Republicans introduced joint resolutions in the United States Senate and House of Representatives today that would gut efforts to carry out a key law for fighting corruption in resource-rich countries, Human Rights Watch said today. Senator Jim Inhofe of Oklahoma introduced the resolution in the Senate, co-sponsored by Senate Majority Leader Mitch McConnell of Kentucky and Senator Mike Rounds of South Dakota. Congressman Bill Huizenga of Michigan introduced the resolution in the House.

The House majority leader, Kevin McCarthy, said in an op-ed on January 24, 2017, that the House “will take the ax” to this rule. It is expected to vote on the measure as soon as Wednesday, February 1. That is the same day the Senate is expected to vote on whether to confirm Rex Tillerson, former CEO of ExxonMobil, as secretary of state. ExxonMobil opposed the anti-corruption rule during Tillerson’s tenure at the company.

Pumps draw petroleum from oil wells, Signal Hill, California. 

© 2008 Getty Images

“Tillerson bent over backward during his confirmation process to reassure Congress he’d be a champion for transparency,” said Arvind Ganesan, business and human rights director at Human Rights Watch. “If Tillerson is to make good on his commitments, he should publicly oppose the effort to undermine the anti-corruption law while there is still time to make a difference.”

The Cardin-Lugar Transparency Rule requires US-listed oil, gas, and mining companies to publicly disclose what they pay governments for natural resources production in those countries. It represents the culmination of a hard-fought, years-long rulemaking process to carry out the anti-corruption provisions of the Dodd-Frank financial reform law. Its repeal would for all practical purposes gut that section of the law. The proposed resolution would nullify the rule by using the Congressional Review Act, which allows Congress to invalidate any executive agency rule by simple majority within 60 legislative days.

Governments in many countries have misused natural resource revenues, contributing to massive corruption, conflict, and human rights abuses. The rule some members of Congress want to repeal was meant to inject transparency into the system by ensuring that companies disclose what they pay governments so that there can be some accountability over the use of public funds. The resolution’s supporters say they are seeking to invalidate the rule because it burdens American businesses with regulations that do not apply to their foreign competitors. The European Union, Canada, and Norway have similar laws.

Canceling this rule would hurt important initiatives to stop corruption, the opposite of what Tillerson promised to do during his confirmation process. It would send a message to corrupt leaders everywhere that their misdeeds are no longer a serious US foreign policy priority.

Arvind Ganesan

Business and Human Rights Director at Human Rights Watch

While the Dodd-Frank Act was passed in 2010, the rule was only carried out by the Securities and Exchange Commission in June 2016, following bitter opposition by the American Petroleum Institute, a petroleum industry trade group that includes ExxonMobil. Tillerson reportedly personally lobbied against it.
 
Measures to roll back anti-corruption and transparency measures are more troubling because Tillerson’s nomination as secretary of state has raised broader concerns that he would oversee a rollback of US anti-corruption and transparency efforts. Senator Jeff Merkley of Oregon, for example, said he opposed Tillerson’s nomination in part due to concerns over ExxonMobil’s activities in countries like Equatorial Guinea, “in which they had channeled enormous amounts of money to the president’s family instead of back to the people of the country.”

During his confirmation process, Tillerson sought to reassure lawmakers that he could be a trusted advocate for strong transparency rules that make it more difficult for corrupt leaders to steal their citizens’ wealth. He insisted that he could effectively put his long history as a champion of ExxonMobil’s global interests behind him and that “if confirmed, human rights, the rule of law, and anti-corruption, and transparency measures would be high priorities.”

“Canceling this rule would hurt important initiatives to stop corruption, the opposite of what Tillerson promised to do during his confirmation process,” Ganesan said. “It would send a message to corrupt leaders everywhere that their misdeeds are no longer a serious US foreign policy priority.”