October 25, 2011
Clark Gascoigne, +1 202 293 0740 ext. 222
Monique Perry Danziger, +1 202 293 0740 ext. 222
Country-by-Country provisions in newly released European Commission a welcome step forward but more action is needed, says Global Financial Integrity
WASHINGTON, DC – The European Commission published a long-awaited proposal today, which included measures building upon, and expanding, multinational company reporting rules in the extractive industries. Transparency proponents noted that the move should spur action on the part of the Securities and Exchange Commission (SEC) to finalize implementing rules for similar legislation adopted as part of the Dodd-Frank Wall Street Reform Act.
“With today’s announcement the European Union (EU) has taken the lead in establishing better business practices and greater overall transparency in the global financial system, but only by a bit,” said Global Financial Integrity (GFI) director Raymond Baker. “It is important to note that the term “country-by-country” used with regard to the EU recommendations would only require the country-by-country reporting of very specific information – only the amounts of money that a company pays to a government. The EU missed a perfect opportunity to stabilize not only governments in developing countries, but governments all over the world by requiring country-by-country reporting of not only payments to governments, but also revenues, profits, losses and taxes paid by a multinational on a country by country basis to address our tax evasion and tax avoidance problems.”
Today’s proposals come from the EU “College of 27,” and are submitted as amendments to the EU’s Accounting and Transparency Directives. Following today’s introduction, these proposals will still need to be voted into legislation by the EU Parliament and then implemented by individual member states to enter into force.
Today’s proposals are based, in part, on the oil and mineral reporting requirements in the Dodd-Frank Wall Street Reform and Consumer Protection Act passed last year. The EU proposals include similar reporting requirements to those found in Section 1504,or the Cardin-Lugar provision, which requires country and project level reporting of all payments made to any government by publicly listed companies. The EU proposals go further to extend reporting requirements to large, private, unlisted companies and include the timber industry within their scope.
“The US needs to move forward and issue rules for implementation of the Cardin-Lugar Provisions,” said Mr. Baker. “It is important that they inform the EU legislative process. Collaboration, cooperation, and harmonization of US and EU measures will be the key to smooth implementation and useful results across the board,” said Mr. Baker.
Global Financial Integrity (GFI) is a Washington, DC-based research and advocacy organization which promotes transparency in the international financial system.
For additional information please visit www.gfintegrity.org.