MEPs in the Legal Affairs Committee today voted in favour of tough amendments to European Commission’s proposals requiring oil, mining and logging companies to disclose payments to governments of countries in which they operate on a project by project basis. MEPs also succeeded in extending the scope of the legislation to cover the banking, construction and telecommunications sector.
Rebecca Taylor, the Liberal Democrat European spokesperson on legal affairs, said:
“Liberal Democrat proposals to strengthen new EU financial disclosure rules to combat corruption abroad received a very timely boost by the US Securities and Exchange Commission (SEC) which led the way with tough transparency requirements this summer.
“We must now strive to achieve a global standard for all sectors, not just the industry sectors agreed today. Local communities must be able to find out how much a company has paid their governments and fight for a fair share of profits and taxes”
Fiona Hall MEP, who drafted changes to the proposals in the Development Committee, commented:
“It is a tragic paradox that many developing countries that are rich in natural resources often suffer from high levels of poverty and are most prone to corruption and dependent on aid.
“MEPs will push EU Member States to accept that all projects over € 80,000 have to be fully disclosed and audited without exemptions.”
Lib Dem MEP Sharon Bowles, Chair of the European Parliament’s Economic and Monetary Affairs Committee, pushed for not only an extension to other sectors but also to ensure that the payments to governments report is legally binding. Sharon said:
“The current status quo is simply not acceptable. International aid last year was approximately $133.5 billion* but tax owed to countries in the developing world is said to be at least $160 billion ** - imagine what could be achieved if multinationals simply paid their fair share of tax.”
“I am pleased that the Legal Affairs committee took on board our liberal amendments and agreed to extend the scope of the reporting requirements to more sectors, bolster project definition and payments and ensure someone is culpable if the report is wrong”
“The fight is not over though, and in the negotiations with the Member States, we must continue to push for all sectors to be covered in this as well as the disclosures to be audited”
Notes to Editors:
Currently, multinational companies only need to submit one set of consolidated accounts despite often having hundreds of subsidiaries – this has allowed some multinationals to hide details of their business activities abroad and also avoid paying taxes to host countries.
*OECD figures for 2011 reveal that $133.5 billion went as foreign aid from richer governments to developing countries as voluntary transfers. (http://www.oecd.org/dac/developmentaidtodevelopingcountriesfallsbecauseofglobalrecession.htm).
**In 2011 multinational firms are estimated to have avoided taxes of more than $160 billion in the developing world. http://www.christianaid.org.uk/actnow/trace-the-tax/background.aspx
Sharon Bowles MEP is running a campaign to close tax loopholes for multinational companies: Please visit her website for more information: http://sharonbowles.org.uk/en/page/own-up-pay-up
The European Commission published its new proposals on the Transparency and Accounting Directives in October 2011. The press release on the Commission proposals can be found here: http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/11/734
SEC Adopts Rules Requiring Payment Disclosures by Resource Extraction Issuers: http://www.sec.gov/news/press/2012/2012-164.htm
What happens next:
Today’s vote in the Legal Affairs Committee has provided MEPs with a mandate to enter into negotiations with EU Member States in the Council. Parliament and Council will have to come to an agreement on the new rules before they can be adopted.