For decades in its foreign policy and development programs, the United States has pressed for measures to reduce corruption. Its efforts stretched across administrations from President George H.W. Bush to President Barack Obama and were part of a broader foreign policy agenda to promote democracy, accountability and transparency, and to level the playing field for businesses and countries seeking investment. As former Bush administration Secretary of State Colin Powell famously said in 2002, “Capital is a coward. It flees from corruption and bad policies, conflict and unpredictability.”
But in a little-noticed vote last week in the Senate, the United States took a step back from that longstanding commitment to transparency and to the citizens suffering under corrupt, unaccountable governments. The vote of 52 to 47 would scrap a 2010 bi-partisan addition to the Dodd Frank Act, called section 1504. The law, known by shorthand for its two sponsors Democratic Senator Ben Cardin (MD) and Republican Senator Richard Lugar (IN), required oil, gas and mining companies that are listed on U.S. stock exchanges to declare to the U.S. Securities and Exchange Commission (SEC) payments made to foreign governments in their investments overseas. The change is now on the President’s desk waiting for his approval.
Requiring companies to declare the payouts was intended as a disincentive for U.S. resource extraction companies (that often work in some of the more closed, autocratic countries such as Venezuela and Russia) from corrupting governments and engaging in non-transparent acts outside the view of the citizens in those countries. The legislation change was allegedly a demand of the Secretary of State Rex Tillerson, and the company he formerly led, Exxon Mobil, which has been an outspoken critic of the anti-bribery regulation.
Surprisingly, despite the foreign policy implications, the vote has received little attention apart from some well-timed op-eds when it was being discussed in the House of Representatives and, when it was approved in the Senate, a mention in a larger New York Times article on efforts to gut Dodd-Frank.
The risks of its repeal are real and deserve attention. For one, by allowing gas, oil and mining companies to bribe with impunity with no effective government or citizen oversight, the Congress is rolling back decades of the U.S.’s commitment to its democracy, human rights and liberal agenda that have been a central part of its foreign policy since President Ronald Reagan. Without SEC oversight, the likelihood increases that indefinite, unaccountable funds will flow to autocratic leaders with which they can line their pockets and the pockets of their cronies, and use those funds to repress their populations. It will also make it more difficult for the U.S. to speak out against cases of corruption internationally and maintain its commitment to anti-corruption treaties like the OECD’s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
Second, giving resource extraction executives the right to bribe at will behind closed doors places at severe risk the international and domestic commitments many states have to protect their communities from abusive extractive practices. One of those is the International Labor Organizations Convention 169 to which—in the Western Hemisphere alone—Mexico, Guatemala, Colombia, Bolivia, Chile, and Peru, among others, are signatories. The convention guarantees indigenous and, in some cases, Afro-descendant communities the right to be consulted when state policies will affect their cultural heritage; that right has commonly been interpreted to include land. Throughout these countries, governments are starting to put in place—in varying degrees—processes to ensure that indigenous and Afro-descendant communities are respectfully consulted over resource extraction investments in the lands that many of them have occupied for centuries.
Turning a blind eye to the cash payouts companies can pay to governments to move projects forward both denies the rights of citizens to monitor the actions of the public officials and risks that, when communities are consulted, a corrupt deal has already been struck precluding any meaningful consultation.
Let’s hope the change gets more attention from the U.S. media and foreign partners, governments and NGOs alike.