Leading the Call for New Global Accounting Standards

In close collaboration with the International Accounting Standards Board (IASB), Revenue Watch is leading in the effort to reform extractive industry accounting rules and require that companies report key information such as payments to governments on a country-by-country basis. Updating these standards will not only create a powerful tool for citizens in producing countries, but will also help companies, investors and government tax authorities.

On September 15, 2008, RWI co-hosted a meeting of the IASB extractives task force, focusing on recommendations for new International Financial Reporting Standards (IFRS).  RWI, Publish What You Pay (PWYP) and others explained the need for country-by-country reporting, with payments to governments broken down by type, along with information that reveals whether companies are paying what they should.

The meeting included representatives from the IASB, major oil and mining companies, prominent accounting firms, large investors from Norway's and Britain's oil, rail, and public employees pension funds, as well as RailPen, Legg Mason, Calvert Investments and George Soros. The investors largely supported RWI's request, as it will help them better price and assess investment risk, but extractive companies maintained objections to the cost and complexity of gathering the new data.

Revenue Watch was extremely encouraged by IASB's initial response on this issue. The IASB has requested more detailed explanations on how new data could help investment decisions. To that end, it has issued a call for investor input with a deadline of November 30.

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RWI Convenes Grantees and Leaders at Columbia University for Training and Strategy Sessions

This summer, more than 100 advocates, officials, Revenue Watch grantees, partners and board members gathered for a week of intensive trainings and planning discussions hosted by the Revenue Watch Institute.

At our International Programs Meeting, colleagues from over 40 countries, from Mexico and Malaysia to Cameroon and Kazakhstan, had the chance to learn from RWI experts, distinguished guest lecturers and each other.

Entering its second full year as an independent institute, Revenue Watch convened the meeting of its core constituency in part to introduce its vision for effective management of resource wealth across the sector's full "Value Chain," reaching upstream to issues of extraction and resource rights, and downstream to issues such as revenue savings, expenditure approvals and social impacts. This Value Chain model is derived from proposals by Oxford economist and RWI advisory board member Professor Paul Collier, and has also been instrumental in the creation of the World Bank's EITI++ program, announced earlier in 2008.

Advocates in resource-rich countries need concrete skills in accounting, budgeting and policy-making if they want to create change in the extractives sector, locally and around the globe.

To help meet this urgent need, Revenue Watch preceded the high level strategy discussions with two days of extractive industry transparency and accountability trainings by experts in the fields of accounting, economics, taxation, law, human rights, political science and industry. The sessions were based in large part on the structure and material in Drilling Down, RWI's guide to extractive industry revenues and the EITI.

Anton Artemyev of Kazakhstan Revenue Watch discussed how to identify likely EITI champions within national institutions. Economist and taxation expert Robert Conrad explained how to use extractive contracts to track revenue streams. Chris Nurse, whose research underpins key parts of the Drilling Down guide, gave a participatory seminar on verifying government revenue receipts using audits and other publicly available financial reports. Revenue Watch policy analyst Juan Carlos Quiroz introduced the group to RWI's developing framework for an extractive sector transparency Index of countries, along with planned data collection and verification methods.

Further expert trainings covered models for change and impact assessment, led by RWI board member Warren Krafchik, director of the International Budget Project, and colleague Gary Hawes; contracts transparency, with Peter Rosenblum and RWI fellow Susan Maples of Columbia University Law School; and comparative hydrocarbon development performance, presented by RWI fellow Christine Jojarth.

In the final two days of the meeting, participants in the earlier trainings had the chance to share their own experiences and gain insight from high-level experts in a series of panel discussions. Each session was organized around a particular stage of the value chain model, in order to hold concrete, practical dialogues on policy advocacy priorities, obstacles and opportunities for the coming year. Panelists included invited guests from among the leaders of the movement for extractive industry transparency, such as Radhika Sarin, Publish What You Pay (PWYP) international coordinator, Jonas Moberg, head of the EITI, RWI board member and former Statoil executive Willy Olsen, who is currently an advisor to Norway's INTSOK foundation, and representatives from Global Witness and Oxfam, two important RWI partners in producing countries and in our global advocacy efforts..

