The U.S. Securities and Exchange Commission (SEC) has adopted rules that would make it a legal requirement for listed companies operating in the extractive industries and doing business in Cambodia to disclose all major payments they make to the government.
The rules, which were adopted in Washington on Wednesday and stem from the Dodd-Frank Wall Street Reform and Investor Protection Act, have been under consideration for the past 16 months as industry groups did their best to lobby the SEC into making the regulations as loose as possible for fear such levels of openness would put them at a competitive disadvantage.
For Cambodia, it means that such companies as Chevron Corp., Total, ConocoPhillips, and China National Offshore Oil Cooperation —which all have offshore exploration licenses and issue shares in the U.S—will be obliged to disclose all payments made to the Cambodian government over $100,000 from September 2013 onwards.
To date, none of these firms have disclosed how much money they have paid to the Cambodian government.
“Under the new rules, a resource extraction issuer is required to disclose certain payments made to a foreign government,” the SEC said in a statement, adding that taxes, royalties, bonuses, dividends and licensing fees must all be reported to regulators in the U.S.
The SEC also said that companies must specify the country in which the payment is made and the type of currency used in the transaction.
While the Ministry of Finance has begun publishing revenues earned from the extractive industries here, it does so arbitrarily and avoids breaking down where the payments come from.
In a statement reacting to the new rules, the London-based environmental watchdog Global Witness—which has raised grave concern over Cambodia’s lack of transparency in the extractive industries sector—said the SEC had not gone far enough in determining what qualifies as an oil, gas or mining project. The SEC rules state that the amount of money paid for each project must be disclosed, but they leave the term project undefined.
“On first appearances, the SEC rule will shed some light on payments made by extractive companies to governments enabling citizens in some of the world’s poorest countries to hold their government to account for how resource revenues are being used,” Global Witness said in the statement.
“However, despite suggesting that ‘project’ is a term understood and commonly used through the industry, we cannot understand why the SEC then failed to define it. That they will only define ‘project’ in their guidance is an enormous missed opportunity, which could provide ‘wriggle room,’ allowing companies to continue to hide illicit payments.”
So far, Cambodia has refused to join global oversight schemes such as the Extractive Industries Transparency Initiative, which requires governments to declare their income and expenditure from money they earn from payments such as contracts, bonuses and royalties.
Companies in the U.S. are already bucking against the new rules, as they say it will put them at a competitive disadvantage.
“The rules will give foreign oil and natural gas companies access to confidential, proprietary information that they could use against U.S. companies when competing for crucial energy resources around the globe,” John Felmy, chief economist for the American Petroleum Institute, of which Chevron is a member, said in a statement on Wednesday.
“State-owned foreign firms could plunder this information to help them determine the strategies and resource levels of their U.S. rivals,” he wrote.