US-Listed Firms Must Disclose Payments to Gov’ts

New law requires oil, gas and mining companies to make payments public by 2012

A comprehensive financial re­form bill passed by the US Senate on Thursday will require oil, gas and mining companies publicly listed in the US to file annual statements to the US Securities and Ex­change Commission showing all pay­ments made to governments around the world, including Cam­bodia, by 2012.

The bill represents an overhaul for many major companies operating in Cambodia’s extractive industries that have previously failed to reveal how much they have paid to the government for exploration rights and other concessions in several offshore locations.

The bill requires firms to disclose the total amount of payments made for all of their individual projects. It also specifies that companies must be upfront about the type of payments—taxes, royalties, license fees and bonuses – made to governments worldwide.

“The law is a measure for respectable companies to participate constructively in reducing poverty in developing countries through their transparent business practice and they have the opportunity to show leadership to others,” said Mona Laczo, deputy regional director for Oxfam America, in a statement on Friday.

“This way, Cambodians will now know exactly how much has been paid by whom and for which concession. This will improve transparency in business practice,” she said.

Ms Laczo said that companies listed in the US and officially operating in Cambodia include Chevron, ConocoPhillips, Total, Petronas, China National Offshore Oil Corp and Mitsui & Company Ltd.

Contrary to what oil, gas and mining companies say, Ms Laczo said the law would not put companies at a competitive disadvantage by disclosing their payments to governments, rather they will instantly be better known for good governance, thus gaining more confidence among investors and the public as a whole.

“Oxfam America believes that this historic law will provide an opportunity for the government and policymakers to speed up the process of drafting relevant laws in Cambodia,” Ms Laczo said.

“Cambodia will want a robust mechanism to ensure that spending of all types of revenues, from oil and gas and hard minerals, is done through a consultative process, and that the National Assembly is playing its key role in terms of oversight,” she added.

The government’s record to date on disclosing how much it has been paid by natural resource companies has been far from adequate, environmental groups say.

French oil giant Total and Australian miner BHP have made multi-million dollar payments to the government’s “social development fund” though BHP, which departed Cambodia last year, drew negative scrutiny to the government in April when it announced that the company was the target of an investigation by US authorities over what appeared to be payments to the government.

News reports cited unnamed BHP officials saying the matter was linked to payments made to Cambodian officials.

Also in April, Prime Minister Hun Sen said that Total had agreed to pay $28 million to the government in return for exploration rights to the offshore resource block know as Area 3, situated in disputed waters with Thailand.

But payments made to the government by other companies have not shown up on government’s books, environmental groups say.

The opposition Sam Rainsy Party submitted questions to the government in May asking officials to clarify their management of the so-called “social funds,” which compromise payments from large foreign companies operating in Cambodia.

Cabinet Minister Sok An responded to those questions last month stating only that all payments made to the government were placed in accounts located in the National Bank of Cambodia. He did not disclose how much those accounts contain or who had paid money into them.

CPP lawmaker Cheam Yeap, chairman of the government’s Commission on Economy, Finance, Banking and Audit, said on Friday that he welcomed the newly adopted US legislation. Mr Yeap said it would be an opportunity for Cambodia to improve its record on revenue transparency from companies operating in the extractive industries.

“On behalf of Cambodian people thank you to the congressmen in the United States of America for passing this law,” Mr Yeap said. “This is a potential for all members of parliament to study and discuss the law concerning the management of the oil and gas in Cambodia.”

Mr Yeap said that he would meet with Minister of Finance Keat Chhon on Monday during which he will discuss the contents of the newly passed US legislation to analyze how it might bear on Cambodia.

Officials at the Cambodian National Petroleum Authority and Minister of Industry, Mines and Energy Suy Sem could not be reached for comment on Friday.

 

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