Blog de Paul Donowitz

This week, speaking before the International Labour Organization’s 101st International Labour Conference in Switzerland as part of her historic visit to Europe, Daw Aung San Suu Kyi recommended that governments prohibit their companies from doing business with Burma’s state-owned oil and gas company, Myanma Oil and Gas Enterprise (MOGE) until the company adopts responsible and transparent business practices.  She noted (emphasis added):

The Myanmar Oil and Gas Enterprise (MOGE), the state-owned company under the Ministry of Energy with which all foreign participation in the energy sector takes place through joint-venture arrangements, lacks both transparency and accountability at present. The Government needs to apply internationally recognized standards, such as the IMF’s Code of Good Practices on Fiscal Transparency. Other countries could help by not allowing their own companies to partner MOGE, unless it was signed up to such codes. This would also ensure that their own companies would subject to the above codes themselves, and to the various requirements of publish what you pay.

Because of the requirement that all oil and gas investments be made through joint ventures with MOGE, Daw Suu’s recommendation effectively suggests to foreign governments that they prohibit companies from oil and gas investments in Burma until there are significant reforms within MOGE.  Daw Suu also endorsed the requirements of publish what you pay, and international movement to require the transparent disclosure of payments to governments related to the extraction of oil, gas, and mining.

On Wednesday, in San Ramon, California, Chevron will hold its annual shareholders’ meeting, and communities from around the globe are gathering to confront the oil giant on their unconscionable human rights and environmental record. For the past three years, ERI has joined with other members of the True Cost of Chevron Network in leading teach-ins, protests, press conferences, and other efforts to raise the voices of affected communities both inside and outside the annual meeting. We are unable to attend this year, but Paul Donowitz, ERI’s campaign director, wrote the following letter to express our ongoing solidarity with our allies’ efforts.

Dear Friends,

As you prepare to confront Chevron at tomorrow’s annual meeting and hold them to account for the impacts of their destructive practices in your communities and our global environment, I wanted to take a moment and once again express my solidarity with all of you, members of the amazing, inspiring, True Cost of Chevron Network.

I am saddened that I cannot join you this year. I have recently relocated to Thailand to focus more energy (the right kind of energy) on working with communities in Burma as they prepare for the onslaught of foreign direct investment in the extractive industries that will surely follow recent and ongoing political changes. I am constantly sharing with my new friends in Burma the cautionary tales and strategic advocacy strategies I have learned from all of you, and your experiences working tirelessly to defend the rights of people and the planet. 

The True Cost of Chevron Network grew from the idea that communities and advocates needed to come together in solidarity to raise our voices to change the policies of an entire industry and policy-makers who continue to put profit over people and the plant. We formed a community, an extended family all committed to each other, to justice and equality for those fighting to save their ways of live and the health and their people.

Recent reforms in Burma are leading policymakers in the E.U. and U.S. to consider whether and when to ease or eliminate longstanding economic sanctions against Burma.  The E.U. may in fact greatly reduce or entirely eliminate sanctions over the coming months, and the international community is looking closely at the fairness of the upcoming April 1st by-elections, when Aung San Suu Kyi and her National League for Democracy among other political parties are contesting a number of seats in the parliament as a barometer through which to view the pace and seriousness of reform efforts.

At this critical time in Burma’s history, international investors appear keen to enter the Burmese market to tap the country’s vast natural resources. However, lack of adequate laws and regulations, a weak and non-independent judiciary, and the continued violation of rights by local authorities and the military remain major obstacles to responsible development.  Without substantial institutional reform and implementation, both at the national, regional and local level, development may exacerbate risks to the people and environment of Burma, while only serving to enrich investors and well-connected individuals at the expense of the well-being of impacted communities.

Within this dynamic environment, the Burma Environmental Working Group (BEWG), of which ERI is a member, has issued its “Benchmarks for Responsible Investment in Burma’s Energy, Extractive and Land Sectors” to serve as a starting point for a framework for responsible and sustainable investment in Burma.   The following are BEWG’s five major benchmarks for investors:

Faced with the threat of a lawsuit if they issue effective rules to implement a new law requiring oil, gas and mining companies disclose their payments to governments, the Securities and Exchange Commission (SEC) was hit today with a hilarious yet appropriate stunt by our friends from Oxfam America. The intended purpose of this pre-Valentine’s Day action was to draw attention both to industry’s high pressure tactics, and to remind the SEC that they are not clients of big business, but government agents tasked with drafting rules to implement laws passed by Congress.

More actions are planned in the near future, beginning next Thursday at Chevron’s Houston offices. Oxfam America, Global Witness and other human-rights and anti-poverty organizations also are planning to place ads in several news publications next week, including the print edition of The Wall Street Journal and web editions of the Hill, the Washington Post, Politico and the Huffington Post. 

Ian Gary, Oxfam’s Senior Policy Manager with their oil, gas and mining program discussed the purpose of the morning’s action: “Our campaign aims to send a strong message that we’re watching, and ready to fight back if the regulatory agency issues weak final rules.” The truth is that only rules that adhere to the law—meaning project-by-project disclosures with no exemptions—will produce information that will allow civil society and investors to evaluate secretive deals between extractive companies and governments, and ensure that people in resource-rich countries benefit from energy development. 

The oil industry, led by their lobby, the American Petroleum Institute (API), has made wild claims that they will lose hundreds of millions of dollars and be forced to break foreign laws if the SEC rules do not grant them exemptions that would, in reality, totally gut the new law.  Their claims are simply untrue, overstated, and unsupported. 

