Dodd-Frank: Five years and $1.5 trillion later
Washington, DC – In the five years since the Dodd-Frank Act passed, oil produced in developing countries was worth an estimated $1.55 trillion for those governments, according to a new analysis by Oxfam America. But because the landmark US transparency law remains delayed, any payments that flowed to governments took place with limited or no transparency.
July 21 marks five years since Section 1504 was passed, but thanks to foot dragging by the Securities and Exchange Commission (SEC) and aggressive lobbying and legal challenges by oil industry laggards, there is no implementing rule in sight. The law is meant to support US national and energy security by helping to stabilize strategically important energy markets and by stemming the flow of money into the bank accounts of corrupt elites. It will also protect investors by giving them information they can use to assess investment risks, and allows citizens in aid-dependent countries to follow the money generated by their own natural resources sector in the hopes they might graduate from US aid in the future.
“Without payment transparency, following the money and holding governments accountable is next to impossible for citizens of developing countries,” said Raymond C. Offenheiser, president of Oxfam America. “With payments for oil and mining projects out in the open, citizens can demand their governments spend these funds in the communities where drilling is taking place – using it to fight extreme poverty and build roads, schools, and hospitals. With secrecy, funds may be lost to corruption and waste, as we have historically seen in oil-rich countries still suffering from high rates of poverty and low development.”
Managed properly, revenues generated from the oil industry should be dramatically reducing poverty through investments in pro-development spending, such as education, health care and agriculture.
The estimated $1.55 trillion represents:
- Five times the existing funding gap for 42 of the world’s poorest countries in both education and health. Closing the funding gap could mean providing basic education and providing key health services (including specific interventions such as maternal health, immunization for major diseases like HIV/AIDS, TB and malaria, and for significant health systems strengthening to see these and other interventions delivered).
- Almost ten times the total value of US Overseas Development Assistance (ODA) over the same five years.
- Enough to buy every team in the US’s major sports leagues (NBA, NFL, MLB, NHL, and MLS), plus the three biggest US oil companies (Exxon, Chevron, and ConocoPhillips), plus Apple Inc. – with $30 billion to spare.
- Enough to buy America’s five richest pharmaceutical companies, five richest food companies and 10 richest universities’ endowments – and still have $167 billion left over.
- The son of Equatorial Guinea’s president, Teodoro Nguema Obiang Mangue, is accused of stealing $300 million through corruption and money-laundering of the country’s oil and gas wealth. Obiang owned a $30 million mansion in Malibu, a $530,000 Ferrari, a $3.2 million collection of Michael Jackson memorabilia (including a crystal-covered glove and a “Thriller” jacket), and a $38.5 million Gulfstream jet. $1.55 trillion is enough for 20,700 corrupt officials to have their very own Ferrari, private jet, Malibu mansion, and Michael Jackson shrine.
Such vast sums of money could be used for good, yet laggards in the oil industry have been fighting to weaken transparency rules, preventing citizens from demanding accountability and investors from being able to assess risks in their corporate holdings. The American Petroleum Institute, one of the biggest opponents of this law, spent hundreds of millions of dollars on lobbying in the past five years.
“With this huge sum at stake, it’s crucial that we have transparency for these payments,” said Ian Gary, senior policy manager at Oxfam America. “The Securities and Exchange Commission has the power to end secrecy from US-listed companies, and needs to obey the law and finish the job with strong rules. The US must resume its leadership on transparency.”
Section 1504 inspired a wave of similar mandatory sunlight provisions around the world, setting a new global standard for transparency. Today, 30 countries have adopted laws requiring public, company by company disclosure for each oil, gas and mining project following the US law, including the European Union, Canada and Norway. These laws give the SEC a clear standard to follow in implementation.
Oxfam America is calling on the Securities and Exchange Commission to finish a rule for Section 1504 by the end of this year, and ensure that the rule requires mandatory, public disclosures by company, at the project-level, for each country with no exemptions.