Assistant Administrator Eric Postel of the U.S. Agency for International Development (USAID) has sent a letter to the U.S. Securities and Exchange Commission (SEC) supporting Section 1504, or the Cardin-Lugar provision, of the Dodd-Frank financial reform bill. The “Publish What You Pay” provision, which has been significantly delayed, requires energy and mining companies registered with the SEC to report payments to foreign governments for the extraction of oil, gas, and minerals on a country-by-country basis. Commenting on the positive effects of country-by-country reporting, Postel writes:
“Our overarching belief is that the enforcement of the proposed rules contributes towards U.S. Government foreign policy goals of supporting stable and democratic governments, with a particular emphasis on USAID’s role in providing assistance to resource-rich countries in support of economic growth, good governance, transparency, and building civil society.”
Postel recommends a broad implementation of the provision, urging the SEC to define “project” as “the full breadth of oil, gas and mining activities without exemption for scope, size or ownership”, including “exploration, extracting and export”. Mirroring GFI’s view on country-by-country reporting, the letter states that the provision will “contribute to the efficient and effective use of U.S. development dollars and complement U.S. development strategies by ensuring resource extraction dollars benefits the developing country rather than increase the wealth of particular individuals.”
Implementing the Cardin-Lugar provision is a strong first step towards creating a more transparent international financial system. Not only will country-by-country reporting help reduce corruption, it will “better not only the lives of the citizens of developing countries, but also our own citizens through more secure and stable global economies and partnerships.”
Disclaimer: Unless specifically stated to be the views of the Task Force, the opinions expressed on this blog are solely the opinions of the individual blogger and are not necessarily those of the Task Force on Financial Integrity & Economic Development.