Financial Transparency Coalition

Today, at the United Nations in New York City, President Obama inaugurated the Open Government Partnership (OGP) with Brazil, the co-chair. The OGP is a global effort to improve governance worldwide through transparency and accountability—two principals that many members of this Task Force have argued for persuasively for many years. To become a member of OGP, countries must adopt an Open Government Declaration, deliver a country action plan, and commit to independent reporting. As of today, eight countries have joined the OGP: Brazil, Indonesia, Mexico, Philippines, South Africa, United Kingdom, United States, and—the relentless crusader for anticorruption and better governance—Norway. Currently, Albania and Azerbaijan are developing their commitments, in hopes of joining the OGP soon.

At the event, President Obama called open government “the essence of democracy.” Well put, sir.

Even more exciting, though, is the President’s commitment to the EITI or the Extractive Industries Transparency Initiative (EITI) through the OGP. The EITI is a voluntary framework under which governments publicly disclose their revenues from oil, gas, and mining assets. Likewise companies make parallel disclosures regarding payments they are making to obtain access to these resources. This data provides an important point of comparison and fosters integrity and accountability. Through the OGP, the United States has noted it is committed to implementing the EITI to “ensure that taxpayers are receiving every dollar due for extraction of our natural resources.” This is important because the U.S. is a major developer of natural resources and “collects approximately $10 billion in annual revenues from the development of oil, gas, and minerals on Federal lands and offshore.”  

President Obama is no stranger to transparency in extractive industries. In July of last year President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act–also known as the “financial overhaul bill”—into law.  And one provision of the bill created the Energy Security Through Transparency (ESTT) Act, which requires companies listed on the U.S. stock exchange to disclose payments to governments for oil, gas, and mining.  They will provide this information in their SEC filings and it will be publicly available. Senator Cardin, has said, “This provision is a critical part of the increased transparency and corporate responsibility that we are striving to achieve in the financial industry. . . We now have the tools to help people in resource-rich countries hold their leaders accountable for the money made from their oil, gas and minerals.”

Collin Swan, a former legal intern with Global Financial Integrity, noted in a previous Task Force blog that the “new commitment shows that the White House recognizes the ESTT amendment as an extension of a global movement in favor of similar disclosure requirements within extractive industries worldwide.” And the White House applauded the ESTT amendment for setting “a new standard for corporate transparency.”

With these two pieces—the EITI and the ESTT—the U.S. has taken a major step forward in promising transparency on both ends of the spectrum: in the public sphere and in the private domain.  Of course, the EITI must be implemented globally to be the most effective. The OGP is a promising forum for this progression, though. Through their OGP declarations, Indonesia has committed to being a fully compliant member of the EITI by 2012 and Norway has supported the EITI since it was founded 10 years ago, but has promised to follow-up on implementation under OGP.

There is still much work to be done in this arena, but we can be cautiously optimistic about the progress we saw today. And it is encouraging to see the United Statestaking a leadership role in this arena. President Obama deserves credit for not just talking about transparency and good governance, but also for taking action. Today, I feel just a little extra pride in being an American, and seeing our leaders living up to America’s ideals. As the President has said, it is our ideals that can light the world.