On Tuesday 1 March Anas Sarwar MP stood up in the House of Commons to table a 10 Min Rule Bill requiring legislated transparency standards for companies involved in resource extraction activities.
Enjoying strong support from all three main political parties, NGOs, independent economists and leaders of the developing world the Bill makes it mandatory for companies that discover, drill and dig up oil, gas and minerals to disclose how much money they pay to foreign governments.
The Bill was tabled in the presence of about 25-30 Ministers and passed without one single nay heard or rebuttal. Below is a summary of his points including key quotes:
The Problem: The Resource Curse
Fundamentally the problem that Anas’ Bill is aimed at addressing is known as ‘the Resource Curse’. This is where; ‘In the absence of strong democratic institutions and strong governance, the people of these countries are unable to hold corrupt officials to account, as those officials siphon off public money for their own benefit instead of using it for the public good.’
The Example: Equatorial Guinea
Sarwar cited Equatorial Guinea as an example of the problem. As he pointed out ‘Equatorial Guinea had the 12th highest gross domestic product in the world in 2008, with more than $30,000 per capita. However, it also ranked 121st out of 177 countries on the United Nations human development index.’
The Solution: Greater tax transparency.
Sarwar’s Bill is based heavily on law enacted in the United States and backed by President Obama and thus; ‘In effect, the Bill would replicate the measures in the Cardin-Lugar amendment for UK listed extractive companies, supporting the move towards a global standard on the issue and a first step towards full tax justice for developing countries. The changes would enable civil society and NGOs to hold Governments to account.’
The Purpose: Stronger Governance and Citizen Empowerment
Sarwar argued that requiring companies to disclose their payments increases the available information to citizens in resource rich countries with the outcome that, ‘Transparent, effective tax systems and the reduction of corruption could allow money otherwise lost to be spent on schools, doctors, clean water and infrastructure-exactly the kind of projects on which British aid money is spent now. Improving access to their own wealth could lead many developing countries out of poverty, away from aid dependency, and into self- sufficiency and sustainable growth-the ultimate development goal.’
The Companies: The Money and the responsibility
Sarwar pointed out that that the London Stock Exchange has a responsibility to act ‘With more than 80 extractive companies listed on the London stock exchange, representing more than £1 trillion of capital, the UK has a responsibility to take action on the issue, for the benefit not only of the developing world but of UK business.’
The Context: EU Wide Push for Action
This bill comes just as this issue is picking up steam across Europe. As he acknowledged, ‘Although I have been working on the Bill for several months, its introduction could not have come at a much better time. During the recess, we had the welcome news that the Chancellor and the Business Secretary are backing President Sarkozy's plans for Europe-wide rules on the issue.’
The UK: Our Role
Sarwar made it clear that whilst the EU is acting, there is no excuse for the UK to take a back seat on this issue because, ‘Independent action by the UK would not jeopardise EU progress, but would strengthen the campaign by setting an important example. It would represent a big contribution to international development at little or no cost, while at the same time promoting the kind of corporate social responsibility of which we can all be proud.’
The Reason: Justice
Sarwar acknowledged that the theft and mismanagement of natural resource wealth is a problem that needs to be dealt with urgently. As he pointed out it is those in developing who suffer the most and as matter of justice this needs to be addressed because, ‘The amount of money disappearing every day could translate into lifting millions of people out of poverty in developing countries [and the] developing world does not have time to wait for Europe to catch up. A genuinely sustainable and cost-effective approach to international development demands that the UK Government act now.’
Our response: Act
At the Global Poverty Project we stand in support Anas Sarwar's Bill. Like him and many others we too believe it is time for the Government to act. Join us in creating a movement of people committed in demanding the Government implement greater transparency standards in the oil, gas and mining industries. Join our movement for Justice.