Senators Want SEC To Explain Delay On Anti-Corruption Rule
WASHINGTON -- The bipartisan Senate sponsors of an anti-corruption measure are demanding to know why the Securities and Exchange Commission has unilaterally delayed its enactment.
The SEC had a Friday deadline to finalize rules requiring companies listed on U.S. stock exchanges to disclose how much they pay foreign governments to acquire drilling and mining rights in their countries, but it was announced that the deadline had been postponed.
Championed by Sens. Richard Lugar (R-Ind.) and Ben Cardin (D-Md.), the measure was included in July's Dodd-Frank Wall Street Reform and Consumer Protection Act, and is intended to make it more difficult for foreign leaders to hide and pocket the funds that energy and mining companies pay them.
Despite a clear statutory deadline of April 15, however, when the commission most recently updated is calendar for Dodd-Frank rulemakings, the final rulemaking for the disclosure measure had slipped until sometime between August and December.
There was no congressional notification. On Friday, Lugar and Cardin wrote to SEC Chairman Mary L. Schapiro asking her to explain what was going on.
"While we commend you and your staff on your ambitious undertaking in this lengthy rulemaking process, we are concerned to find out that the final rule may not be issued until late 2011, perhaps even December. The law clearly states that final rules must be issued within 270 days from final passage," the senators wrote.
"Please let us know the cause of the delay, as well as greater detail on when we should expect to see the final rule issuance."
The measure is fiercely opposed by oil and mining interests, who prefer the current process that governs disclosure -- which happens to be voluntary.
An SEC spokesman declined to comment on the letter on Friday. In a January statement extending the comment period on the proposed rule, the commission explained that its nature "differs from the disclosure traditionally required by the Exchange Act" and therefore called for particularly extensive public input.
Dozens of Dodd-Frank related rulemakings have considerably increased the SEC's regular workload. The commission also delayed two other final rules due on April 15: One requiring companies to disclose their use of "conflict minerals" from the Democratic Republic of the Congo or an adjoining country, and another requiring that mining companies make public their safety and health standards.
The disclosure measure's inclusion in the Dodd-Frank bill spurred other countries to get to work on similar rules regarding payments for drilling and mining rights. Those efforts, the senators wrote on Friday, are one reason for expediency.
"[S]everal of our global partners, particularly in the European Union, are eager to move forward with a similar disclosure law," they wrote. "Yet, to be as collaborative as possible, they are waiting for the final rule issuance in the U.S., recognizing that many multinational companies are listed in several markets around the world, warranting similar rules for all markets."
And then there's the press of current events.
"As we have seen recently with the events in the Middle East, the transparency and corruption that this legislation sought to address are necessary to the stability of economies -- a major impetus for our drafting the language," the senators wrote. "Therefore, we feel the timely implementation of this rule is crucial."
Dan Froomkin is senior Washington correspondent for the Huffington Post. You can send him an e-mail, bookmark his page; subscribe to his RSS feed, follow him on Twitter, friend him on Facebook, and/or become a fan and get e-mail alerts when he writes.