After the formal meetings, regional partners were given the chance to strategize in small groups. The week of meetings concluded with a reception and dinner for all guests, along with George Soros and Revenue Watch's governing and advisory boards. RWI advisor and former BP Vice President for Strategy Nick Butler and Norwegian Ministry of Foreign Affairs and RWI advisor Leiv Lunde joined George Soros for a dinner discussion of climate change and its implications for extractives-dependent countries and the global revenue transparency movement.

The meeting was an important opportunity for Revenue Watch, Karin Lissakers said. "We all maintain contact to learn from each other and move our work forward, but Revenue Watch cannot be effective as a leader or partner without real-time response to our models from the colleagues and grantees who know the work best."

Revenue Watch looks forward to continuing our collaboration with all who attended and further widening our network of partners in the movement for transparency governance.

LEARN MORE

• PHOTO GALLERY: Images from the RWI International Programs Meeting
• Meeting Materials (pdf)

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EITD Act Takes New Strides

The movement for improved U.S. rules governing company reporting of extractive industry payments gained further attention and momentum in Congress this fall, as the Extractive Industries Transparency Disclosure Act picked up new sponsors in the House and the Senate. RWI has pushed hard with Publish What You Pay (PWYP) US over the past year and a half to get this bill introduced and approved in Congress.

On September 24, Revenue Watch board members, partners and authors testified in two different Senate hearings in support of the EITD bill (S. 3389), which would require oil, gas and mining companies to publish payments to foreign governments in greater detail in annual SEC filings. Country-by-country reporting would shed much-needed light on an industry that operates in some of the most corrupt and unstable regions in the world. The ability of local communities to keep their governments honest will also help stabilize the nation, yielding safer investments and a more secure supply of resources for consumers.

The first hearing was chaired by EITD co-sponsor Senator Russ Feingold of Wisconsin of the Africa Subcommittee of the Foreign Relations Committee. Witnesses included RWI advisors Paul Collier of Oxford University and transparency and extractives expert David Goldwyn, who is also the author of Revenue Watch’s Drilling Down guidebook. RWI Director Karin Lissakers testified in support of the EITD bill earlier this year, at a legislative hearing of the Financial Services Committee.

Another co-sponsor, Senator Richard Durbin of Illinois, chaired the second hearing, entitled "Extracting Natural Resources: Corporate Responsibility and the Rule of Law." Witnesses included Revenue Watch board member Bennett Freeman, Senior Vice President of Social Research and Policy, Calvert Group, as well as Simon Taylor, Director of Global Witness, a founding member of the Publish What You Pay coalition. The hearing focused on the human rights responsibilities of American oil, mining and gas companies operating in conflict zones or countries with repressive governments, and allegations that extractive industry companies have been complicit in human rights abuses in Burma, the Democratic Republic of Congo, Indonesia Nigeria, and other countries. Chevron and ExxonMobil were invited to represent the extractive industry, but declined the invitation.

The Senators attending both hearings appeared very supportive of the efforts of RWI, PWYP and other EITD supporters, and were receptive to David Goldwyn's argument that a more unified governmental presence on transparency issues is needed to advance and protect America's energy security.

Revenue Watch, Publish What You Pay and our partners have watched with excitement as the list of co-sponsors has grown for both the Senate bill its counterpart in the House of Representatives (H.R. 6066). Senators supporting the bill include Charles Schumer of New York, Feingold, Durbin and five others, including Senators Joseph Lieberman and Patrick Leahy. House supporters include House Committee on Financial Services Chairman Barney Frank, Rep. Christopher Shays, 13 other committee members and 10 additional representatives.

MULTIMEDIA: Oil, Power, and the Niger Delta

Revenue Watch is proud to present an original audio slideshow featuring images by award-winning photographer Ed Kashi. Through stunning photos and firsthand commentary, this presentation reveals the stark problems of poverty, corruption and environmental abuse that continue to devastate the oil-rich Niger Delta.

