The following article is reprinted with permission from CMJ's sister publication The Northern Miner.
Canada's extractive industries got some high-profile international attention in mid-June. Prime Minister Stephen Harper used the lead-up to the G8 summit in London to announce that the federal government intends to establish new mandatory reporting standards for Canadian mining and oil and gas companies with, in his words, "a view to enhancing transparency on the payments they make to governments."
The government says it's doing this for six reasons: to improve transparency; to ensure Canada's framework is consistent with existing international standards and aligned with other G8 countries; to ensure a level playing field for companies operating domestically and abroad; to enhance investment certainty; to help reinforce the integrity of Canadian extractive companies; and to help ensure that citizens in resource-rich countries around the world are better informed and benefit from the natural resources in their country.
Next, the federal government will consult with its provincial and territorial counterparts, industry representatives and aboriginal and civil society groups on what would be the best regime for Canada's extractive industries to follow.
Broadly speaking, this is all laudable and a good step forward. With some notable exceptions such as SNC-Lavalin in Gaddafi's Libya, Canadian companies are generally on pretty good behaviour overseas, and so greater transparency with respect to their payments to foreign governments will shine a light on their at times underappreciated contributions to their host countries.
Plus, one of the beauties of modern resource extraction by public companies is that if you know the production numbers and prices being fetched for the commodity being extracted, you can grab a calculator and easily estimate the maximum amount of money that is being generated at a mine site or oil and gas field. And so, the payments that Canadian companies make to foreign governments in taxes and fees shouldn't hold too many surprises, as they are made more public under any new transparency regime.
Canadian mining companies will be happy to know that their national representatives — the Prospectors and Developers Association of Canada and the Mining Association of Canada — have been on the ball, having teamed with NGOs Publish What You Pay Canada and Revenue Watch to form a what they call a "Resource Revenue Transparency Working Group" that followed up on the PM's announcement with its own recommendations for a new transparency regime.
While there may be a couple of years of back and forth between stakeholders to set up the Canadian regime, in the end, in true Canadian style, the regime will probably fall in line with whatever standards are being established right now in the U.S., Europe and the U.K. — and then Canadians will declare that we're leading the world.
The death on June 26 in opulent old age of the infamous oil trader, Glencore International founder and former U.S. tax fugitive Marc Rich is a timely reminder that achieving true transparency — and let's call it "resource justice" in the international commodities markets — is a lot tougher than simply revealing taxes and fees paid by companies to governments.
Containing an amoral genius like Rich and reining in other bad actors in the resources sector requires dealing with some of the standard techniques for hoovering out resource wealth from a developing country and leaving its inhabitants dazed, destitute and powerless.
Some of the more dubious old school techniques that aren't really dealt with in something like this latest transparency drive include:
You clean that stuff up, and you've really done something for the world's poor.
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