On 18 September, 2012, the European Parliament's Committee on Legal Affairs (the "Committee") voted in favour of proposed EU legislation to impose disclosure obligations aimed at deterring corruption by large companies involved in extracting oil, gas and minerals and logging. The draft legislation, proposed by the European Commission in October 2011 as a new accounting directive and amendments to existing transparency legislation would require companies active in the exploration, discovery, development and extraction of oil, natural gas and minerals and in the logging of primary forests to publish on an annual basis full information on their payments to national governments on both a project-by project and country-by-country basis. The Committee has significantly strengthened the Commission's proposal.
Why the proposals have been put forward -
Campaigners have long recognised the problems associated with payments made to governments in resource-rich developing countries which lack political and economic stability. Arlene McCarthy MEP, who is a leading proponent of the changes, explained "Project-level disclosure is the only way in which local communities in resource-rich countries are able to expose corruption and hold their governments accountable for using revenues towards development".
The proposed legislation is also part of a global move towards greater levels of transparency. Disclosure obligations for resource extraction issuers have recently been introduced in the United States, pursuant to Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act 2010; in 2010, Hong Kong implemented new reporting regulations which established country-by-country reporting for petroleum and mineral companies listed on its stock exchange; and the authorities in Australia and Canada are also considering similar proposals.
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