Well, for one, it’s good for exposing corruption-tainted oil deals.

That’s the clear conclusion from a new investigation by Global Witness, a respected London-based anti-corruption watchdog, into a $120 million ExxonMobil deal in Liberia. The details are complicated, involving payments to Liberian government officials, money funneled through a Canadian company apparently to avoid official scrutiny, and an ExxonMobil document expressing “concern over issues regarding U.S. anti-corruption laws.”

But the key takeaway is this: this questionable activity was only uncovered because ExxonMobil was required to report its payments to Liberia under a program nearly identical to the requirements of Cardin-Lugar.  It’s the latest example proving that transparency works in exposing corruption.

The Global Witness report came out last week, and was picked up by Newsweek, the Guardian newspaper (which highlighted the Canadian company’s connections to a prominent British politician), and the Wall Street Journal, which conducted its own investigation and says it “independently corroborated information from the Global Witness documents.”

 As the WSJ noted in its story, “There is a growing body of U.S. and European laws aimed at stamping out corruption around the world, and they have been aggressively enforced. The Exxon transaction shows the extent to which companies are structuring deals to try to minimize the risks of government scrutiny.” The Global Witness report says documents show that Exxon, which began negotiating the deal in 2011, “knew the block in question was tainted by corruption.”

 You can find the entire Global Witness report here: https://www.globalwitness.org/en/campaigns/oil-gas-and-mining/catch-me-if-you-can-exxon-complicit-corrupt-liberian-oil-sector/

And the Wall Street Journal story here: https://www.wsj.com/articles/how-exxon-designed-an-oil-deal-to-skirt-anticorruption-scrutiny-1522338992

Cardin-Lugar, originally sponsored by Sen. Lugar and Sen. Ben Cardin (D, Md.), is a key part of that growing body of global anti-corruption laws. It was passed in 2010 as Sec. 1504 of the Dodd-Frank financial reform bill. After fierce opposition from Exxon—former Sec. of State Rex Tillerson, when he was Exxon’s boss, personally lobbied Sen. Lugar against the legislation—and the oil lobby in the courts and at the SEC, Congress struck down the implementing regulation last year on a narrow party-line vote. The SEC is expected to issue a new regulation soon, but there are also moves in Congress to repeal the original legislation.

Cardin-Lugar, which requires all U.S.-listed oil and mining companies (which include a number of major international firms from China, Brazil and elsewhere) to report their payments royalties, taxes, and other payments to foreign governments and the U.S., was written to complement the voluntary Extractive Industries Transparency Initiative (EITI). That requires participating countries—which now number 51—and the oil and mining companies that operate within them, to report annually how much they receive and pay, respectively, so citizens can account for the money. As the WSJ noted, “Global watchdogs see transparency as one of the best ways to reduce corruption, believing that when companies disclose payments to governments, money will be less likely to flow illegally to public officials.” Cardin-Lugar will cover those countries that don’t participate in EITI’s voluntary program, requiring essentially the same information from U.S.-listed companies as EITI.

Liberia, which has a history of corruption, joined EITI in 2009 under its reformist President (and Nobel Peace laureate) Ellen Johnson-Sirleaf. This was a key step. As the Global Witness report notes, “This investigation was made possible thanks to publicly available data published by the Liberian Extractive Industries Transparency Initiative (LEITI).” It adds, “Without this data….Liberian citizens and NGOs would not know what companies pay.” (For the record, Exxon denies any wrongdoing in the Liberian deal, saying it is “confident that the agreement complies with Liberian law and international anticorruption laws.” Under new president  George Weah, Liberia is reviewing the audits connected with the Exxon oil blocks, according to the WSJ, and an official said “If any corruption activity is found to have taken place, the perpetrators will be brought to justice.’)

This illustrates why it’s so important for the SEC to re-issue a strong rule implementing Cardin-Lugar, and why Congress should not give in to the oil industry. “At the same time Exxon was lobbying to keep its payments to governments secret, it was getting entangled in Liberia’s corrupt oil sector,” said Stefanie Ostfeld, Deputy Head of Global Witness’ U.S. office. 

Following the lead of Cardin-Lugar, the European Union and Canada have implemented nearly identical laws. Ironically, they have been in force for several years.  So while the Big Oil lobby in America whines that it will somehow be hurt terribly by this reporting requirement, either through compliance costs or competitive harm, hundreds of oil and mining companies elsewhere—including some of Exxon’s own overseas subsidiaries—have reported hundreds of billions of dollars in payments with no harm.

As this case study makes clear, transparency is the best antidote for corruption. Cardin-Lugar will pull back the cloak of secrecy from more countries. A vote to repeal Cardin-Lugar would be a vote for corruption.