The House Financial Services Committee voted today to advance a bill repealing the bipartisan Cardin-Lugar anti-corruption provision (Section 1504 of the Dodd-Frank Act), which requires oil, gas and mining companies to disclose the payments they make to foreign governments. The committee voted 33-27 to advance H.R. 4519, with Rep. Ed Royce (R-CA-39) joining all 26 Democrats on the committee in voting to oppose repeal.
The Cardin-Lugar provision is a landmark transparency law, intended to deter and expose corruption in a notoriously corrupt industry, give local communities the tools they need to hold their own governments accountable, and provide investors with vital information to evaluate risk. The legislation and the SEC regulations implementing it were widely supported by pretty much everyone – investors worth nearly $10 trillion, anti-corruption watchdogs, numerous government agencies, national security experts, and religious groups – except the companies that want to keep their payments to corrupt dictators secret. (As CEO of Exxon, Rex Tillerson – now Secretary of State – personally lobbied against Cardin-Lugar, and voiced concerns that it would undermine its business dealings with the Russian government.)
The bill to repeal Cardin-Lugar was introduced by Representative Huizenga (R-MI-3), who seems to be spending the vast majority of his time these days advancing the interests of his big corporate donors rather than serving the people of western Michigan. Earlier this year, he took a first stab at undermining Cardin-Lugar by sponsoring legislation to gut the Securities and Exchange Commission’s (SEC) regulations implementing Cardin-Lugar, effectively undoing the work the agency had already done and making them start over – a grossly inefficient and wasteful tactic to buy big oil more time to keep their payments secret. The bill was signed into law by Trump in February. (I’ve already written at length about the outright lies told by Representative Huizenga and other industry shills in enacting that measure.)
In the face of heated criticism, condemning it as enabling corrupt deals and a handout to big corporations, Representative Huizenga professed to still be a believer in transparency. “Transparency is a critical element in governance and I believe there is a way for the SEC to achieve transparency regarding section 1504,” he said.
Now Huizenga has introduced H.R. 4519 to ensure the SEC cannot do so. During mark-up yesterday, he said repealing Cardin-Lugar was “necessary to eliminate the authority of the SEC to issue another resource extraction rule at some point in the future.” In other words, to ensure corporations like Exxon and Chevron can rest easy that their dealings with foreign regimes will remain secret.
But U.S. companies are already lagging behind the rest of the industry. U.S. leadership in enacting Cardin-Lugar prompted significant changes globally. Today, 30 other countries including the European Union and Canada have similar transparency laws that require companies to disclose payments to governments. Companies like BP, Shell, Total and others are already disclosing the payments they make – as are Russian state-owned companies and some Chinese state-owned companies – and many have noted the business benefits of transparency. Payment transparency is now an international expectation and U.S. companies that continue to follow standards far lower than the rest of the industry may soon find it hurts their bottom line.
We have to keep asking, what is it that companies like Exxon and Chevron are so afraid we’ll find? Maybe they are nervously watching the recent developments in the international criminal proceedings against companies like Shell and ENI for making corrupt payments totaling more than a billion dollars to the former Nigerian oil minister in exchange for a lucrative oil block. Or maybe they are afraid the American public will discover just how little they actually pay in corporate taxes while Congress is on the verge of enacting an unprecedented corporate tax cut, to be paid for in large part by middle class working Americans.
Repealing Cardin-Lugar does nothing for Representative Huizenga’s constituents and it does nothing for the American people. It would only benefit the corrupt foreign dictators and the few companies willing to exploit that corruption to get an edge on their competitors. Why is Congress putting the interests of foreign regimes and their cronies first?
Our elected officials must do better.