States has withdrawn as an implementing country and this can have significant impacts on the openness of this country’s relationship with ExxonMobil.
The Trump administration announced to EITI board its decision to withdraw via letter last Thursday. In the letter the director of the U.S. Office of Natural Resources Revenue, Gregory J. Gould, wrote that while the U.S. remains committed to fighting corruption “it is clear that domestic implementation of EITI does not fully account for the U.S. legal framework.”
The letter adds that “effective immediately” the United States was withdrawing as an EITI implementing country.
In response EITI Chair, Fredrik Reinfeldt, released a statement saying that the withdrawal was “a disappointing, backwards step.”
“The EITI is making important gains in global efforts to address corruption and illicit financial flows. Our work supports efforts to combat transnational crime and terrorist financing. It’s important that resource-rich countries like the United States lead by example. This decision sends the wrong signal,” Reinfeldt added.
He further explained that the United States has been implementing the EITI since 2014. The USEITI multi-stakeholder group (MSG) has been a valuable platform for dialogue, encouraging state and tribal participation.
Reinfeldt said that under the auspices of the EITI, the US Department of the Interior has made strides in modernising royalty revenue management. The MSG developed a simple procedure to provide greater transparency on corporate income tax payments. Regrettably, he said, the majority of companies declined to report. This was because of an executive order in February this year by US President Donald Trump targeting the Dodd-Frank Wall Street Reform .
Bloomberg reported that the decision to quit the EITI “follows a long lobbying battle waged by the American Petroleum Institute, Exxon Mobil Corp. and Chevron Corp. against a related regulation compelling U.S. energy and mining companies to disclose those payments. President Donald Trump axed that rule earlier this year.” This is Section 1504 of the Dodd-Frank Act.
Reinfeldt referred to this axing in his statement, noting that the recent disapproval of the SEC Rules implementing the Dodd Frank provisions on the disclosure of payments by resource extraction issuers was a set-back, undermining the EITI’s efforts.
He also clarified that while the US is no longer an implementing country, it remains a supporter of the EITI internationally. Supporting governments are committed to promote good governance in the extractive industries across the world. A supporting country can support the EITI through financial, technical and political support at the international level and in implementing countries.
The EITI is an international effort to fight corruption in managing revenues from oil, gas and mineral extraction which at its core requires that governments disclose how much they receive from extractive companies operating in their country. It also requires that these companies disclose how much they pay.
In addition, other key data is published. Govern-ments sign up to implement the EITI Standard and must meet seven requirements.
According to the Huffingtonpost, the repealed SEC rule would have required companies to file annual reports revealing how much they paid in taxes, royalties, licensing fees and other payments. Some firms, including BHP Billiton and Houston-based Kosmos Energy, voluntarily released tax data in recent years. The country’s top three oil companies ― Exxon Mobil Corp., Chevron Corporation and ConocoPhillips Co. ― dod not.
Guyana’s application to become a candidate country was deliberated upon and accepted during the 38th EITI Board Meeting which is being held in Manila, Philippines in October. Entering the EITI was seen as pivotal before oil revenues begin flowing here around 2020.