The Repeal of Dodd-Frank Rule and Extractive Transparency Advocacy in Nigeria

As Nigeria steps up its effort on improving transparency in the extractive sector, President Trump signed his first legislation Tuesday, scrapping an anti-corruption measure that requires oil and mining companies to disclose their payments to foreign governments. How does that impact on Nigeria and the responsiveness of foreign oil companies in disclosing what they pay Nigeria government to both their countries and Nigeria citizens.

The president of America, Mr. Trump, signed a directive calling for a rewriting of major provisions of the Dodd-Frank Act, which was drafted by the Obama administration and passed by Congress in response to the 2008 economic meltdown.  The greatest worry is that given the position and influence of America in global politics and development, there is palpable fear that many countries will queue behind and start to close the transparency space opened up by Dod – Frank Law. The fear in Nigeria is that elected representatives, who have major investments in foreign extractive companies will hide under the repeal of Dod Frank Law to deny citizens some information which will be helpful to fight corruption.

Reasons are emerging on why Dod Frank law was repealed. It hovers majorly around two provisions on mineral purchase disclosure and retention of 5% of syndicated loan.  Currently there is no signal that something else will be put in place to replace that law.

Employing a legislative tactics called the Congressional Review Act, lawmakers overturned the rule earlier this February, following aggressive lobbying from energy companies, including Exxon Mobil. Rex Tillerson, Exxon’s former CEO, is now the Secretary of State.

Does this cast a shadow at the brighter side of extractive transparency advocacy, or does it provide some support for foreign extractive companies to hide some data from Nigerians? Now that the law which extractive sector transparency advocates should rely on to get foreign companies to disclose is gone, what options are there for Nigeria? First we must step up the Open Government rollout and ensure full implementation of Freedom of Information Law, particularly in the extractive sector. The procurement law guiding contracts should be strictly applied in the extractive sector to ensure that from day one, foreign companies are tied to some local laws in their contract with Nigerian government.

To enhance transparency in the sector to the extent that it will to some measures substitute what Dod Frank law would have done for Nigeria, is the automation of all systems of the extractive sector, from payment to oil lifting.

The rule, implemented by the Securities and Exchange Commission, was mandated in 2010 by the Wall Street Reform and Consumer Protection Act, better known as Dodd-Frank. After a court battle, the SEC introduced it in June 2016.

At the time of the rule’s introduction, the SEC said it was devised “to advance U.S. policy interests by promoting greater transparency about payments related to resource extraction.”

It requires public companies that extract oil, natural gas or minerals abroad to disclose in an annual report any payments made to a foreign government or the U.S. federal government. Companies were not required to comply with the rule until their first fiscal year ending on or after Sept. 30, 2018.

Today, PWYP members will look at those areas that the repeal of Dod Frank law will create loopholes in Nigeria’s extractive transparency advocacy and provide local recommendations for municipal laws and policies. Is this the right time to have laws that mandate foreign companies operating in Nigeria to disclose both at home and abroad their payments to Nigeria government and other stakeholders? The answer may not be farfetched.