More than two years later than expected the Securities and Exchange Commission (SEC) in the USA has introduced Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act mandating many US and foreign companies that are resource extraction issuers to disclose certain payments made to the USA or foreign governments.
Sounds boring, pardon the pun, but this is odds on to gusher in the beginnings of a swarm of scandals that will surely rival those of the banking industry. The European Parliament is expected to vote on not dissimilar legislation within a month.
So, instead of the likes of Barclays or Goldman Sachs dominating corporate sleaze expect the top oil barons to step up to the plate. In particular expect some interesting disclosures from the likes of BP, Rio Tinto, BHP Billiton, Occidental, BG Group, Conoco Phillips, Chevron, Exxon Mobil, Royal Dutch Shell, Schlumberger, Gazprom, Petrobras-Petroleo, Petro-China, Total, ENI and CNOOC.
Most of these global conglomerates operate through subsidiaries of subsidiaries (held via tax haven based intermediary holding companies) in very fertile areas of exceedingly poor and sadly therefore generally corrupt jurisdictions. These business structures were designed never to have to report anything and have therefore never faced such onerous reporting requirements which the SEC will no doubt relish enforcing and auditors should have learnt by now not to fall foul of.
We will have to wait and see whether the man or woman on main street feels as guilty filling up his/her car with “blood” oil as Naomi Campbell did wearing diamonds!
This article was first published on 23rd August 2012.