Much stays hidden
An initiative aimed at increasing the transparency of mining companies’ payments to governments across the globe has been slammed as paternalistic and ineffective by representatives of the people it was claimed to help.
The extractive industries transparency initiative (EITI) was first announced by then UK prime minister Tony Blair at the world summit on sustainable development in Johannesburg in 2002. It was launched a year later, at a time when the entire developed world, led by Blair and pop stars Bono and Bob Geldof, seemed determined to save Africa from itself.
It is described as a multistakeholder initiative involving the relationships of governments with civil societies and multinational corporations.
Its aim is to increase transparency in the mining, oil and gas sectors through corporate disclosure of the money paid to the governments of the countries where mining companies operate. The critical underlying assumption is that increased transparency will lead to improved accountability by those governments. In turn, this enhanced accountability is expected to result in improved delivery and less corruption. So much for good intentions. David van Wyk, a researcher with community-based NGO Bench Marks Foundation, describes EITI as yet another global initiative driven by powerful corporations. “The big companies want us to believe they are being held accountable by citizens, but what’s actually happening here is that they’re pretending to be the good guys while throwing mud at African governments,” says Van Wyk, who has just completed a report, soon to be published, assessing the effect of EITI.
Among Van Wyk’s damning conclusions is that the EITI, which is voluntary, offers the large oil, gas and mining companies a “safe alternative” to mandatory regulation. Also, that it fails to tackle tax avoidance and revenue distribution, and completely overlooks the frequently devastating human and environmental impact of resource extraction.
A revision of the EITI rules in 2013 has addressed only a few of the less important flaws in the system’s design, says Van Wyk. He does not entirely condemn the initiative, and commends the participants for their good intentions, noting the involvement of the socially aware Norwegian Sovereign Fund.
“Investment is driven by reducing costs and increasing yields; some fancy CSI [corporate social investment] statements and box-ticking won’t change the fundamental reality that environments and communities have to bear the price of that.”
A suspicion of double standards and paternalism may explain SA’s refusal to sign up to the EITI. Though there has been no formal statement on the matter, a series of comments by senior government officials, from the department of mineral resources to national treasury, conveys the general scepticism.
Former finance minister Trevor Manuel was particularly scathing of the initiative’s antiAfrican bias at an international corporate governance conference some years back.
The official SA view is that government is sufficiently transparent in accounting for its revenue and sees no compelling need to be a signatory of the EITI.
It’s a view that will be endorsed by anyone who has sat in on the very lengthy annual budget presentations in February, or the equally lengthy annual medium-term budget policy statement presentation nine months later, in October.
Further endorsement is that SA generally scores well in the open budget index.
For those still not persuaded about its high standards of transparency, government also alludes to the Promotion of Access to Information Act, which allows citizens to gain access to the type of information covered by the EITI, and lots more.
All the significant SA-based mining operations are, in EITI parlance, “supporting companies”.
The list of local supporters includes African Rainbow Minerals, Anglo American, AngloGold Ashanti, Glencore, Gold Fields, Impala Platinum and Lonmin.
In its recently released annual report Glencore reveals (in terms of its EITI obligations) that it contributed US$83.5m to the SA fiscus in 2015. Its total payments to governments across the globe were almost $3bn, with Australia the single-largest recipient.
Group chief financial officer Steve Kalmin says the company is committed to the highest standards of corporate governance and transparency. “The tax and royalty payments we make in connection with our activities can be used to provide the citizens of those countries with government services and infrastructure to improve their quality of life,” Kalmin says.
He believes disclosure of the payments reduces the potential for corruption by all parties.
For Van Wyk this kind of statement is little more than cynical whitewash designed to relieve companies of any responsibility.
He alludes to the investigation launched several years ago by the European Investment Bank into tax evasion allegations against Glencore’s Zambia-based