We refer to Section 1504 of the Dodd Frank Act frequently when we discuss the issue of corruption and what you can do about it, but there is more than a slight chance that you have no idea what Section 1504 is and what it is so important. So, here is some brief information about the Dodd Frank Act, and, more specifically, Section 1504.
- It applies all companies listed within the US, and registered with the Securities and Exchange Commission (SEC), that engage in the commercial development of gas, oil, and other minerals. Engagement is defined as exploration, extraction, processing, export, and other significant actions.
- It covers 8 of the 10 largest mining companies and 29 of the 32 largest internationally active oil companies.
- It requires the companies to publicly report how much they pay to the US and foreign governments for natural resources – including taxes, royalties, fees, production enticements, and bonuses all the way down to the project level
- The report and data must be made available publicly and online.
- First of all, it is the first law of its kind in the world. There are laws requiring extraction companies to pay governments for the natural resources they are taking and laws making it illegal to pay bribes, but there is little to no accountability.
- Other nations of the world are looking to the United States as an example, seeking to similar legislation in their countries.
- Requiring financial interactions to be transparent not only helps the SEC crack down on bribes, but it allows the everyday citizen to keep track of the money being paid to their governments.
- It gives citizens the ability to influence where and how the money is being spent as well as monitor the decisions and conditions of the deals and contracts between governments and the extractive companies.