During Chevron’s annual board meeting last week, just seven percent of the US oil giant’s shareholders voted in favor of disclosing all payments made to host governments on the grounds that doing so could jeopardize the “sanctity of existing contracts” and, therefore, harm the company’s competitiveness.
But a coalition of NGOs in Cambodia, where Chevron is currently exploring in off-shore block A in the Gulf of Thailand, say an agreement to disclose such financial practices could actually serve to the contrary by improving the company’s international standing.
Chevron’s stockholder notice released after its annual meeting on May 26, said that openly announcing a one off payment could “undermine the efforts of more productive disclosure initiatives, and could put Chevron at a competitive disadvantage” if the host country itself doesn’t have a proper disclosure framework.
“[D]isclosure of payments by an extractive company could give rise to legal liability where contractual arrangements and country-specific laws can prohibit such disclosure and could legally prevent Chevron from making such disclosures,” Chevron stated, adding that the disclosure of one payment from one extractive company would not provide “critically important information on revenues” to the public.
Oxfam America in December called on Chevron to disclose all payments it has made to governments in the countries it operates, including Cambodia, where oil extracted is expected before the end of 2012.
The international aid agency filed the shareholder resolution to emphasize that the citizens of oil-rich countries have the right to know how their governments spend their oil revenues.
Mam Sambath, chairman of Cambodians for Resource Revenue Transparency, a coalition of civil society organizations, disagreed with the Chevron board’s vote on revenue disclosure.
“By disclosing information of payments to host governments it would not significantly impact its competitive position but instead it will promote Chevron’s image, increase the stability of host countries and create a better long-term operating environment for Chevron,” he said, adding that other companies – namely Norway’s Statoil and Canada’s Talisman Energy – have managed to disclose payments in all countries where they are operating.
“They have not appeared to suffer from competitive pressures or host government displeasure and any contractual hurdles have been overcome,” Mr Sambath said. “Chevron can play a leadership role in the area of financial transparency.”
Some industry experts claim that companies can benefit from disclosing payments as they reduce the risk of being accused of corruption and can show how much they pay in taxes and, therefore, the wellbeing of society at large.
But very often it is the policy of the least transparent company that dictates, they say.
Nevertheless, in its stockholder notice Chevron said that if the transparency practice was adopted “it could put itself at a competitive disadvantage against other companies that do not similarly disclose payments on a country-by-country basis.”
Instead Chevron said it is advocating an alternative approach allowing host governments to take the lead in applying discourse measures so that companies operate under the same guidelines.
The debate surrounding transparency is hot on the heels of the government who have recently been heavily scrutinized by the media, NGOs and donors in order to provide public information on where money from companies operating in the extractive industries is located and how it is accounted for.
Last month the opposition party called on the government to explain its dealings with Australian miner BHP Billiton and French oil firm Total over payments both firms made to do business in Cambodia.
After the request Prime Minister Hun Sen assigned Cabinet Minister Sok An, who is chairman of the national petroleum authority, as well as Finance Minister Keat Chhon, to answer those questions.
In April, it was announced that BHP was being investigated in the US for corruption charges that many believe stems from payments made in Cambodia. Similar payments from a plethora or other companies who have operated in the country are also untraceable, rights groups say.
Officials at the government’s petroleum authority declined to comment for this article.
Mr Sambath said the disclosure of payments made to the government would “empower the people to hold their government accountable for using oil revenues for economic development and basic social service like education and healthcare.”
“Transparency in our oil sector will help to ensure that revenue is managed in an accountable way that benefits all Cambodian people,” he said.
“Chevron payment disclosure would provide valuable information to potential investors and citizens in resource-rich countries such as Cambodia for poverty alleviation and economic growth.”