financial mail - amazon s3 · 2016-10-26 · financial mail search keywords money & investing...
TRANSCRIPT
Wednesday, October 26 2016
Business Sites
SubscribeRegisterLogin
Financial MailSearch keywords
Money & InvestingSo much for good intentions
Transparency: Much stays hiddenby Ann Crotty, August 25 2016, 20:43
Tweet
ShareShare
5ShareShare
0
Kindle
HOMEHOME FM FOXFM FOX FEATURESFEATURES MONEY & INVESTING MEDIA & ADVERTISINGMEDIA & ADVERTISING OPINIONOPINION LIFELIFE
SPECIAL REPORTSSPECIAL REPORTS PAST ISSUESPAST ISSUES
Steve Kalmin
Related Articles
Investors' mad dash for goldThe shine is back
Diageo: Great possibilities
SA banks: Setting standardsBanks have ingenious ways of squeezing revenue out of clients
Shop Talk: Cash or credit?Credit through store cards is idiosyncratically South African
Mentioned in this ArticleFM Edition:
August 25 - 2016
An initiative aimed at increasing the transparency of mining companies’ payments to governments across the globe has beenslammed as paternalistic and ineffective by representatives of the people it was claimed to help.
The extractive industries transparency initiative (EITI) was first announced by then UK prime minister Tony Blair at the worldsummit on sustainable development in Johannesburg in 2002. It was launched a year later, at a time when the entiredeveloped world, led by Blair and pop stars Bono and Bob Geldof, seemed determined to save Africa from itself.
It is described as a multistakeholder initiative involving the relationships of governments with civil societies and multinationalcorporations.
Its aim is to increase transparency in the mining, oil and gas sectors through corporate disclosure of the money paid to thegovernments of the countries where mining companies operate. The critical underlying assumption is that increasedtransparency will lead to improved accountability by those governments. In turn, this enhanced accountability is expected toresult in improved delivery and less corruption.
So much for good intentions.
David van Wyk, a researcher with community-based NGO Bench Marks Foundation, describes EITI as yet another globalinitiative driven by powerful corporations. "The big companies want us to believe they are being held accountable by citizens,but what’s actually happening here is that they’re pretending to be the good guys while throwing mud at Africangovernments," says Van Wyk, who has just completed a report, soon to be published, assessing the effect of EITI.
Among Van Wyk’s damning conclusions is that the EITI, which is voluntary, offers the large oil, gas and mining companies a"safe alternative" to mandatory regulation. Also, that it fails to tackle tax avoidance and revenue distribution, and completelyoverlooks the frequently devastating human and environmental impact of resource extraction.
A revision of the EITI rules in 2013 has addressed only a few of the less important flaws in the system’s design, says VanWyk. He does not entirely condemn the initiative, and commends the participants for their good intentions, noting theinvolvement of the socially aware Norwegian Sovereign Fund.
"Investment is driven by reducing costs and increasing yields; some fancy CSI [corporate social investment] statements andbox-ticking won’t change the fundamental reality that environments and communities have to bear the priceof that."
A suspicion of double standards and paternalism may explain SA’s refusal to sign up to the EITI. Though there has been noformal statement on the matter, a series of comments by senior government officials, from the department of mineralresources to national treasury, conveys the general scepticism.
Former finance minister Trevor Manuel was particularly scathing of the initiative’s anti-African bias at an internationalcorporate governance conference some years back.
The official SA view is that government is sufficiently transparent in accounting for its revenue and sees no compelling needto be a signatory of the EITI.
It’s a view that will be endorsed by anyone who has sat in on the very lengthy annual budget presentations in February, orthe equally lengthy annual medium-term budget policy statement presentation nine months later, in October.
Further endorsement is that SA generally scores well in the open budget index.
ADVERTISING
inRead invented by Teads
For those still not persuaded about its high standards of transparency, government also alludes to the Promotion of Access toInformation Act, which allows citizens to gain access to the type of information covered by the EITI, and lots more.
All the significant SA-based mining operations are, in EITI parlance, "supporting companies".
The list of local supporters includes African Rainbow Minerals, Anglo American, AngloGold Ashanti, Glencore, Gold Fields,Impala Platinum and Lonmin.
In its recently released annual report Glencore reveals (in terms of its EITI obligations) that it contributed US$83.5m to the SAfiscus in 2015. Its total payments to governments across the globe were almost $3bn, with Australia the single-largestrecipient.
Group chief financial officer Steve Kalmin says the company is committed to the highest standards of corporate governanceand transparency. "The tax and royalty payments we make in connection with our activities can be used to provide thecitizens of those countries with government services and infrastructure to improve their quality of life," Kalmin says.
He believes disclosure of the payments reduces the potential for corruption by all parties.
For Van Wyk this kind of statement is little more than cynical whitewash designed to relieve companies of any responsibility.
He alludes to the investigation launched several years ago by the European Investment Bank into tax evasion allegationsagainst Glencore’s Zambia-based subsidiary Mopani Copper Mines.
