The new standard will be adopted at the next EITI conference in Sydney in May.
“There are 37 countries implementing the EITI standard, and a number of countries – including the US – are on the verge of signing up,” said Juergen Reitmaier, special adviser to the EITI and former Assistant Director at the IMF.
The most recently published report – the Democratic Republic of Congo (DRC) 2010 report, released this week – points out that “as with the EITI reports for previous years, there are still discrepancies between what companies report to have paid and what the government reports to have received”.
“Theoretically, these figures should be the same,” said Reitmaier. “Sometimes this is not the case for legitimate reasons, and sometimes this reveals strange things which need investigating.”
The previous report for the DRC (2009) is one example of this.
“The last EITI report, released one year ago, caused the president to take a critical look at taxation and investigate the discrepancy between what companies reported to have paid and what the government reported it received,” said the EITI’s Anders Tunold Krakenes.
And while some issues remain, the 2010 report shows that the DRC is making significant progress.
“The 2010 report is much better than the 2009 report,” said Tim Bittiger, EITI regional director for Francophone and North Africa and Europe. “It is clear that these reports have really made a difference to the DRC. The current government is quite reform-oriented, and is throwing a lot of money at these initiatives and at becoming fully compliant with the standard.”
The EITI also focuses on holding governments to account for what they do with the money they receive from the extractive industries, and the standard is constantly evolving, as evidenced by the upcoming reforms.
“There is still wrangling between stakeholders as to the precise direction of change but it is very likely that a new standard will be adopted at the May conference in Sydney and it is quite certain that there will be new areas required under the standard, as well as new areas encouraged,” said Krakenes. “Annual reports in future will be more comprehensive and provide a better form of assessment, putting things in a broader context.”
Clare Short, EITI chair (pictured above), has already identified five areas of possible improvement:
- Making the EITI reports more understandable
- Making EITI more relevant in each country
- Better and more accurate disclosure
- Recognising countries that go beyond the minimum requirements
- A clearer set of rules, with room for adaptation
Other initiatives
Krakenes said that the EITI is complimentary to other initiatives such as Dodd-Frank and country-by-country reporting (CBCR) and that while EITI stakeholders – including countries, companies, and institutional investors – have quite different opinions, efforts such as Dodd-Frank should generally be welcomed.
For CBCR to be effective, many stakeholders have argued it has to provide more than EITI, Dodd-Frank and so on. Hence the Tax Justice Network’s wishlist of what companies would be required to disclose under CBCR:
- The name of each country it operates in;
- The names of all companies in each country; and
- Financial performance information in each country, including: sales, purchases, labour costs, pre-tax profits, tax charges, and asset values.
