SEC ruling will spotlight financial dealings of firms in Africa

The world is set to know a bit more about the billions of dollars that US-listed companies spend to scoop gold and gas and diamonds and oil out of the earth.

In a 2-to-1 vote yesterday, the US Securities and Exchange Commission approved a thorny clause nestled near the back of 2010's 800-page US Financial Reform Act. Section 1504 – the “Disclosure of Payments By Resource Extraction Issuers Section” – forces any oil or mining company listed on a US stock exchange to produce an annual report detailing each check, bank transfer, or cash-flushed suitcase above $100,000 that they submit to foreign governments.

In a second ruling today, the SEC also backed Section 1502, the so-called “conflict minerals clause,” which would make miners tell the public if any of their minerals come from Democratic Republic of Congo, where sales of precious stones have financed more than a decade of war.

Human rights advocates have reason to cheer both decisions, especially in resource-rich Africa.

Oil companies are not likely to be as happy. Today's ruling tops off a mountain of new anticorruption laws in the US and Europe that have trapped the biggest oil and mining corporations between their home governments, increasingly eager to pry open company books, and foreign governments that mostly prefer to keep big business deals under wraps.

“This is going to be a real step change in the way these deals are ... made public to the wider society,” says Carl Dolan, senior policy officer of Transparency International. “We're going to have a very, very clear picture of the kinds of money that are going to national governments.”

How firms see the ruling

Company lobbyists spent more than a year pushing the SEC to have Section 1504's phrasing watered down. Many wanted it defined as broadly as possible, to let companies keep under wraps payments that could help rivals figure out their strategy and outbid them. “Foreign firms could plunder this information,” said John C. Felmy, chief economist for the American Petroleum Institute, in response to the ruling.

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