The Dodd-Franck Act Annulment: Killing Transparency is bad for government accountability
In 2010, the Dodd Franck Wall Street Reform Act on disclosure of payment by all resource extraction companies was passed in the United States of America and hailed by local communities and civil society organizations in resource rich countries around the world. But it was with shock and disbelief that the same local communities and civil society groups received news on the 3rd of February 2017 of the nullification by the US congress of the Dodd Franck Act that was seen by them as a very important instrument to deter corruption in their various countries with revenue generated from natural resources exploitation. The repeal of the Dodd Franck law marks a serious blow to progress on transparency that was already taking shape in most African countries.
From the very onset RELUFA and its partner organization, the Centre for Environment and Development were actively involved in supporting section 1504 of the Dodd Franck act and also countering efforts from the American Petroleum Institute led by ExxonMobil to do away with this law. In 2011, RELUFA and CED sent a submission encouraging the Securities and Exchange Commission to produce robust rules for the implementation of section 1504 of the Dodd -Frank Act and also refuting industry claims that payment disclosure as required by section 1504 is prohibited under Cameroon law. The arguments brought forward in the submissions clearly indicated that industry objectives in making such allegations were simply aimed at obtaining exemptions from the publication of revenues and induce the Securities Exchange Commission to water down the rules. Repealing the Dodd Franck Act as is currently the case means the current US administration is playing the game for industry actors who are determined to maintain opacity in the exploitation of natural resources around the world. This is bad for local communities and civil society organizations advocating for transparency and good governance in the management of revenues from natural resources exploitation so that these revenues are converted to development and poverty alleviation.
In Cameroon, 30 % of government revenue comes from oil but majority of the population in both urban and rural areas still have less water supplies, suffer from diseases constant black outs and extreme starvation. Government corruption is endemic and thus section 1504 of the Dodd Frank Act constitutes an important mandatory disclosure tool for civil society to hold our government accountable. Together with other similar initiatives like the Extractive Industries Transparency Initiative (EITI) in which Cameroon is already a compliant country but which is simply a voluntary disclosure initiative, transparency can become the norm rather than an exception. Effective implementation of the transparency and accountability initiatives like the Dodd Frank Act can help reduce the so called resource curse plaguing most resource rich countries but repealing it will maintain most resource rich countries in poverty as revenue is directly away from development to lining the pockets of corrupt leaders without any traceability.
Civil society organizations are increasingly using revenue data and allocations disclosed in EITI conciliation reports to advocate for increased benefits for local communities impacted by extractive projects. An example is the work done by RELUFA in 2014 on EITI and mining governance in Cameroon that analyzed sub national revenue payments and transfers to local communities and local councils host to extractive projects (see ww.relufa.org/publications). The work was done because data from payments by companies could be accessed and analyzed and then used as an advocacy document to solicit effective government transfer of sub national revenues meant for local communities and councils. However revenue disclosure within the EITI is voluntary and not necessarily project by project and therefore not complete and extensive like the Dodd Franck Act. Mandatory disclosure by companies on project by project basis of payments made to governments as provided by section 1504 of the Dodd Frank act provides a clear idea of the revenue paid by companies and facilitate effective monitoring by civil society organizations of the effective payment and use of this revenue.
The Dodd –Franck Act is considered as an important reference hence eradicating it completely means complying with initial industry campaign to maintain opacity in the management of revenue from the extractive industry. The defeat of the very intent of the Dodd –Frank Act to promote transparency and accountability in the management of revenue from the extractive industry around the world sends a very negative message of the USA as a country that others can look up to for leadership in governance and accountability. This is bad local communities in resource endowed countries because development will continue to elude them since they will have no information to hold their governments accountable for the management of revenues from extractive resources. There is still time for the US congress to listen to grieving voices of local communities and civil society organizations affected by resource extraction and make amends.