In the 50 years since oil was first exported from the Niger Delta region, Nigeria has become the largest producer in Africa, earning $600 billion in oil revenues over the past five decades. But this historic windfall has not brought wealth or stability to Nigeria's people. Instead, oil wealth has led to crisis and decline, in what author Michael Watts calls "a gigantic failure of leadership and governance."

Narrated by Nigerian transparency advocate Asume Isaac Osuoka and award-winning photojournalist Ed Kashi, "Shadows and Light" captures the contradiction of Nigeria's resource curse: the “sad irony,” as Osuoka describes it, "that communities in the Niger Delta that sit atop huge oil and gas deposits have gotten nothing really in return."

In September, RWI and the Open Society Institute also co-hosted a panel event on the "Photography as Advocacy—A Half Century of Oil and Misery in the Niger Delta," which featured Antoine Heuty of RWI, Ina Howard-Parker, Ed Kashi, Omoyele Sowore, and Michael Watts. Heuty spoke on the importance of the media in publicizing the resource curse: "We recognize photography, but more broadly, the media's power, and the role they have in fighting this battle that we have in front of us. We try to empower the media and photographers to play a bigger role in overseeing and making government more accountable." View the slideshow, listen to the panel, and learn more about oil and transparency in Nigeria …

Managing Resource Revenues at the Regional and Local Level

In 2008, Revenue Watch launched a groundbreaking project on three continents designed to develop government policy expertise and build civil society capacity at the local level. Resource-producing regions bear the brunt of negative impacts from extractive activity and are often the least-developed areas of a country. After years of rising commodity prices, these regions have the opportunity to reap the benefits of their extractive activity and to convert the wealth in the ground to long-term development.

RWI believes that this opportunity will only be realized if sub-national governments have the tools to make good use of their windfalls. Revenues from the extractive industries are highly volatile-often rising and falling dramatically year to year-and can sometimes overwhelm other industries.  Without careful management, increased extractive revenues can actually worsen the circumstances in states and provinces by undermining other economic sectors, reducing government's accountability to citizens, and increasing corruption and conflict.

With support from the Bill and Melinda Gates Foundation, the Revenue Watch Institute and its partners are working in Indonesia, Nigeria, Peru and Ghana to combat the paradox of plenty at the sub-national level.

These pilots, meant to build RWI in-house knowledge and expertise on successful models of intervention and skill-building at the local level that can be disseminated, are making early progress. In Nigeria, RWI has conducted a civil society training on budget monitoring and hired a local coordinator to manage local implementation. Pattiro, our partner in Indonesia, hosted multi-stakeholder workshops in Blora and Bojonegoro to begin conversations about social and economic development planning at the local level.  In Peru, the Revenue Watch governing board was able to see firsthand the work of partners Remurpe and Grupo Propuesta Ciudadana during site visits in Peru this fall.  September also brought the first scoping trip to Ghana for sub-national work.  We expect this project to begin there in earnest during early 2009.

AZERBAIJAN: Looking Toward EITI Validation

After leading the call for a UN resolution on EITI, Azerbaijan continues to be at the forefront of the validation process. This fall, the Azeri EITI committee was the first multi-stakeholder group to agree to terms for selecting an EITI validator.

In the coming months Revenue Watch will be supporting the EITI process in Azerbaijan by co-hosting a multi-stakeholder workshop. The one-day event will include information sessions on validation process details and EITI criteria, as well as techniques for meeting the likely challenges.  The workshop will also help stakeholders identify which EITI criteria may need to be revisited to ensure successful validation. 

Upon the EITI coalition's request, RWI may hold an additional workshop for a wider constituency of civil society actors to help members of the validation committee make links between their advocacy and the priorities of the wider EITI coalition. Civil society groups have also expressed concerns over the need for a costed workplan for the EITI process, among other issues. 

Revenue Watch's Azerbaijan workshop will kick-start a wider strategy for capacity building and monitoring during the global EITI validation process. RWI will be creating validation training modules for multi-stakeholder and civil society audiences, which will in turn be adapted for specific countries by RWI and its partners. RWI staff will be available for technical assistance after the trainings to help move the process forward with a special focus on civil society engagement. In addition, RWI will use these in-person events to inform its international advocacy and to help ensure that EITI standards are protected in all countries.

