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smaller extractive firms are invited to transparency party

April 2005

Pressure is to be applied on some of the UK’s smaller oil and mining companies to support the Extractive Industries Transparency Initiative, which seeks to open up the revenue arrangements of oil, gas and mining companies in developing countries to greater public scrutiny.

So far some of the biggest listed oil and mining corporations, among them BP and ChevronTexaco, have supported the UK government-backed initiative, which was set up in 2003 to find a mutually acceptable way of publicly disclosing payments made to states by oil and gas companies. But at a meeting of interested parties held in London last month, the 60 international institutional investors that have signed the EITI agreed to begin pressing smaller companies to become involved.

Howard Carter, chief executive of F&C Asset Management, speaking on behalf of the investors, said they will now be ‘actively turning [their] attention to smaller listed UK oil and mining companies to urge them to back the initiative’. However, he said F&C, for its part, would not divest from companies that did not support the EITI.

‘The EITI is a means of lowering country risk, and where a company operates is a far more meaningful indicator of investment risk than whether or not the company is a backer of this initiative,’ he said. He added that countries, rather than companies, that embrace the EITI ‘are fundamentally more attractive places to invest for the long-term’.

The institutional fund managers involved, who include Fidelity, JPMorgan Asset Management, Merrill Lynch Investment Managers, PGGM, Schroders and UBS, collectively manage $8.3trillion of assets (£4.33tn). They are concerned that taxes, royalties, signature bonuses and other legitimate payments made by companies to governments can, through their confidential nature and often sheer size, be open to abuse. They say this can fuel corruption and conflict.

Trinidad and Tobago has become the latest country to support the EITI by agreeing to reveal more details of the revenue it receives from oil companies.



Further Information
http://www.eitransparency.org
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