Oil companies working in conflict zones or highly corrupt countries should be required to declare exactly how much they pay to host governments in taxes and concession fees, a pressure group has said.
Global Witness, an NGO campaigning on environmental and social issues, says publication by companies of the payments would promote greater transparency and enable citizens in those countries to find out how much money their governments had received in oil revenues. It says £1billion ($1.5bn) in oil revenues ‘went missing’ in Angola alone last year.
It claims it has had private support for the idea from some oil companies, but says a voluntary agreement on transparency can only be set up with the support of all players in the field and ‘may not be workable’.
BP told EP that in Angola it had raised the issue of declaring taxes and fees paid with the government, but was threatened with having future concessions terminated.
In a paper on the subject, Global Witness argues that the best way to force companies to publish such details would be for one of the world’s major stock exchanges to require such action as a prerequisite to listing.
However, it also says the requirement could be included in any European Union code of conduct for multinationals that may arise from its recent green paper – or that the International Accountancy Standards body could include a clause to that effect in its review of accountancy standards for 2005.
‘Dialogue with many of the major oil companies suggests that if they had legislation forcing disclosure to fall back on, they would be able to claim to protesting governments “sorry, we have no choice, we have to do this for the following reasons…”’ says the paper.
It adds that forcing payment disclosure would level the playing field and prevent companies that revealed payments from being undercut by less scrupulous competitors.
Global Witness campaigner Gavin Hayman told EP: ‘While some progressive companies such as BP, Shell and Statoil have recognized the need for disclosure they have not been able to persuade their less progressive competitors to act collectively.
‘We only need one regulatory authority, such as the Financial Services Authority in the UK or the Securities and Exchange Commission in the US, to introduce mandatory disclosure and that will be enough, because companies will not want to be de-listed from one of the world’s major exchanges.’
Hayman emphasized that the idea was not to blame companies for the way the money they hand over to governments is spent, or to get them to intervene in local politics.
‘We’re not trying to get the companies to call the governments to account on how they disperse their money, just to reveal what they have given to those governments,’ he said.
‘This will depoliticize the issue of payment disclosure in authoritarian regimes and allow companies greater freedom of responsible behaviour.’