Activists familiar with the Azerbaijan EITI process continue to harbor concerns that the nation's EITI reports are not detailed enough to ensure government accountability. The NGOs in the working group have pushed for disaggregated reporting by companies, to aid in effective public oversight of the extractives sector. While 26 companies are implementing EITI in Azerbaijan, only five have agreed to disaggregated reporting thus far:  Middle East Petroleum, Binagadi Oil Company, BP, Shell and Statoil-Hydro. The most surprising absence from the list is Azerbaijan's state oil fund (SOFAZ), which has consistently declared its readiness for this step. Read more about extractives sector transparency in Azerbaijan ...

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TIMOR LESTE: EITI Validation and Challenges to Mainstreaming Transparency

In September, RWI Asia Pacific Regional Coordinator Chandra Kirana met with a number of government officials of Timor Leste, including the Minister of Natural Resources, the EITI government focal point, the President and the Marketing Director of the National Petroleum Authority (NPA), and the Technical Advisor to the Ministry of Finance, to discuss the country's progress towards EITI validation.

Timor Leste is confident it will meet the EITI validation schedule, and is working with a contractor to develop the country's EITI templates.  RWI is working with civil society to provide comments on the structure of these templates and reporting requirements including disaggregation.   The government of Timor Leste is laudably attempting to increase the often lacking participation of civil society in the EITI process by offering a grant of $20,000 (USD) to help civil society groups improve their understanding of the EITI process. Existing EITI experts in the country, from the IMF, the World Bank, and the NPA could also help build the capacity of civil society and the Parliament, and RWI will be working with these groups to identify effective forums for skill-building in the near term. Timor Leste's admirable steps to promote transparency include reporting the status of the Petroleum Fund to the public every three months, in all languages, and its expressed desire to create a Petroleum Resource Center with RWI's input.

Despite the government's openness to transparency, Timor Leste faces challenges in both managing expectations and building the public's understanding of the oil fund. It is struggling to find a balance between rapid delivery and high-quality development programs, so that desperately needed social investment initiatives are matched by the ability of government to implement these plans.

Seeking Oversight and Transparency in the Middle East

In July, 2008 Arab Region Parliamentarians Against Corruption (ARPAC) hosted its first meeting for the Revenue Transparency project in Beirut, a joint effort of ARPAC, Revenue Watch and the Arab Anti-Corruption Organization (AACO) dedicated to strengthening legislative oversight of government revenues in the Arab world, with a focus on revenues from the extractive industry. This multi-phased research and capacity building project is distinct from other initiatives in the Arab region that seek to improve financial oversight at the parliamentary level, as the latter focus predominantly on national budgets and pay little attention to revenue transparency.  Revenue transparency and parliamentary oversight of the extractive sector are particularly important for MENA, where the vast majority of public budgets are composed of oil and gas revenues.
 
The Revenue Transparency initiative begins in five pilot countries: Jordan, Lebanon, Kuwait, Morocco and Yemen, with RWI focusing on the latter three resource rich countries. Phase one will focus on research and mapping. Subsequent project phases will focus on policy implementation, capacity building and public outreach. Revenue Watch and its partners will work to develop tools for effective revenue oversight and to foster parliamentary capacity to use these tools. Working with governments and civil society, RWI, ARPAC and AACO will help to improve the quantity, quality and timeliness of information on government revenues, in order to foster accountability and make the budget process more efficient.

The inaugural July meeting drew parliamentarians from Bahrain, Jordan, Kuwait, Lebanon, Morocco and the Palestinian Authority, a researcher from Yemen, as well as representatives from AACO, the World Bank, and others. Issues raised by country representatives included concerns about monitoring returns on investments; the need for help in analyzing complex revenue data; and greater transparency and clarity in budgeting and taxation. The World Bank presentations emphasized the need for more work on revenue oversight. The ARPAC Board voiced its expectation that ARPAC will be able to take the lead on transparency with the Global Conference of Parliamentarians against Corruption (GOPAC).

