WASHINGTON, D.C. – The Conflict Risk Network (CRN) today called on the Securities and Exchange Commission (SEC) to bring needed transparency to payments that oil and other extractive companies make to foreign governments such as the Government of Sudan, accused of genocide in Darfur. In a comment on the SEC’s implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act, CRN recommended that certain companies be required to report payments made by their parents, not just their subsidiaries, to governments for access to their oil, gas and minerals.
“When Congress passed historic legislation last year requiring greater energy sector transparency, it gave investors and citizens new tools to hold companies and governments accountable for their actions,” stated Melany Grout, Director of the Conflict Risk Network. “In cases where an SEC-listed company is no more than an alter ego of its parent, the SEC should apply the disclosure requirements to the parent as well. Anything less will welcome companies to circumvent the Act’s requirements, stripping it of its teeth and thwarting its intent.”
CRN cited PetroChina and its parent, the China National Petroleum Corporation (CNPC) – the largest corporate actor in Sudan’s oil sector – as an example of why the SEC should include parent companies, not just subsidiaries, in its disclosure requirements. In this case, PetroChina appears to be no more than an alter ego of its parent, seemingly created specifically for the purpose of allowing CNPC to enjoy exposure to the NYSE while avoiding scrutiny of its extensive operations in Sudan.
CRN’s recommendations would increase investors’ access to information and would benefit local populations as well. CNPC is currently the Government of Sudan’s largest partner in oil activities, and will likely be a major player in a new southern state. Southern Sudan, which relies on oil for 98% of its revenue, voted in January 2011 to secede from Sudan’s north this year. “There is great hope that the people of a new southern state will gain stability, development and prosperity from their oil revenue,” said Grout. “This is precisely the kind of situation in which greater transparency is critical if citizens are to be empowered to hold their governments accountable for effective management of oil, gas, and mineral resources and revenues.”
Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires all U.S. and foreign companies that engage in the commercial development of oil, natural gas or minerals and are registered with the SEC to publicly report how much they pay governments for access to their oil, gas and minerals. It also requires them to disclose similar payments that their subsidiaries and other entities under their control make. The SEC is soliciting comments and will craft a final rule by April 15th. The new disclosure requirements will become effective as of April 15, 2012.
About CRN: Conflict Risk Network (CRN), http://crn.genocideintervention.net/ is a network of institutional investors, financial service providers and related stakeholders calling on corporate actors to fulfill their responsibility to respect human rights and to take steps that support peace and stability in areas affected by genocide and mass atrocities. Its goal is to increase such behavior by corporate actors, and thereby reduce conflict risk.
CRN is a project of the newly merged Genocide Intervention Network / Save Darfur Coalition (GI-NET/SDC). The two organizations merged on November 1, 2010 to create a more powerful voice dedicated to preventing and stopping large-scale, deliberate atrocities against civilians. The organization remains committed to its work to end the crisis in Darfur and bring peace to all of Sudan as well as to end violence in other areas of mass atrocities such as Congo and Burma. The merger creates the world’s largest anti-genocide organization, with a membership base of hundreds of thousands of committed activists globally, an unparalleled nationwide student movement, more than 190 faith-based, advocacy and human rights partner organizations, and a network of institutional investors collectively representing more than $3 trillion in assets under management.
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