Resource firms risk pariah status

EITI chair Clare Short says that the transparency initiative has been such a success that firms and nations that shun it risk damaging their reputations

  • By Peter Guest
  • 12 Oct 2013
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Transparency is becoming the accepted norm in new resource deals, leaving governments and companies that resist accountability as outliers, according to Clare Short, the chair of the Extractive Industries Transparency Initiative.

“The ground is moving,” Short said. “I think for companies or governments, if you’re not willing to be open about revenues and contracts now, you’re up to something. That wasn’t the case 10 years ago.”

The EITI’s voluntary standards, as well as the legal obligations on companies laid out in the Dodd-Frank Act, which includes stipulations on reporting payments in conflict-affected countries, are now part of the fabric of the industry.

Mining companies have accepted the change more readily than oil and gas producers, Short said, noting that the Dodd-Frank amendment was still subject to a legal challenge by major oil companies.

“I think the miners are ahead of oil, partly because oil is increasingly offshore, so you don’t have to deal with so many people. Miners do have to be onshore, and human beings live there. I think they’ve learned you’ve got to treat the locals reasonably and you need to get people on your side, or life gets very difficult.”

The EITI was created in 2003 as a mechanism to allow civil society to examine the flow of money between resource companies and governments. In its original form, it allowed observers and citizens to ensure cash was not disappearing through corruption or patronage, as well as simply showing the amount paid to the state. This in turn allowed individuals to hold both companies and governments to account.

“The three parties have all got slightly different motives, but they come out to be complementary. Governments want good reputations and inward investment. Companies want not to be attacked and to show that they’re paying something. Civil society want the money spent on the poor. They’re slightly different motivations, but it brings them all in,” Short said. “Then when the facts come in, some of the parties get a bit of a shock.”

  • By Peter Guest
  • 12 Oct 2013

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