This week marks the one year anniversary of the worst oil spill in U.S. history.  On April 20, 2010, a blow-out at BP’s Macondo well killed eleven workers on Transocean’s Deepwater Horizon and led to months of uninterrupted oil flowing into the Gulf of Mexico, damaging ecosystems and livelihoods in ways we still don’t understand. Our friend and colleague Antonia Juhasz has a new book on the Gulf oil spill that just came out, Black Tide: The Devastating Impact of the Gulf Oil Spill, and you can hear her talk about it recently on Democracy Now.

With the anniversary upon us, and in the middle of the season when oil companies convene shareholders for their annual meetings, it seems like a good time to take stock of corporate obstacles to sustainable energy policy.

The Problem

A It is now clear that climate change is real and man-made (or, at least, man-accelerated), and that it will produce drastic and severe consequences for our future on the planet.  Meanwhile, fossil fuel sources are running out and extraction of non-renewable resources is getting more dangerous.  Deep-water drilling (still no technologies available to prevent blow-outs like BP’s), drilling in the arctic, hydro-fracking (massive injection of toxic chemicals and greenhouse gas releases), tar sands (possibly the most destructive energy extraction process)… the list of bad energy options the oil and gas industry presents goes on and on.

The international community can make it harder for the generals in Burma to steal the proceeds of the country's natural gas exports, EarthRights International Senior Consultant Matthew Smith wrote in an op-ed for the Wall Street Journal (WSJ subscription required; PDF below) last Monday . The article explains that preventing corruption and money laundering can be accomplished through existing but unenforced U.S. legislation, and that steps to prevent this massive corruption are a reasonable response to the serious and growing problem of the looting of Burma's natural wealth.

Coming on the heals of global asset seizures of the Mubarak family, momentum is building for banks to lift the veil of secrecy that enables the looting of vast sums of natural resource wealth by autocratic leaders. Although banks have a responsibility to know their customers, ultimately, each country's monetary authorities have a responsibility to ensure their country does not become an country of prime money-laundering concern. ERI is pleased to hear that banks in Singapore have begun refusing some Burmese accounts related to regime cronies, and looks forward to more such action in the near future.

In a major development in the effort to promote the responsible use of resource-related revenues, French President Nicolas Sarkozy has pledged to spearhead efforts to pass legislation at the European Union requiring oil, gas, and mining companies registered in Europe, to disclose their resource-related payments to governments. Responding to a call from U2’s Bono and inspired by similar U.S. legislation passed in 2010 that will require U.S. registered companies in the sector to disclose their payments to governments on an annual and project-by-project basis, Sarkozy stated his intention to organize a meeting on the issue at the G8 and G20 meetings in Paris in March, and pledged to ask the EU to “adopt as quickly as possible legislation forcing companies in the extractive sector to publish what they pay to host countries."

Sarkozy’s statement should be commended and adds to momentum that is clearly building towards more transparency and accountability in this secretive and oft criticized sector. Just this past December in South Korea, similar legislation was also introduced in the National Assembly that would increase transparency of payments made by Korean resource extractive companies.

This week, we released a report focused on 15 international oil and gas companies that the government of Norway has invested more than $4.5 billion through its public pension fund. The report found that these companies are operating in Burma and are complicit in human rights abuses committed by the Burma army providing security for their oil and gas projects. As shocking as it may seem to those who view Norway as the bastion of ethical investment and responsible management of their oil revenues (through their oil Fund), the truth is that, by its own rules, Norway itself is complicit in (and profiting from) these abuses.

We released this report both because we have important information from inside Burma that documents the direct connection between these companies, their projects, and serious and on-going and likely human rights abuses, and because Norway strives to avoid complicity (and profit) in serious human rights and environmental harms through their investments. In fact, Norway should be commended for creating the Ethical Guidelines; a leading standard for responsible investment that other governments, and socially responsible investors look to for guidance on their own investment decisions. 

Today, Publish What You Pay (PWYP), a global coalition of civil society organizations was presented with the Commitment to Development Award sponsored by the Center for Global Development and Foreign Policy magazine. Special recognition is being given to Publish What You Pay United States (PWYP US), of which ERI is a member, for promoting revenue transparency in the oil, gas, and mining industries through our work towards passage of the Cardin-Lugar Transparency Provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The Cardin-Lugar Provision, the first of its kind in the world, will require all oil, gas, and mining companies filing annual reports with the Securities and Exchange Commission to disclose their extractive related payments to governments on an annual and project basis. The detailed discloser requirements are currently being drafted by the Securities and Exchange Commission and they will issue draft regulations later this month, and final regulations sometime in 2011. Both PWYP US and ERI are submitting Comments to ensure the intent of the legislation is not defeated by industry attempts to weaken the rules.

Today, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act passed last week by the U.S. Senate that includes a landmark provision requiring disclosure of payments from oil and mining companies to governments around the world. For the first time, communities who live in resource-rich countries will know how much their governments receive annually, and on a project-by-project basis for the extraction of natural resources.

After nearly two years of work and consistent opposition from big oil, substantive provisions of legislation initially introduced by Senators Lugar (R-IN) and Cardin (D-MD) as the Energy Security Through Transparency Act (ESTT), were signed into law by President Obama as Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act on Wednesday. Offered by Senator Leahy (D-VT), the provision will require both US and internationally-based companies registered with the U.S. Securities and Exchange Commission (SEC) to publish what they pay to governments for the commercial development of oil, gas, and minerals, while creating a new international standard for transparency in the extractive industry.

The provision, which will apply to 90 percent of the largest internationally operating oil and gas companies, made the cut during an all-night House-Senate conference committee meeting over the Wall Street reform bill.