I’m not known for my ability to party. Let’s be honest I am generally unenthusiastic, sort of like Eeyore from Winnie the Pooh--I’m not a pessimist, but I am a realist and the world is a messed up place. I tend to carry the burdens of injustice with me like a twenty pound chain--hard to ignore the weight even at the happiest of times.
Racism, exploitation, corruption, apathy, excess, and injustice haunt our world. But today I celebrate. Why? In what sounds like a boring technical financial regulation the ground was laid for the world to change.
Perhaps one of the oldest, most severe forms of exploitation and corruption will have that much more difficulty thriving thanks to the SEC’s latest ruling on Section 1504 of Dodd Frank (yes, that Dodd Frank bill from 6 years ago), requiring strong transparency disclosures from oil, mining, and other extractive industries. These rules are welcome against a backdrop of resource rich nations having some of the most persistent and abject poverty on the planet. Perhaps you’ve been to DR Congo, Peru, Nigeria, Sudan, South Africa, Brazil, or a host of other nations who have an abundance of natural resources (gold, diamonds, oil, minerals) and seen pervasive poverty. Why is this such a prevalent theme that there are multiple terms (resource curse, paradox of plenty) to describe such scenarios?
The lack of transparency in extractive industries has been the status quo since colonization. In modern days this lack of transparency plays out in many different ways--fueling corruption, environmental degradation, funding conflict, and most simply put making it difficult for communities to benefit from their own natural resources. Too many oil, gold, and mineral mining contracts are secretive and end up funding the pockets of political elites and foreign multinationals while exploiting the land, resources, and labor of communities. This week's announcement from the SEC will help shine a light on all this darkness.
Thanks to the SEC’s ruling on Section 1504 of Dodd Frank, communities will be armed with the information they need to hold their governments accountable to massive amounts of revenue from extractive industries. The new rules will require reporting on a company by company, project level basis payments made to governments (including taxes) for the rights/leases/contracts to take resources out of the ground.
This is a critical step in allowing civil society to hold leaders accountable. The government claims there is no money for a school, health center, teachers, or new roads? Activists will now have the ability to look up the payments their government received from mining revenue and demand to know just where that money ended up. The hope is that corruption will be curbed on the front side of many of these deals--simply put they will be the way they were always intended to be. What company wants to publish that they paid no taxes, just a few million in bribes to the guy in charge of collecting taxes? When corruption is curbed, and local governments are held accountable to spending, no longer will communities rely on foreign NGOs to build schools or hospitals--they will be able to demand this function from the people who’s job it has been to always provide these basic services--their government.
It’s not the end of corruption in extractive industries, but it is a critical step. Significant enough that I may just crack a smile today as I celebrate.