Come clean, oil and mining firms told
Published by MAC on 2003-05-21
For over two years, British NGO's and the Blair government have demand greater "transparency" on payments made overseas by domestic oil and mining companies. However, the term means different things to different people. An indication of this is that Rio Tinto has supported the government's campaign, yet also helped conceal Freeport/ Rio Tinto's financial backing to the Indonesian military to "protect" their Grasberg operations in West Papua (see Freeport paid Indonesian military US$5.6m in 'protection money'). The Labour government itself has a recent history of sleaze: for example it covertly backed Labour party funder, L K Mittal, in a successful bid to land a steel smelter contract in Romania.
Come clean, oil and mining firms told
Terry Macalister, The Guardian (UK)
21 May 2003
Ten of Britain's top institutional investors have called on oil and mining companies to publish all payments made to governments, in an effort to stamp out corruption.
Jupiter, Schroders and Isis are among the firms that have thrown their support behind the government-backed extractive industries transparency initiative (EITI).
The issue has been given added urgency by the controversy surrounding the award of reconstruction contracts in Iraq and legal cases involving Mobil, now part of Exxon, and Elf, now owned by Total.
This is the latest - and the largest - in a series of initiatives that have seen top investors flexing their muscles over reputational risk. Institutions argue that legitimate payments such as taxes, royalties and signature bonuses can be open to misuse through their size and confidentiality.
This fuels corruption and encourages poverty and conflict in developing countries, they say, in line with the arguments in a report published last week by Christian Aid.
"Reform will give the extractive companies in which we invest an opportunity to be seen as contributors to, and not just beneficiaries of, economic development and reconstruction," said Karina Litvack, head of governance and socially responsible investment at Isis.
Payments and transparency are becoming a hot topic and are due to be discussed at the French-chaired G8 summit in Evian from June 1-3.
A British ministerial meeting with companies on the topic is also scheduled for later next month with a formal opportunity to sign the EITI statement.
The prime minister, Tony Blair, welcomed the investor backing. BP, Shell and Rio Tinto are among a handful of firms which have undertaken to support the transparency initiative.
BP was one of the first to publish payments it made in Angola, running into criticism from the government in Luanda for doing so.