Sir, The Publish What You Pay coalition of transparency activists has consistently highlighted the substantial contribution oil, gas and mining companies can make to countries in need of revenues for development. For this reason we welcome industry support for new European Union tax disclosure rules (“Project-by-project reporting will not allow citizens to ‘follow the money’ ”, Letters, 6 June). However, this opposition to publishing payments for each oil/mining project is based on a series of misunderstandings.
First, we agree with industry that artificial allocation of project payments would be a mistake. Indeed, we have never asked for this. If corporate income tax is levied at the country level then it should be disclosed at that level.
But the fact remains that huge payments are made for specific oil and mining projects around the world – such as Shell and Eni’s payment of almost US$1.1bn in April 2011 to the Nigerian government for control of an oil block. Or Rio Tinto’s payment of US$700m to the Guinean government for its Simandou iron ore project last year.
Second, companies claim their proposal to report according to which level of government they pay taxes to will “improve accountability at a local level”. In fact, this is precisely not what will happen in countries where disclosure is needed most.
In resource-rich developing countries in Africa and elsewhere the vast majority of taxes are paid to the national government (for example, 99 per cent in Ghana’s mining sector). In countries such as Angola, the Democratic Republic of Congo and Equatorial Guinea the companies’ preferred disclosure model would allow the corrupt few to embezzle millions while some of the world’s poorest people are starved of vital services.
Secrecy and corruption often occur at the project level; this is where scrutiny is needed. Project-by-project reporting is the only way to truly “follow the money” as it enables communities to track entitlements to money paid to national governments and is crucial in determining whether a company has paid what it should be paying.
Third, some of the companies that oppose project-by-project reporting in Europe are already covered by US law – the Dodd-Frank Act passed in July 2010 requires project-by-project reporting. To improve accountability and cut corruption, citizens in countries afflicted by the “resource curse” must know how much money each project in their area generates.
Marinke van Riet, International Director, Publish What You Pay
Simon Taylor, Director, Global Witness
Loretta Minghella, Director, Christian Aid
Matthew Frost, Chief Executive, Tearfund
Jamie Drummond, Executive Director, ONE
Henri van Eeghen, Director, Cordaid Netherlands
Paul Arlman, Chair, Transparency International Netherlands
Chandrashekhar Krishnan, Executive Director, Transparency International UK
Julien Coll, Executive Director, Transparence Internationale France
Neil Thorns, Director of Advocacy, CAFOD
Marc Laroche, Director of International Division, Caritas France – Secours Catholique
Catherine Gaudard, Director of Advocacy, CCFD-Terre Solidaire France