The bill he signed soon after he took office in 2017 killed an SEC regulation implementing the Cardin-Lugar anti-corruption amendment. It would have required all oil, gas and mining companies listed on U.S. stock exchanges to report publicly how much they pay—royalties, taxes, signing bonuses, etc.—to the governments of the countries where they operate. The reasoning behind the regulation was simple: history has shown that countries heavily dependent on extractive industries like oil, gas, coal, copper, etc., often suffer from a “resource curse.” The huge revenues from these natural resources are squandered through corruption, white-elephant projects or military adventurism. Requiring the giant multinational corporations that operate in resource-rich developing countries to be transparent about their payments would be an important step in fighting this pervasive corruption that President Trump now says he is so concerned about.
This mandatory transparency idea was a novel one when it was first proposed by Sen. Lugar and Sen. Ben Cardin (D, Md.), and enacted in 2010. But other countries soon saw this was a common sense and low-cost way to tackle debilitating corruption. They passed their own versions of Cardin-Lugar, which had become law as Sec. 1504 of the Dodd-Frank financial reform act. Many of the world’s major oil, gas and mining companies have been reporting their payments to governments for several years now.
All the countries in the European Union have implemented an anti-corruption law matching Cardin-Lugar. So has Norway. So has Canada. But President Trump and his Republicans allies in Congress pulled the plug on this key global anti-corruption measure just months before it was to take effect in the United States.
As the NPR stories point out, the Trump administration soon after dealt another blow to what was once prominent American leadership in fighting corruption overseas. Several months after rescinding the Cardin-Lugar regulation, the administration abruptly pulled the United States out of participating in the Extractive Industries Transparency Initiative (EITI), a voluntary anti-corruption NGO based in Oslo that promotes full disclosure of payments by participating extractive companies and their host governments. For more than 15 years EITI, with U.S. support, has urged developing countries to sign up to its transparency requirements, and roughly 50 countries have done so. Even Ukraine is a member. During the Obama administration, the United States signed on to EITI to lead by example and to open its books—and the books of its big oil companies—the way it has been urging others to do. The Trump administration cavalierly turned its back and withdrew. Sen. Lugar and Sen. Cardin issued a statement at the time: “The Trump administration’s move today is a painful abdication of American leadership on transparency and good governance.”
Last week, Isabel Munilla of Oxfam America told NPR, "It's ironic to hear President Trump talk about his work fighting against corruption, because he essentially shut down these very clear-cut initiatives that have been endorsed the world over, that are not radical by any stretch of the imagination."
In explaining the pullout, the Trump administration made some vague and unsubstantiated claims that U.S. law prevented them from meeting EITI requirements. In fact, it was the oil companies’ refusal to disclose how much—or how little—they pay in taxes to the U.S. Treasury that scuttled U.S. EITI. Their reasoning was rich in irony: they argued that after they had successfully helped block the Cardin-Lugar regulation which would have required them to disclose their tax payments, they couldn’t disclose them voluntarily. Which is simply not true. Even richer is this bit of history: back in 2010, the oil companies and their powerful lobbying arm, the American Petroleum Institute, argued strenuously that if Cardin-Lugar were to pass, it would kill EITI. But in 2017, they made an about-face and claimed that because Cardin-Lugar was NOT implemented, they had to kill U.S. EITI.
The ostensible concern by President Trump over a Ukrainian natural gas company and Russia coincides with the publication of a new book by Rachel Maddow, the popular MSNBC TV host, on the global oil industry and what she claims is its role in weakening democracy and enabling corruption. Russia and Ukraine figure prominently in the book, titled “Blowout—Corrupted democracy, rogue state Russia, and the richest, most destructive industry on earth.” It debuted this week as No. 1 on the New York Times’ Best Seller list. The wide-ranging narrative includes small sections on Cardin-Lugar and EITI. In an interview, again with NPR, Maddow makes the case for American leadership in the struggle to counter the resource curse:
“We the people of the United States have the key role in the whole world to play in this because the Western oil majors — not all of them but most of the important ones — are U.S. companies. And even if they're not U.S. companies, they need to operate within the United States, which is a rule-of-law country, which has the opportunity to regulate them if we so choose.
“... If our government chose to make oil and gas companies better international and better corporate citizens, it would have a knock on effect all over the world in terms of this industry being able to prop up despotic regimes and sort of malignant bad actors around the world. We have the power to fix this if we demand that our representatives do this.”
So if President Trump and his Republican allies are really serious about corruption overseas there are two simple steps they could take. Reinstate the SEC regulation on Cardin-Lugar and re-join U.S. EITI.