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

Statement

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This bill obviously is a great first start in transparency -- not necessarily a first start. The voluntary Extractive Industries Transparency Initiative has been partially implemented by 23 countries already.

I guess there are countries prospectively and currently that would like us to go a little bit further, and I wanted your comment on that. That there be some -- and since you brought this up Mr. Detheridge -- the mandatory revenue disclosure.

And -- because it's one thing to say this is how much we've paid a government, but we still don't know what the volume of the extraction was or the mass of the extraction was, what profits were involved.

We -- you know, we need some contract transparency. So I guess I would like to hear your comment on more contract transparency.

MR. DETHERIDGE: As I said earlier, I can only speak in a personal capacity.

In answer to your question about transparency of contracts, that is actually something that I fully believe in. I think contracts -- the parliaments, legislators should have access to those contracts. It's something that I personally support.

As you can imagine, that is not a universally held opinion within the oil industry.

REP. MOORE: Mr. Jenkins, Ms. Stevelman, others.

Ms. Lissakers.

MS. LISSAKERS: Yes. Certainly, the Revenue Watch Institute and the civil society groups that we work with, both internationally and especially in the producing countries, are very strongly in favor of contract transparency.

In almost every country in question, the resources that we are discussing are public assets, they are not private property, they are public assets by law in most countries.

And therefore, contracts between the state and an operating company should be made public. And that would greatly enhance the accountability aspects as well as help to ensure that the country itself is getting a good deal from the extractive sector, a fair deal from the industry.

A number of countries now are submitting -- have changed their approach and are submitting large extractive concessions to their own parliaments for review before the contracts are consummated, and that, of course, makes them public. And we think that is a very healthy strong move in increasing accountability.

REP. MOORE: Thank you.

You know, the chairman has heard the cry about regulation. And you know, many observers or critics have said that there are already many onerous reporting -- requirements as in Sarbanes-Oxley.

And can you please just reassure us or explain how this EITD Act would not risk exacerbating this difference. In other words, the U.S. listed companies -- there would be -- wouldn't be an incentive for them to de-list because of these provisions?

MR. DETHERIDGE: Yes. I don't think that companies can reasonably say that these reporting requirements are onerous. And the reason I say that is simply because most of the major oil and gas companies -- certainly all of the major U.S. companies and all of the major European companies support the Extractive Industries Transparency Initiative.

And the Extractive Industries Transparency Initiative is very much -- or I should say, this bill is very much in line with the reporting requirements of EITI.

Now in supporting EITI, companies implicitly have accepted that they will bear the costs of making those numbers available wherever and whenever the initiative is implemented, hopefully, worldwide. And so I don't see how they can reasonably claim that, you know, this is -- this is too costly. They've already implicitly admitted they are prepared to bear those costs. I mean, this information is, of course, known to the companies. It is in their books.

Now I don't doubt that there is going to be some additional cost in extracting that information from the books. They will probably need to have it vetted in each country by external auditors just to make absolutely certain that they are putting forward the right numbers.

But as I say, I don't think it can be reasonably claimed to be a prohibitive cost. So the argument on costs to me personally doesn't stand up.

MS. MOORE: That's great information for the record.

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