At Publish What You Pay Africa Meeting, a Focus on EITI

Revenue Watch Africa regional coordinator Emmanuel Kuyole and deputy director Julie McCarthy joined more than 140 participants in Abuja, Nigeria this fall for Publish What You Pay's (PWYP) Africa regional meeting. RWI Program officer Angela Mugore led a validation training session, and RWI Fellow Susan Maples conducted a contracts disclosure training session.

Representatives from PWYP's Africa coalitions met with groups from across Africa, Europe and North America for a three-day conference to review campaign strategies and strengthen civil society’s ability to advocate accountability and sound revenue management in Africa's extractive resources.

Participants identified several areas within the Extractive Industries Transparency Initiative that need development, including the focus on contract transparency; attention to gender issues across the EITI process; the need for legislation in candidate countries that enshrines EITI principles; and the importance of EITI progress in both developed and developing countries.

Attendees also expressed concern that the EITI framework does not capture the social or environmental costs of extractive activity, and that the approaching March 2010 deadline for EITI validation creates problems for countries that lag behind in the process. Nigerian participants also expressed concern about Nigeria's lack of progress on EITI over the past two years after a very energetic and promising start.

GUINEA: RWI Legal Analyst Speaks on Mining Contracts at Guinean Symposium

Revenue Watch legal analyst Patrick Heller spoke about the negotiation of mining contracts at the Symposium Mines Guinée on October 13 in Conakry, Guinea. Heller participated in a panel on the legal framework for mining-sector development, where he presented an international perspective on the renegotiation of contracts between governments and international mining companies, drawing heavily on Revenue Watch's experience supporting and analyzing renegotiation processes throughout Africa.

TANZANIA: RWI and International Groups Join for Scoping Mission to Tanzania

In Summer 2008, legal analysts Matt Genasci and Patrick Heller visited Tanzania along with international groups including the International Senior Lawyers' Project (ISLP).  The mission's main goal was seek ways to help the Tanzanian government increase public revenues generated from gold mining. The nation is estimated to be losing hundreds of millions of dollars in revenue under a fiscal regime established during the 1990s to court foreign investors. One estimate suggests that the Tanzanian gold industry has generated $3 billion since 2000, but the government has only received $100 million during this period in tax and royalties. This prioritization of corporations has put an estimated 400,000 artisan miners out of work, and shows little benefit to the general population. As the country's resources continue to be extracted, this lack of public benefit threatens to do dramatic long-term damage to Tanzania's economic prospects.

In discussions with Revenue Watch, Tanzanian government officials acknowledged the need to reform the mining sector, but expressed concern over government readiness to negotiate a better deal from companies. Though the government is under widespread public and political pressure to increase public gains from mining, a lack of industry knowledge and advanced negotiation skills could hinder the push for increased revenues.  The scoping mission met with representatives from civil society, parliament, the executive branch, and international organizations, and identified four key problem areas impeding revenue generation, including unbalanced legal and regulatory frameworks, heavy concessions to company interests in individual contracts, a lack of industry expertise and financial modeling skills within government negotiating teams, and limited capacity to monitor company performance and enforce operable rules.

Tanzania has extracted only 10% of its gold reserves, according to an August 2008 estimate by the Bomani Commission, which would leave 90% still to be extracted under more equitable terms. Laying the groundwork for sound extractive industries policies will also benefit the growing petroleum and natural gas sectors. The gas sector was the focus of the mission's meeting with the Tanzanian Petroleum Development Corporation, continuing discussions begun in 2007 on improving the nation's legal and fiscal frameworks for tapping gas reserves.

Looking ahead, Revenue Watch and international partners develop a program to enhance the Tanzania's ability to generate public revenue from the mining sector. Specific areas of possible intervention include analyses legal and financial frameworks and capacity development for government officials on contract interpretation and negotiation.

RWI is also undertaking a separate parliamentary capacity-building effort around extractive sector oversight, funded by the Gates Foundation, which will focus in part on improving MPs understanding of contracts and fiscal regimes for the mining sector.

