Memo to the Extractive Industries: Tell Us What You're Doing in Secrecy Jurisdictions
September 20th, 2011
September 20th, 2011
As The Guardian reports this morning:
More than a third of the subsidiaries owned by major energy and mining companies including Shell, BP and Glencore are based in “secrecy jurisdictions” where company accounts are not publicly available, according to a report.
The study by Publish What You Pay Norway, which campaigns for transparent accounting among oil, gas and mining giants, claims that populations in resource-rich countries are losing out because they are unable to extract financial information from businesses operating on their soil or off their seaboards.
“Extractive industry giants’ corporate ownership structures, their use of secrecy jurisdictions and the lack of meaningful information they impart is a major reason why stakeholders in resource-rich nations often meet a wall of silence when asking questions,” says the report. “This makes it very difficult to hold their politicians and the companies that extract oil, gas and minerals to account.”
The full report is available here. And yes, in the interests of full disclosure, I should note I advised on its production.
What are the key issues the report highlights? First of all that when so much of the activity of these companies is hidden from view, the need for country-by-country reporting is proven, or it is impossible to hold them to account for what they do where, which is the basis of corporate transparency, corporate responsibility and accountability as well as the stewardship concept that directors of such companies are duly bound to uphold.
Second, the project featured Bolivian and Ecuadorian journalists and campaigners, who set out to get answers to key financial and operational questions to test whether country-by-country reporting is needed. They found they could not secure any material data on the operations of the companies surveyed in their own countries. The need for international cooperation to ensure companies are held to account locally has been proven.
Thirdly, a legacy resource from the project is the creation of a Web-based database, which maps every subsidiary and its incorporation location owned by:
This will be available soon to academics, campaigners, journalists and other interested parties – although what it documents is in effect a series of questions – all of which start with “What do you do in this place and in this company?”
Lastly, it shows the extraordinary extent to which multinational corporations are willing to embrace complexity to avoid tax. Never doubt they like complexity when it suits them. Arguments to the contrary are simply spurious.
My congratulations to Nick Mathiason for undertaking this project and to Publish What You Pay Norway for funding it.