Contract transparency can help assess whether a country is getting what it should from its natural resources, argues the Publish What You Pay-coalition, who has advocated strongly for contract disclosure to become a mandatory part of the EITI. Under the revised standard, contract disclosure is encouraged.
Free the contracts
“We have moved in the right direction”, said Corinna Gilfillan from Global Witness, during a panel discussion on contract transparency in Sydney on 24. May. Supporting the civil society campaign “Free the contracts”, she also stressed that civil society would have liked to see contract transparency become a requirement for EITI implementing countries, and not only a recommendation. She also emphasized the need for transparency in the whole contracting process, from licensing to spending.
“Who are behind the contracts? How are licenses allocated?”, she asked, and added that “there are new requirements for license transparency in EITI, and it speaks to an overall framework for a fair licensing process.” Speaking on the current state of contract disclosure, she noted that many countries in the EITI in fact already are disclosing contracts.
"Through the EITI standard setting process, many countries were positive to contracts disclosure”, she told. In contrast, most companies were opposed, according to Gilfillan, who noted that while companies claim they will not have a problem with disclosing contracts if governments agree, the situation is that governments mostly do not have an issue with contract transparency.
“In the EITI we have a multistakeholder process with government, civil society and companies, which can serve as a mechanism for reaching a consensus and getting the contracts out there”, she said. h3. Liberia and Afghanistan leads on contract transparency Speaking on a similar note, Vijay Iyer, Director of the Sustainable Energy Department of the World Bank said: “There has been a terrific movement the last ten years on transparency.
For the World Bank it is important that deals are better managed and create development impact for a country. Transparency contributes to that in an important way. Afghanistan and Liberia has to be commended for putting out the contracts in such a public way. It takes a lot of courage and it takes a lot of preparations.”
“The public must have access to all contracts and to all licenses oil, agriculture and forestry, Publishing of contracts is by law,” said Liberian Senator, Gbegzohngar M.Findley. Liberia joined the EITI in 2009 and has spearheaded a process that has gone beyond the minimum EITI standards. “There is no way around it”, he continued. “We do not see it as a confidential issue. It is already in the public domain. There is no way we shall keep a contract out of the eye of the public.” Disclosure of shareholders is also necessary by Liberian law.
“Disclosure of shareholders and parties that have interests in those contracts are disclosed. That is the law in Liberia”. From the Afghan side, HE Wahidullah Shahrani, Minister of Mines , stated that “No information is considered as a state secret”, but also commented on the practical issues of disclosing information: “The contracts are huge, around 150 pages. It’s difficult to publish in the newspaper, so we publish it on the Internet. We translated it to English and to indigenous languages. That is important for transparency.
The strongest mechanism is full disclosure of contracts,” he said. Afghanistan has published over 200 contracts, commended Gilfillan from Global Witness, but added concerns regarding the most important mining contract which is not yet published despite concerns surrounding it. “Why has it not been published?”, she asked. h3. Is contract transparency business sensitive? Evelyn Tsange, Frankophone African Regional Coordinator in Revenue Watch Institute, argued that the publishing of contracts will benefit all, whether it is citizens, governments or businesses.
“Transparency in contracts gives business an opportunity to show that negotiations have been fair. This way the business can avoid false claims of the opposite. Contract transparency is also a way to show that a business is paying what they ought to pay to a state in accordance with the contract.”
She went on to argue that the information requested by the public is not what the business deems sensitive, but that, on the contrary, it is important in order to foster dialogue about the resources. “It is hard to have a discussion if you do not have the figures. People need to know that the country negotiated fair contracts on behalf of the population.” She specifically shared an example from Guinea, where the government, RWI and the World Bank have joined forces to create an online database with all the mining agreements, allowing anyone interested to review and search in the contracts.
“This is an example on how these contracts can be made available”, she said. h3. AngloGold: “We would endorse contract transparency” Yedwa Simelane, Senior Vice President of Corporate Affairs with AngloGold Ashanti, said that her company would in fact endorse contract transparency, and supported the need for a transparent framework for business. She also argued in favour of standardizing contracts. “The best thing a country can do to establish transparency, is to develop a coherent and transparent mining regime, including a mining cadastre with geotechnical data. If you have that, discussions about individual contracts will fall away”, she said.
Vijay Iyer from the World Bank, argued that legislative work is necessary: “Contracts contain elements that should really be in the regulative framework of the countries so that contracts are not a substitution for the national law. We are working with countries to find ways to find the right policy and support governments in enforcing those”, he said. h3. Is contract transparency sensitive? Speaking on the sensitivity of information, Simelane from AngloGold agreed that some information is not problematic to disclose, such as fundamental information about the mining activities; taxes, investment committments, timing, and size of assets.
She did however go on to argue that some sensitive information needs to be kept out of public domain, in favour of competitiveness: “There are things that are sensitive and confidential. It is important that the companies have that information private. Some facts cannot be disclosed because you end up with anti-competitiveness.”
“Some information you want to keep private”, Simelane went on. “Intellectual property, operational costs, procurements costs and marketing and pricing information.”, she said, and stressed that defining what was sensitive or not, could be difficult to decide in practice. “EITI is a good arena to have those discussions.”, she said. She went on to address concerns of what contract transparency will be able to show: “Contract disclosure itself will not enable one to make a level of assessment of “fairness”. You are going to see on which terms the contract is made, but you cannot take two different contracts from two countries and see if that is fair. You have a vast range of resources, risks, infrastructure and so on. When deciding to enter a contract, companies do not only look at the taxation, we look at all the different variables.”
“The contract transparency itself will only achieve so much. It is necessary to take this information and connect it to other sources of information and to get stakeholders to understand the information. Stakeholders must come together and understand the data. What are some of the challenges of meetings this expectations? Information has to be useful.”, said Vijay Iyer from the World Bank.
“A full contextual picture is necessary”, Gilfillan from Global Witness argued, and also argued in favour of beneficial ownership being a part of the contract discussions. “There is a commitment to get this as a requirement in 2016”, she continued, and ended: “I have yet to hear any negative commercial experiences stemming from disclosing contracts”.