LEARN MORE

• The Bomani Mining Report “Popular Version” (pdf, Swahili only)
• A golden opportunity? How Tanzania is failing to benefit from gold mining (pdf)
• Revenue Watch and Parliamentary Capacity Building
• TANZANIA: Overview
  

SIERRA LEONE: Technical Assistance and Other RWI Activities

RWI has been working in multiple roles in Sierra Leone for years, offering both technical assistance and capacity building support in promoting improved transparency and management of extractive resources. Since 2006, RWI has worked with the National Advocacy Coalition on Extractives (NACE), and has supported the implementation of EITI in the country, helping draft the EITI work plan in Spring 2008. RWI also has a standing commitment to support the government of Sierra Leone in reforming its mining sector, pursuant to an offer of support by RWI Director Karin Lissakers who, with George Soros, met with President Koroma during a visit to Freetown in February 2008.

Recently, RWI became actively involved in providing technical assistance in Sierra Leone. RWI has played an active role reviewing four key mining contracts that the government has selected for renegotiation, and is also advising the government on its anticipated revision of the Core Mining Policy. 

LIBERIA: Government Signs EITI Commitment

In early April, the Liberia Extractive Industries Transparency Initiative (LEITI) multi-stakeholder group signed a memorandum of understanding committing themselves to implementation. Interestingly, Liberia will be the first country to include forestry in its EITI process. LEITI also began the process of hiring an auditor for the first EITI report.   

Throughout the year, the local Publish What You Pay (PWYP) coalition supported by RWI has been widely distributing several thousand advocacy stickers across the country to increase awareness around citizens' rights to benefit from natural resources.  Recently they held a capacity building event for media and policy makers on the relevance of PWYP/EITI to development in Liberia. To help expand the coalition's advocacy base, six new membership applications have been received and placed under review pending the adoption of the coalition's constitution in July. Looking ahead, the coalition plans to produce a newsletter and launch a website later this year, in addition to using their role on the EITI board to promote an effective and disaggregated EITI process.

GABON: Harassment of Transparency Campaigner Continues

From July 11-15, Publish What You Pay (PWYP) organized a fact-finding mission to Gabon to coincide with PWYP Gabon’s annual meeting. The mission was attended by Christian Mounzeo, EITI Board member and Raymond Dou'a, PWYP Strategic Advisory Group member. It sought to shed light on Gabon Interior Ministry's recent decision to impose a travel ban on Marc Ona, coordinator of PWYP Gabon and a member of the multi-stakeholder committee implementing EITI.

The travel ban decision came in June, as Ona was en route to RWI's international meeting on revenue transparency in New York, and has not yet been reversed. The ban follows PWYP Gabon’s recent criticism of the opacity around the renegotiation of the Belinga contract between Gabon and China.  Marc Ona remains under an illegal travel ban and has been forbidden from leaving Gabon each of the two times he has tried since June on the direct orders of the Interior Minister, without any formal charges or explanation provided.  RWI is working with PWYP International and Africa to continue monitoring the situation and provide support, including personal security and legal representation as necessary, to Marc as the situation plays out.  RWI and PWYP intend to bring this intolerable situation to the attention of the EITI Board on which the Government of Gabon sits at the Athens meeting in October. Read more about the harassment of transparency campaigners in Gabon ...

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ZAMBIA: National Publish What You Pay Coalition Launches

South Africa Resource Watch organized a seminar in Zambia in the first week of April to discuss Zambia's experience with revenue transparency and EITI. It was attended by civil society, government and development agencies. The main outcome of the seminar was the establishment of a national PWYP coalition to be coordinated by the Centre for Policy Dialogue, with the priority of starting a dialogue with the government and mining companies on signing up to EITI.

UGANDA: Update on Civil Society Engagement in the Ongoing Oil Exploration in Uganda

Oil exploration in Uganda is progressing rapidly, with numerous oil reserves being discovered, and more wells drilled, in the Albertine region in the last two years. This rise in exploration raises expectations of an increase in the number of barrels of oil Uganda produces, from current estimated at 4,000 to 10,000 barrels per day. Three main companies are engaged in exploratory drilling, including Tullow Oil, Heritage Oil and Gas, and Tower Resources. In an effort to ensure transparent management of the oil revenues for the benefit of the entire country, Uganda's government has begun to set up clear mechanisms for the management of oil revenues, including passing the National Oil and Gas policy in January 2008.