February 03, 2017

Van Hollen Statement on the SEC Resource Extraction Rule

U.S. Senator Chris Van Hollen submitted the following statement to the congressional record of the SEC Resource Extraction Rule:

"Mr. President, with this resolution, the Senate Majority is continuing its rush to overturn Obama Administration consumer and investor protections, this time by targeting a bipartisan anti-corruption measure.

"In 2008, under the direction of Senator Richard Lugar, Republican staff of the Senate Foreign Relations Committee produced a report entitled "The Petroleum and Poverty Paradox: Assessing U.S. and International Community Efforts to Fight the Resource Curse." They traveled to some of the most resource-rich countries in the world and explored how government corruption, fraud, and instability prevented those nations' people from benefitting from their oil, gas, and mineral reserves. Rather than spurring national economic development, benefits were concentrated among government and military elites and organized crime. According to the non-profit research organization Global Financial Integrity, in 2012, developing countries "lose roughly $1 trillion per year to crime, corruption, and tax evasion."

"The 2008 Foreign Relation Committee report led to the bipartisan Cardin-Lugar amendment to direct the Securities and Exchange Commission to require that all oil, gas, and mineral companies listed on U.S. stock exchanges disclose their payments to foreign governments, including royalties, fees, taxes, and bonuses. Congress enacted the Cardin-Lugar amendment as section 1504 of the Dodd-Frank Act.

"These transparency provisions are critical to combatting corruption in resource-rich nations. And these provisions are critical to protecting investors by ensuring that they have a clear picture of companies' interactions with foreign nations.

"As the Foreign Relations Committee report noted:

'transparency in extractive industries abroad is in our interests because mineral wealth breeds corruption, which dulls the effects of U.S. foreign assistance; inequitable distribution of mineral revenues creates civil unrest, threatening political and energy instability and adding a price premium to commodities such as oil and gas; and energy rich countries can become emboldened militarily.'

"The Cardin-Lugar amendment continued American leadership in anti-corruption efforts, and has established a new global standard. Similar rules are now in effect in Europe, Norway, and Canada and apply to 80 percent of the world's largest publicly-listed oil, gas, and mining companies, including state-owned oil companies in Russia, China, and Brazil.

"While many of the world's largest extractive businesses have expressed support for transparency, including BP, Shell, and Newmont Mining, the SEC rule has been strongly opposed by a narrow group, including ExxonMobil. I am concerned to see the Senate acting to repeal this rule and prohibit the SEC from ever establishing a similar anti-corruption and investor-protection measure in the same week that it voted to confirm Rex Tillerson, former CEO of ExxonMobil, to be Secretary of State.

"There is no logical reason to go against international norms and repeal a rule supported by much of the regulated industry, investors, and advocates for transparency and government reform in favor of a narrow opposition led by ExxonMobil. I urge my Colleagues to reject this special-interest favor to ExxonMobil and maintain this important tool to fight corruption and protect investors."