News: Trump’s SEC Chair deals a major blow to global fight against corruption
December 16, 2020.
For immediate release: December 16, 2020
Trump’s SEC Chair deals a major blow to global fight against corruption
Gutted oil industry rule for Section 1504 requires immediate action from Biden administration to restore US leadership
(Washington, D.C.) Trump’s Securities and Exchange Commission (SEC) Chairman, Jay Clayton today set the world back years in the global effort to tackle oil, gas, and mining sector corruption. By voting to pass a last-minute weak rule to implement Section 1504 of the Dodd-Frank Act, Clayton has given the fossil fuel industry the benefit of continued secrecy at a time when transparency of the sector is needed more than ever.
“By attacking the 1504 rule, the Trump administration gave its final gift to kleptocrats and oil companies with something to hide,” said Kathleen Brophy, Director of Publish What You Pay-US. “Even a simple bipartisan transparency rule was stopped by Big Oil lobbyists and their friends in this White House. President-elect Biden now has an opportunity to re-establish America’s leadership role in combating global corruption.”
That original law compels companies in the extractive industries to disclose project-level payments they make to governments in all countries where they operate. Signed into law in 2010, the law inspired anti-corruption laws around the world and helped set a global transparency standard to shed light on the notoriously secretive oil, gas, and mining sectors. Similar laws are now in place in more than 30 countries including Canada, the European Union, Norway, Switzerland, and the United Kingdom. The Extractive Industries Transparency Initiative (EITI), with more than 50 implementing countries, has also aligned its requirements with the global standard.
But in January 2017, the Republican-led Congress repealed the 2016 SEC rule using the little-known Congressional Review Act, demanding a new rule that better satisfied industry interests. The SEC’s revised draft rule, issued last December, gutted the original rule and replaced it with industry-approved revisions, including an entirely novel definition of oil, gas, and mining projects that was copied directly from a submission to the SEC by the American Petroleum Institute.
“The final rule is covered in industry fingerprints,” said Brophy. “Despite the fact that hundreds of these companies are already doing this in other countries, the US fossil fuel industry still wants to conceal their financial dealings, especially their payments to the U.S. government. The only difference between the U.S. and the 30 other countries implementing similar regulations is the political influence of Big Oil in Washington.”
The rule passed today closely resembles the SEC’s weak draft, ignoring repeated pleas from investors, global oil, gas and mining companies, members of Congress, hundreds of civil society groups, and anticorruption and national security experts, who overwhelmingly called on the SEC to strengthen its draft rule to align with the international standard. Senator Elizabeth Warren also sent a letter yesterday to Chair Clayton, saying the weakened rule is unsupported.
Fortunately, new SEC leadership can easily and quickly fix this industry giveaway through administrative action to address the most problematic features of this rule. This task will be critical in ensuring that Biden’s SEC heeds the call from investors for more information from fossil fuel companies in order to limit climate risk in the wider market. This must be top of Biden’s agenda, given that the rest of the world has moved steadily in this direction over the past four years while the US lags behind.
“Biden’s agenda to restore U.S. leadership in global efforts to combat climate change and fight transnational corruption must include strong anti-corruption regulation that aligns with the global standard,” said Brophy “If Biden hopes to turn the page on the corrupt Trump years and tackle the climate crisis head on, this transparency measure is a common sense and bipartisan place to start.”
Press Contact: Janel Forsythe, Janel@upshiftstrategies.com