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The U.S. Securities and Exchange Commission (SEC) approved on Wednesday in a 3-2 vote a final rule on resource extraction disclosures, relaxing the requirements for oil and mining companies to report payments made to foreign governments.
The final rule, part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, is the third version of the rule for Section 1504 of the Dodd-Frank act. The final rule doesn’t require oil and mining companies to disclose payments on a contract-by-contract basis, only aggregate amounts of payments per country in most cases.
The first version of the rule from 2012 was defeated in court by the American Petroleum Institute (API), while a revised rule was rejected by the House in 2017.
Now the final rule passed with three to two votes, with all three Republican commissioners at SEC voting for the 2020 version with relaxed reporting rules, and the two Democrats voting against it.
“The final rules are designed to achieve the statutory objective of promoting the transparency of resource extraction issuers’ payments to governments while adhering to the CRA’s limitation that the new rule not be substantially the same as the disapproved rule,” SEC Chairman Jay Clayton said in a statement.
But Democratic Commissioner Allison Herren Lee said, expressing dissent with the final rule:
“We are not ensuring sufficiently granular disclosure to enable citizens to combat corruption. We are not providing investors with the information that is material to their investment and voting decisions… And, most unfortunately, we are not taking the opportunity to further the SEC’s and the United States’ tradition as leaders in the fight against global corruption.”
Ian Gary, executive director of the Financial Accountability and Corporate Transparency (FACT) Coalition, said that “Oil companies and corrupt kleptocrats should no longer be able to exploit US financial secrecy, and investors should have the information they really need to make informed investment decisions. Once in office, President-elect Biden should restore America’s global standing on oil and mining transparency by working with the SEC to revise and strengthen this rule.”
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com