Hearing of the House Financial Services Committee - H.R. 6066, The Extractive Industries Transparency Disclosure Act

Statement

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With good governance the exploitation of natural resources can generate large revenues to foster growth and reduce poverty in some of the world's poorest countries. Right now, we have two problems. One is corruption; the other is a lack of information and suspicion of corruption even where there is no corruption.

Suspicion itself is corrosive, but apparently in many places there is corruption. For example, the Democratic Republic of the Congo claims to have received a mere $86,000 in mineral royalties despite having 80 percent of the world's coltan which is used in cell phones and DVD players, et cetera.

We see poverty in Africa's largest oil producer, poverty in Sierra Leone in spite of large exports of diamonds. Now, maybe there isn't corruption in Nigeria and Sierra Leone - maybe. But the people of those countries certainly don't have access to all the information to allay their suspicions, suspicions that I think are probably grounded.

The Extractive Industries Transparency Initiative announced at the world summit for sustainable developments in Johannesburg offers a real way to deal with this. The Bush administration announced its support in June of 2004. Last year we were able to pass through the House the private -- the Overseas Private Investment Corporation Reauthorization Act through the subcommittee that I chair over in Foreign Affairs.

This bill passed overwhelmingly, and on a bipartisan basis both the committee and the House and passed in substantially the same form through the relevant Senate committee. It is, I believe, the first piece of legislation to get that far that requires that those who benefit from a government program, in this case OPEC, adhere to EITI principles.

It makes perfect sense to require that those who seek capital on our capital markets, and disclose what's relevant to shareholders, will also disclose what is relevant to the citizens of those countries from which they extract natural resources.

That information may also be relevant to shareholders who may decide how to invest based in part as to whether they think the regimes that are getting money from the corporation are regimes that they think a company they own stock in should be getting money. So this bill will help investors, which is the primary purpose of the SEC.

It will help the countries receiving this money through a reduction in suspicion, and I believe a reduction in corruption. And finally, and perhaps most important to my constituents, is that the corruption and the suspicion of corruption is undermining oil production around the world.

One need only look at the Niger River Delta in Nigeria. There should be a lot more oil production there. If we could go to the people of that region and say this is the amount of money your government is getting, and here your government will account to you for how that money is being spent, if we could allay the suspicions, if we could reduce the corruption, we might very well see peace in that region of Nigeria and in many other places.

And we might see an increase in the production of oil and some of the other commodities whose world price endangers our economy. So this is important for American consumers, for the residents of our individual districts, as well as the effort to eliminate poverty in the countries that are blessed with these natural resources.

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