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Thursday, 7 August 2014

George Soros urges China to disclose resource payments

China should publicly disclose what it pays African governments for oil, gas and minerals extracted as a way to level the playing field for companies worldwide, billionaire investor George Soros said on Monday.
The move will also help countries on the continent get a fair deal for their natural resource wealth.
“China has to line up to join the regulations,” Soros said at a forum on natural resources held on the sidelines of the US-Africa Leaders’ Summit that runs through Wednesday. “Otherwise they are spoilers.”
Sub-Saharan Africa has immense riches in gold, gems and rare minerals and new discoveries of oil and gas off east Africa promise to make it a leading exporter of hydrocarbons by 2030. Yet its citizens see only a fraction of that wealth on a continent that has among the world’s highest poverty levels.
The value of natural resources extracted each year in Africa is estimated at US$500 billion  but revenues collected by their governments are scarcely one-tenth of that, according to Daniel Kaufmann, president of the Natural Resource Governance Institute. In addition, US$50 billion  a year leaves Africa in illicit finance through mispriced trade and corruption, said Mojanki Gumbi, a trustee of the Thabo Mbeki Foundation, which focuses on the political and economic development of Africa.
To increase accountability for natural resources, the United States and the European Union have passed laws requiring extractive industries listed on public exchanges to disclose their payments to governments.
In addition, 35 countries including many in Africa are party to the Extractive Industry Transparency Initiative (EITI), a coalition of governments, companies and civil society that works to improve accountability for management of revenues from natural resources by setting global standards for payment disclosure.
Soros called on Africans to urge China to participate in the initiative, and to expand payment disclosure from oil, gas and mining to include forestry and agriculture.
“It is a very important thing to get them to join, in fact so important that we have to be ready to reconsider the structure of EITI, or China won’t consider it,” he said.
Multi-national companies frequently complain that their competitive position in bidding for contracts is undermined if they have to adhere to US and European disclosure rules that would not apply to state-owned companies in China, which are big players in Africa.
Mo Ibrahim, a philanthropist from Sudan who made his fortune in mobile telecommunications, was cautious about whether the proposal would succeed. China does not like to engage with civil society, which is a central part of EITI, he said. However, Chinese companies are learning that failure to engage poses significant risks to their investments in Africa.
“It is the new kid on the block in Africa, and they are finding their feet. They are getting their workers kidnapped and they are learning that it is not just some nice forest you can come in and cut down, or you can go in and pick up some good iron ore,” Ibrahim said.
Moreover, Chinese companies already must disclose their payments to governments that are party to the EITI, and those that list securities in the EU and the United States will have to comply with new transparency rules that start taking effect next year.
Source: Reuters