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A bureaucratic delay in carrying out a rule requiring U.S.-listed companies to disclose payments to foreign governments for getting access to oil, gas and minerals has contributed to corruption in those countries and harm to investors at home, says a report by nonprofit Oxfam America.
At issue is the implementation of a key section of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which is approaching its fifth anniversary next week.
“That is five years of payments for oil projects without adequate transparency and citizen oversight. Five years of corruption and poverty in oil-rich countries. Five years with investors not having access to this critical data,” the report says.
The provision requires oil, gas and mining companies to disclose payments to the Securities and Exchange Commission for things such as taxes, permits and licenses needed for development overseas.
Oil production in developing countries including Angola, Nigeria, Indonesia, Sierra Leone is estimated to have generated approximately $1.55 trillion for such governments in the five years since Dodd-Frank Act was enacted, and much of it has flowed to governments with limited or no transparency, according to the report by Oxfam America, the U.S. branch of the international charity working to find solutions to poverty around the world.
The federal rule would also have “serious impact on investors and their bottom line,” said Isabel Munilla, Oxfam America’s senior policy advisor.
“Oil, gas and mineral development has destabilized a lot of countries,” Munilla said in a phone interview. Despite generating a lot of money, the development often leads to conflicts in local communities, where many remain poor despite the windfall, she added.
“And when communities protest to stop a mining or oil drilling project, the company can lose millions of dollars in a day,” Munilla said.
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