Under federal law, US companies can’t bribe public officials in countries where they do business, but they often make payments that are nominally taxes but are actually diverted by corrupt officials for their own use. To help citizens of those countries oversee their own leaders, the 2010 Dodd-Frank financial regulatory reform law has a worthwhile provision requiring oil, gas, and mining companies to disclose payments they’re making to governments as the price of doing business. But this provision can’t take effect until the Securities and Exchange Commission spells out how it will be enforced. Two years, thousands of public comments, and a missed deadline later, the commission has yet to do so.
The commission sat on a proposed rule for months before finally scheduling a vote for this August. The regulatory agency may be spooked by a federal court decision striking down an unrelated rule because the SEC didn’t do enough to justify it. To dissuade industry-backed lawsuits, the agency is now trying to include cost-benefit analyses for all new regulations. But the benefits of anti-corruption rules are hard to quantify. How much is honest governance worth in Congolese francs?
It also doesn’t help that the commission is responsible for making a host of other rules and lacks the funding to do the job properly. The result, however, is clear: Of the 95 rules the SEC is supposed to draw up under the financial reform law, 56 have missed congressionally mandated deadlines and are still pending. There’s a danger in waiting too long: A new, more industry-friendly Congress and president could overturn much-needed reforms.
Many energy and mining firms argue that disclosure of the payments they make to foreign governments would expose proprietary information to competitors. But it’s not clear that secrecy has benefited anybody; if all payments are disclosed, corrupt officials will have a harder time shaking US energy companies down for mysterious “fees.” And the amounts that US firms are paying out is staggering: More than $100 billion a year to governments overseas — sums that dwarf the amount of US aid many countries receive, according to the Boston-based Oxfam America. Transparency rules would increase the pressure on foreign governments to put those payments into public projects, not Swiss bank accounts.
Oxfam is right to press the securities commission by suing the agency in federal district court in Massachusetts for missing its statutory target date. Ideally, the SEC would approve the rule while Oxfam’s case is still pending, so the suit becomes moot. If the agency doesn’t act soon, the best chance to find out where the oil money is going will be lost.