The EU legislation (directive 2013/34) has significantly improved the transparency and accountability of European businesses active in the mining and forestry industries, the organisation Transparency International (TI) states in a report published on Thursday 18 October, as the European Commission continues its assessment of the effectiveness of this legislation.
In 2013, the revision of the 'accounting' directives required European companies with mining and forestry activities to provide information about the payments, taxes and bonuses they pay every year, project by project, to third countries above a threshold of €100,000 (see EUROPE 10824).
“Previously, these payments were made largely in secret, making it impossible for citizens to scrutinise them and track them into government accounts”, TI notes.
The organisation has studied the activities of Tullow Oil in Equatorial Guinea, Repsol in Bolivia, Vedanta in India and the joint venture between ExxonMobile, Statoil, BO and ENI in Angola. It welcomes the improved transparency of transactions between private businesses and states, “in particular in traditionally secretive countries such as Angola and Equatorial Guinea”, and for companies that are not listed or headquartered in the EU, such as ExxonMobil, which has just two subsidiaries, in Germany and Luxembourg.
Transparency International does, however, note weaknesses in the European rules and their implementation by the companies in question.
They make the following recommendations: - include all payments made by joint ventures, either by the central operator or other entities of the joint venture; - ask the companies covered by the legislation to explain how they establish payment categories; - specify the amounts or volumes for each payment in kind in the form of gas, oil or another mineral; - prohibit aggregations between cash payments and payments in kind, or between payments in kind relating to different commodities; - draw a distinction between taxable income (when reported at the entity level) and other tax payments (withholding tax, royalties, etc.); - require companies to clarify who receives the payments (ministry, public agency, public enterprise).
The TI report is available at: http://bit.ly/2J5tJDX (Original version in French by Mathieu Bion)