The secrecy surrounding the investigation’s report confirms Van Wyk’s view that the governments of the rich North are keento promote the perception that the resource curse is an African government problem.
Last year, after prolonged efforts by various EU-based NGOs to get access to the report, EU ombudsman Emily O’Reillyslammed the European Investment Bank for the way it handled the request, saying it had failed to meet its obligations underits own transparency policy. Glencore has consistently denied any wrongdoing.
Reinforcing the perception that the voluntary EITI is an easier and more manageable set of standards than anything thatmight be imposed by regulators was the US-listed extractive companies’ aggressive opposition to section 1504 of the Dodd-Frank Act. This section required all US-listed extractive companies to publish how much they paid governments forinternational projects, and was due to be enacted in 2012.
For a while stiff opposition from the oil industry, led by the American Petroleum Institute, stalled the enactment. The oilindustry argued that section 1504 would cost it $1bn/year to implement and would expose commercial secrets.
In an unintentionally damning indictment of the EITI, the institute and its members have urged the US Securities & ExchangeCommission to allow them to opt for a voluntary system. The industry players have backed the EITI as the "more sensible"alternative to section 1504. The commission held out, and last month enacted a slightly modified version of section 1504.
It will help to up the stakes in transparency, but on the other side of the world, in Motlhabe Village in the middle of theRustenburg mining belt, the Bench Marks Foundation community watches as its lifestyle and environment continue todeteriorate.
More in this sectionBackstory: Taste Holdings' Carlo GonzagaKing 4: New wine in old bottles?Directors' Dealings: So what is going on?Analyse This: Vunani Securities' Anthony ClarkMarket Watch: Pour us a dividend pleaseGold may just win US election
Top StoriesEditorial: Cyril Ramaphosa shaken out of slumber at lastSA’s Game of ThronesThuli Madonsela's last battle: How SA's heroine stuck it to Zuma (again)Bruce's List: ICC withdrawal: SA moves from deplorable to despicableAnalysis: Gordhan's R6.8bn Gupta masterstroke
MORE FROM FINANCIAL MAIL MORE PROMOTED STORIES
Between the Chains: Now for Mosebenzi Zwane?
PROMOTED STORIES
Recommended by
Inside Today's MillionDollar Listing of theDayMANSION GLOBAL BYDOW JONES
33 Expert Tips No OneShould Plan TheirRetirement WithoutQUOTE
Making the Most ofForex When Investingin Currency TradingFINANCIKA
4 Students reveal theirMoney-MakingSystem on Live TV!STARTUP365
Sign Up for the FreeCourse and LearnEverything There Is toKnow About…FINANCIKA
Transpaco: The full package MONEY & INVESTING
Remgro: Tentacles of a giant MONEY & INVESTING
Fury over new auditing rules MONEY & INVESTING
The new MBA: Laying (most) fears to rest COVERSTORIES
Public protector: Building on Baqwa COVER STORIES
Gold Plated super car spotted in Joburg belongs to alocal millionaire. Can you… 24 BUSINESS NEWS
Capetown math student shocks wall street with a systemthat makes more money… 24 BUSINESS NEWS
Cape Town Teacher makes R4,200 per day! He revealshis Money-Making Secret here… WWW.REALCASHGUIDE-SA.COM
The Greatest Western Movies of All TimePRETTYFAMOUS
Four Students Reveal their Secret for Making MillionsSTARTUP365
Most ReadEditor's Picks
1. PSG Group: Building up a head of steam2. Analyse This: Vunani Securities' Anthony Clark3. MTN Zakhele shareholders look forward to juicy payday4. Aspen: A picture of good health5. Gold may just win US election6. Dunkin’ Donuts bets on SA's sweet tooth7. Property: Focus on Europe’s ‘new hope’8. Backstory: Taste Holdings' Carlo Gonzaga9. Penny Stocks: cheap for a reason
10. King 4: New wine in old bottles?
JSE InJSE In…… Comm… Currenc… Intl Indi…
Index Value Move Change %
15 friends like this
Financial Mail54,593 likes
Like Page Sign Up
Financial Mail
+ 1,034
Follow +1
HomeFM FoxFeaturesMoney & InvestingMedia & AdvertisingOpinionLifeSpecial ReportsPast Issues
About UsStaff ProfilesFAQsContact UsAdvertise with usSubscribeTimes Media Group B-BBEEPrivacy PolicyPress CodeTerms & Conditions
TML NetworkBDliveBusiness TimesBusiness Day TVTimes LIVEFinancial MailBooks LIVERDM
UpdatesTwitterFacebookYouTubeNewsletter
OtherSite Map
Times Media (Pty) Ltd disclaims all liability for any loss, damage, injury or expense however caused, arising from the use ofor reliance upon, in any manner, the information provided through this service and does not warrant the truth, accuracy orcompleteness of the information provided.