Nigeria hails U.S. court’s dismissal of suits against oil companies, others

NEITI Logo
NEITI Logo

NEITI says it was encouraged that the dismissal of the suit.

The Nigeria Extractive Industries Transparency Initiative, NEITI, on Tuesday hailed the decision of the U.S. Court of Appeal to dismiss a law-suit challenging the legality for mandatory public disclosure by oil companies of all payments to the country’s government from operations in the industry.

NEITI, which welcomed the decision by the court, described the decision as “courageous,” adding that it is part of the unfolding positive developments around the world on extractive industry transparency and good governance.

“The decision to dismiss that suit in favor of this major anti-corruption legislation (Dodd-Frank Act) is worthy of emulation by all countries that subscribe to the global Extractive Industries Transparency Initiative, EITI, including Nigeria,” NEITI said in statement through its Director of Communication, Ogbonnaya Orji.

“NEITI believes that this positive development over Dodd-Frank legislation is consistent with another major declaration by the European Union, EU, to adopt an agreement among all EU countries to compel all EU-listed companies operating in the oil, gas, mining industry to make similar public disclosures on payments made to governments at home and their host countries on project-by-project basis.

“NEITI strongly aligns itself with these developments in view of the implications of extractive industry corruption on increasing poverty, social conflicts and poor socio-economic development common in resource-rich nations,” he added.

In 2012, the U.S. Securities and Exchange Commission, SEC, adopted rules requiring public companies engaged in certain oil and gas activities to disclose payments made to domestic and foreign governments under the Dodd-Frank Act.

The rules were promptly challenged by the American Petroleum Institute, API, the Chamber of Commerce, and others in the United States Court of Appeals for the District of Columbia and the United States District Court for the District of Columbia.

However, last week, the Court of Appeals dismissed the case for lack of jurisdiction, arguing that the provision of the Dodd-Frank Act, which required the SEC to adopt the resource extraction rules, is not specifically enumerated in Section 25(b) of the Exchange Act, which grants appellate jurisdiction to review specifically defined rules.

NEITI said it was encouraged that the dismissal of the suit is coming on the heels of a similar initiative spearheaded by the former United Nations’ Secretary General, Kofi Annan, focusing on prudent management of natural resource wealth and good governance in the extractive sector, especially in the Sub-Sahara Africa.

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The transparency agency said the new global order for mandatory disclosure of payments to governments both at home and in their countries of operations is consistent with the cardinal principles of EITI, which NEITI is working hard to enthrone in Nigeria.

Mr. Orji said NEITI is delighted that the unethical business practices by companies doing business in the extractive industries is beginning to attract global attention, citing the case of its independent audit reports that focused on public disclosure, saying the Federal Government has so far recovered about $2billion, while efforts are on to recover another outstanding sum of over $9.6billion from companies.

According to Mr. Orji, huge sums uncovered by NEITI reports were attributed to under-assessment, under-payment of levies, taxes, bonuses, royalties and other sharp practices, which the affected oil companies claimed they paid and the government declared it received.

He noted that but for NEITI’s insistence on public disclosure as mandated under a similar law in Nigeria (NEITI Act, 2007), these recoveries and information on potential debts would not have been possible.

“It is the view of NEITI that addressing problems associated with poor management of natural resources wealth remained the fundamental basis for tackling the increasing trends of global inequality, poverty, social conflicts and insecurity which are common in resource-rich countries,” he said.

He said at this time when public demands and agitation for reforms in Nigeria’s extractive sector is high, the passage into law of the Petroleum Industry Bill (PIB) currently before the National Assembly offers another great opportunity for the country to align its extractive industry governance to international best practices and ensure that revenues from its oil, gas and mining sector support national development.

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