News: PWYP-US Director statement in reaction to upcoming SEC vote on Section 1504 implementing rule

For Immediate Release: December 11, 2020

CONTACT: Kathleen Brophy- kbrophy@pwypusa.org

PWYP-US Director statement in reaction to upcoming SEC vote on Section 1504 implementing rule

The following is a statement by PWYP-US Director, Kathleen Brophy in reaction to the SEC’s recent sunshine notice for next week’s open meeting where the Commission will vote on a final implementing rule for Dodd-Frank Section 1504.

“We were dismayed to see the sunshine notice signalling that Chairman of the Securities and Exchange Commission Jay Clayton is planning to finalize the draft implementing rule for the Cardin-Lugar Anti-Corruption provision of Dodd-Frank (Section 1504) as one of his last actions as Trump’s SEC Chair. Despite Chair Clayton’s efforts to paint himself as a leader in the international fight against corruption, he may be set to mirror other Trump officials forcing through poorly drafted midnight rules while on their way out.

While we have not yet seen the contents of the final rule, we are concerned that it will track the woefully inadequate proposed rule that fails to require detailed public disclosure of payments to governments by US-listed oil, gas, and mining companies. We will be disappointed if Clayton decides to rubber stamp a weak final rule that closely resembles the proposed rule, and fails to meet Congressional intent. As one Trump official that has taken great care to distance himself from the rampant corruption of the rest of the administration, it could deal a serious blow to his reputation. This is especially true considering that for at least the first part of his tenure, he sought to appear thoughtful in his rulemakings and interested in bipartisan consensus building. Unfortunately, more recently, he has opted to put corporate interests over investor protection, including issuing a weak proposed rule for Section 1504 last year that ignored a decade of evidence and investor pleas.

The proposed rule was crafted entirely based on industry influence– it is completely unsupported and actually contravenes the language in the original statute, evidence in the record, standard industry practice and testimony from some of the 950 companies already reporting under similar rules in other countries. We would be very disappointed if this sort of rule made its way into securities regulation especially on Clayton’s watch, as it would contradict his self-described reputation as an anti-corruption champion and leave the SEC exposed to possible legal challenges after he departs.

As a leader who prides himself as an independent who does not abide blindly by partisan directives, it would be a mistake for Clayton to end his tenure by gutting a landmark bipartisan anti-corruption provision requiring oil, gas, and mining companies to publicly disclose project-level payments to all governments in countries where they operate. Because of Section 1504, the United States is now celebrated for inspiring the global standard for payment transparency in the extractive industries. Unfortunately, the Trump administration seems dead set on reversing US leadership. We urge Chair Clayton not to bend to the will of the oil industry at the expense of both his own legacy as Chair and the role of the US in the global fight against corruption.”