A European Parliament panel voted yesterday (18 September) to strengthen financial disclosure rules designed to deter corruption in foreign mining, petroleum and forestry investments, putting the draft EU rules in line with a stringent law adopted this summer in the United States.

The Legal Affairs Committee amended the European Commission’s proposed revamp of the Transparency Directive, a move welcomed by anti-poverty and environmental campaigners who want more light shed on mining and logging concessions to prevent exploitation and graft – especially in resource-rich developing countries.

The panel removed provisions that would prevent EU-listed corporations from filing financial statements if the country where they are doing business bans such disclosures, and requires reporting on specific projects rather than a more general country-by-country basis.

“The result of this vote in the European Parliament will be welcomed by millions in resource-rich developing countries who have been deprived of stolen oil and gas funds,” said Jana Mittermaier, who heads Transparency International’s Brussels office.

“Wealth in some of the poorest countries should no longer stay in the hands of corrupt elites, politicians and industry insiders,” Mittermaier said in a statement. “The publication of business information on a country-by-country and project-by-project basis is an important step toward greater accountability of governments and corporations worldwide.”

Campaign groups including Oxfam, Transparency and ONE had all pressed MEPs to put the EU directive in line with rules adopted in July by the US Securities and Exchange Commission (SEC). The US rules stem from a sweeping package of financial and consumer reforms known as the 2010 Dodd-Frank Act.

The rules apply to US-registered companies while the EU’s would apply to European firms. Together the standards would cover hundreds of companies – including some of the world’s biggest corporations – that mine minerals or extract petroleum in conflict areas, emerging countries with weak rule of law or developing nations with newly discovered mineral reserves.

EU covers logging

Unlike the new US law, the EU draft would also cover logging concessions. The amendments must now be adopted by the full Parliament before negotiations can begin with the Council.

MEP Françoise Castex, a member of the Legal Affairs Committee, and fellow French Socialist MEPs Eric Andrieu and Patrice Tirolien had argued before the vote that the law “should be clear and exclude all exceptions relative to certain operations or certain types of enterprises.”

The three MEPs, writing in a commentary published by the French daily La Liberation on Monday (17 September), also said that the directive should eventually apply to other industries, such as telecommunications, with overseas concessions.

Clare Short, who chairs the Extractive Industries Transparency Initiative (EITI), also urged EU align its draft rules with the Americans “so that companies don’t have do one set of reports under the US rules, and another set of reporting under the EU rules.”

“As far as possible [the EU should] make the rules compatible with the US rules, just to make it lean and clear and not heavily bureaucratic and difficult,” Short, a former British MP and international development secretary, told EurActiv ahead of the Legal Affairs Committee vote.

The recast of the Transparency Directive was unveiled by the European Commission in October 2011 to close loopholes and streamline reporting.

Trade groups challenged proposals

On both sides of the Atlantic, the disclosure rules have been controversial. The powerful American Petroleum Institute, representing the big oil companies, and the International Association of Oil and Gas Producers (OGP) in Europe contend that the rules would put them at an unfair advantage against unscrupulous companies or state-owned firms that are not registered in either the US or Europe.

The trade groups also fear that disclosing details of specific projects could expose them to unfair competition in bidding and contracting.

Industry groups had pressed lawmakers to model the regulations on the EITI’s decade-old standards, which oblige implementing companies to disclose their payments for mining and petroleum operations and governments to report what they receive. The goal was to cut back-room contract deals and shed light on an industry prone to political manipulation.

Today, 14 countries, 60 corporations and charities like Oxfam participate in the Oslo-based initiative. Some 22 nations are candidates, and one country - Madagascar - has been suspended. The European Commission is also a partner in EITI.

Proponents of the transparency rules contend that businesses benefit from the transparency measures, by being sheltered from unscrupulous politicians.