Ethical Performance
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EITI begins to take flak over ‘free rider’ concerns

April 2008

Pressure is growing on the secretariat of one of corporate responsibility’s flagship global programmes to take action against ‘free rider’ companies.
Civil society critics of the five-year-old Extractive Industries Transparency Initiative (EITI), which promotes disclosure of revenue payments by oil, gas and mining companies to officials in developing countries, say too few are making real progress.

Last month Publish What You Pay, a coalition of 300 civil society groups that was instrumental in forming the EITI, issued a statement expressing frustration at the lack of action.

Corinna Gilfillan, a spokeswoman for coalition member Global Witness, said it was ‘unacceptable’ that only three of the 37 endorsing companies  – Chevron, Shell and StatoilHydro – have laid out the steps they have taken to meet the EITI’s principles. She urged companies ‘to step up to the plate and fulfil their end of the bargain’ or risk losing the support of civil society.

The coalition has warned companies that ‘free riding is no longer an option’ and said signatories ‘must now deliver concrete results towards making revenues and payments from oil, gas and mining transparent and accountable’.

In its 2006 report Shell stated that it had paid $6billion (£3bn) in corporate taxes and royalties to African governments.
In addition, the performance of the 22 governments that have joined the EITI is under fire. All have achieved interim ‘candidate’ status by making a public statement of intent to work with civil society and companies, and by producing a plan of action agreed with stakeholders. So far, however, no country has fully disclosed revenues received from the oil, gas and mining sectors.

A further seven countries joined the initiative in February – the Democratic Republic of Congo, Equatorial Guinea, Madagascar, the Republic of Congo, Sao Tome and Principe, Sierra Leone and Timor-Leste. Civil society observers have welcomed their participation but there have been suggestions that some may not disclose revenues.

Carlos Monge, of the Peruvian NGO Grupo Propuesta Ciudadana and an EITI board member, said he was troubled because countries might ‘use the EITI label to continue business as usual’.

He added: ‘Concrete steps should be taken towards implementation and regular monitoring of country work plans, starting immediately.’

The new pressure for results coincides with the organization being put on a permanent footing last year. It now has a secretariat of six in Oslo, having previously been run on an ad hoc basis. 

Eddie Rich, an EITI policy adviser, acknowledged that 2008 would be an ‘exciting year’ but said: ‘The EITI is a learning process, and while it will remain a robust global standard, it will also be flexible enough to ensure different approaches to implementation in each country and to learn best practice as we develop the product.’

Publish What You Pay | Global | Transparency

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