Promoting revenue transparency: 2011 report on oil and gas companies

Turning the resource curse into a blessing

Many countries home to great resource wealth are also home to some of the world’s poorest communities. If companies were more transparent about payments made to governments to exploit oil and gas resources, there would be less room for corruption and more money available for development.

The Promoting Revenue Transparency: 2011 Report on Oil and Gas Companies, published by Transparency International in partnership with Revenue Watch, rates 44 companies on their levels of transparency. Representing 60 per cent of global oil and gas production, the companies are evaluated in three areas:

More global disclosure, but not enough hard detail

Reporting on anti-corruption programmes shows what companies are doing to fight corruption and helps prevent individuals from misappropriating revenues and bribing foreign officials.

**View infographic #1

Good scoring companies have measures in place such as giving employees anti-corruption training or ensuring them protection from retaliation if they report corruption.

Only eight companies score zero for reporting on anti-corruption programmes. This number represents a big improvement on the 2008 Promoting Revenue Transparency results, where 21 of the 42 companies evaluated scored zero.

More transparent operations

Clarity on subsidiaries and equity partners helps prevent corruption because it exposes potential areas of conflict of interest. A government minister, for example, will be less likely to take a private stake in an oil subsidiary if this information is openly published.

**View infographic #2

These scores also look at whether company accounts, and external audits of them, are published. Although average results are relatively high, disclosure of equity or field partners in upstream operations remains infrequent.

Shedding light on company-government relations

Companies score poorly for disclosing information on a country-by-country basis the amount of royalty payments, taxes and fees they make to governments. For the most part, if this data is published, it is aggregated for a region so there is no way for citizens and civil society to hold their governments to account for the money they receive from oil and gas companies.

**View infographic #3

The report shows that a dozen companies reveal very limited or no data about operations outside their home country, and four companies only reveal their production volumes in foreign countries.

Strong rules needed to set transparency standard

Companies listed on stock exchanges, which mandate certain levels of public disclosure, show better results.

As world leaders look to help resource rich developing countries, they should look at how their national laws (or the lack of them) impacts corporate transparency.

The United States took this step in 2010 by passing new rules (the Dodd-Frank Act) requiring all companies registered with US stock market authorities to publicly report their payments related to oil, gas or mineral extraction to governments on a country-by-country basis. The law also applies to non-US companies that are listed on its stock markets, making it a powerful force for transparency.

Recommendations to public bodies and the investor community

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Additional resources:

Revenue Watch Index 2010

Promoting Revenue Transparency report 2008

For any press enquiries please contact press@transparency.org

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