EconoMatters, Global HotSpots, Rethinking America

Trump and Corporate Secrecy: Welcome to the Dark Age

The U.S. Congress and Trump’s cabinet bring joy to the kleptocrats in Africa, Latin America and elsewhere.

Credit: Dooder - Shutterstock.com

Takeaways


  • The repeal of the energy transparency law is just the opening salvo in what will be a tidal wave of White House administrative actions.
  • Publicly reporting payments to foreign governments would have indicated how much cash was being transferred.
  • We are entering a dark era of business secrecy, encouraged by the leaders of both houses of the U.S. Congress.

One of the first acts of the new Congress of the United States will bring joy and a sense of security to the kleptocrats in many countries in Africa, Latin America, Asia and in Central and Eastern Europe who steal the natural resources wealth of their countries.

Trump does Exxon Mobil’s bidding

The swift decisions by both House of Representatives and the U.S. Senate in recent days to kill a law that demanded that American oil, gas and mining companies publicly disclose their royalty, license and other payments to foreign governments is a victory for secrecy.

The Congressional action has the full blessing of President Trump who has long argued that anti-corruption regulations weaken the competitiveness of U.S. companies.

For several years, ExxonMobil and other giant energy companies have sought to kill, or at least delay, the enforcement of the law.

Now, they join their foreign governmental partners in cheering the death of a major transparency initiative.

Back to murkiness

The law that has now been overturned is the Energy Security Through Transparency Act, which was an amendment to the Dodd-Frank Act financial regulation law of 2010.

President Trump has just signed an executive order that calls for the gutting of most of this comprehensive law to the applause of Wall Street banks.

A leading opponent of the energy transparency law was former ExxonMobil boss Rex Tillerson, who is now the U.S. Secretary of State.

No doubt, he will be a key part of the powerful chorus in the Trump Administration pressing for even more deregulation of business.

Goldman Sachs to the rescue

A staunch colleague on this front is billionaire industrialist Wilbur Ross, the new Secretary of Commerce.

Also along for the ride is the former top Goldman Sachs banker Gary Cohn. In his new role as chief White House economic policy adviser, he authored the new executive order for the repeal of most of Dodd-Frank.

The swift repeal of the energy transparency law is just the opening salvo in what assuredly will be a tidal wave of White House administrative actions and Congressional legislative decisions.

The goal is reduce business regulation, increase business secrecy and, in effect, end the era of U.S. global anti-corruption leadership.

US a leader no more

Since 1978, with the coming into force in the U.S. of the Foreign Corrupt Practices Act, the United States has led the world in curbing the proclivity of multinational corporations to bribe foreign government officials.

In 1998, other leading industrial countries, encouraged by the U.S., approved an international anti-bribery convention that mirrored the U.S. law.

Enforcement actions by the U.S. Securities and Exchange Commission and the U.S. Justice Department have been substantial and gradually encouraged U.K., Swiss and German authorities to be more vigilant.

Following the U.S. lead, the European Parliament approved legislation similar to the energy transparency law and included forestry companies to the other natural resources firms that must comply.

Will Europe also pedal back?

But now the U.S. has signaled that it is retreating from the corporate anti-corruption field. Not to be left behind, this will encourage Europe-headquartered multinational companies to lobby their governments for a level playing field with their U.S. competitors.

The U.S. law was a bipartisan initiative spearheaded in 2010 by Democratic Senator Ben Cardin and former Republican Senator Richard Lugar.

No sooner had the legislation been signed by President Obama than the American Petroleum Association (APA) went on the attack.

The APA succeeded in the courts for several years to prevent the Securities and Exchange Commission from enforcing the rules. The SEC was finally able last year to write the implementing regulations.

Cardin-Lugar law

These regulations demanded that oil, gas and mining companies start publishing the details of their payments to foreign governments on an annual basis in 2019. Now, the SEC will assuredly terminate those rules.

Writing in The Hill newspaper, which reports on the U.S. Congress, Senators Cardin and Lugar argued that Donald Trump campaigned to serve the interests of ordinary people in opposition to special interests.

The actions to rollback the Cardin-Lugar law serves only the special interests, notably the resources companies.

The real victims, say the two the politicians, are the citizens of oil-rich countries whose leaders steal the royalty payments received from U.S. corporations.

As Cardin and Lugar stressed in their article:

History shows that many resource-rich countries are actually poor because the vast mineral revenues breed corruption that leads to poverty, hunger and instability. Oil-rich Venezuela is running out of food and medicine. Nigeria, with vast reserves, is gripped by economic crisis and terrorism.

Welcome to the dark age

Publicly reporting payments to foreign governments by resources companies would not have ended corruption, but it would have made it far clearer just how much cash was being transferred. And it would have added pressures on recipient governments to account for how the funds are used.

Now, we are entering a dark era of business secrecy, encouraged by the leaders of both houses of the U.S. Congress and the White House. The first challenges to business transparency have been made and they have succeeded.

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About Frank Vogl

Frank Vogl is co-founder of Transparency International and author of Waging War on Corruption: Inside the Movement Fighting the Abuse of Power.

  • SOLOMON ABDETTA SHENE

    Hope the better SHALL come.
    But how could laws which are being created by the Ethiopian government with the pretext that would inprove the development efforts but in reality meant to facilitate oppositionless government favouring the rent seekers multiple benefits be exposed and worked for their removal? Though these laws were made with the full awarness of the western,particularly the U.S.A govt., for the sake of the collaboratively need on the war. against terrorists at the expense of longtermed lifethreatening situation the people are being forced into