Ten years ago, an unlikely coalition of governments, citizens' groups and oil, gas and mining companies known as the Extractive Industries Transparency Initiative (EITI) was set up to fight corruption in countries that are rich in natural resources, but mired in desperate poverty.
By encouraging extractive companies to publish accounts of the trillions of dollars they pay to governments for the world's oil, gas and minerals, the EITI aims to empower people with information to track the money and ensure it's used for their benefit, rather than swelling the bank accounts of dishonest politicians.
The EITI has made considerable progress, with 32 countries publishing data about the payments they receive from extractive companies, and around 900 firms disclosing transactions worth US$959 billion. But the scheme has many flaws, and corruption and poverty endure in countries that follow its rules.
Tomorrow, as its international board begins critical negotiations to revise its implementing rules, the EITI has an opportunity to fix some of these flaws. And Global Witness, along with over 650 civil society groups in the Publish What You Pay coalition, is pressing for radical change.
For one, extractive companies should be required to break down their payments by each resource project they operate. Doing this will allow people living next to mines or oil fields to track the payments being made to governments.
Extractive firms bidding for licenses must also be required to reveal who their true 'beneficial" owners are, to prevent anyone who wants to loot state funds from hiding their identity behind a company. Finally, companies should publish the terms of their contracts with governments to help ensure countries get a fair deal for their natural resources in the first place.
But while the EITI negotiations take place, and in a remarkably cynical move, many of its oil company members are supporting a lawsuit that if successful would destroy U.S. legislation designed to strengthen the EITI standard.
The legal action, filed by the American Petroleum Institute, an oil trade association that includes the EITI board members Chevron, BP, ExxonMobil and Royal Dutch Shell, aims to scrap Section 1504 of the Dodd-Frank Act, which requires U.S.-listed extractive companies to publish the payments they make to governments for each resource project they invest in around the world.
Revelations published by Global Witness in 2012 revealed just how vital this law is, and how important it is for project-level disclosure. In 2011 Shell and the Italian company Eni agreed to make a payment of US$1.1 billion to acquire an oil concession from the Nigerian government. At the same time, the Nigerian Government agreed to pay precisely the same amount to Malabu Oil & Gas, a company known to be controlled by Dan Etete, a former Nigerian oil minister and convicted money launderer.
Details of the US$1.1 billion payment only came to light by chance through a court case in New York that focused on a different aspect of the oil deal. The court judgement and subsequent statements by the Nigerian Attorney General suggest that Shell and Eni must have been aware that the money would ultimately be transferred to the company controlled by the former oil minister.
Section 1504 of the Dodd-Frank Act forces companies to publish the kind of payments made by Shell and Eni in Nigeria. Without this 'sunshine' on natural resource deals, business will continue to be conducted in an opaque environment that enables payments to end up in the wrong hands.
The industry is not united behind the legal challenge to Section 1504, however. Statoil, the Norwegian state-owned oil major, is a member of the American Petroleum Institute but publicly dissociated from the lawsuit earlier this month.
It is fitting that the EITI has chosen to meet in Norway this week, a country known for promoting transparency in the extractive industries. But unless the meeting's participants who are members of the American Petroleum Institute drop their support for the U.S. lawsuit, their claims to be champions of transparency will ring hollow.