New SEC rule for Cardin-Lugar inadequate to halt oil industry corruption, ignores investors
Washington, D.C., Dec. 16, 2020---The Securities and Exchange Commission today, by a 3-2 vote, approved a watered-down regulation to implement the Cardin-Lugar anti-corruption amendment, Sec. 1504 of the Dodd-Frank Wall Street reform act. In response, The Lugar Center issued the following statement:
“Today’s vote ignored bipartisan Congressional intent, abandoned American leadership in the global fight against corruption, and brushed aside the concerns of investors who control trillions of dollars in assets. Instead, the Commission bowed to a handful of powerful U.S. oil companies who wish to keep secret their dealings with corrupt foreign governments. Inexplicably, outgoing SEC Chair Jay Clayton, a wealthy former corporate lawyer who supported the new weakened rule, claimed that Cardin-Lugar’s simple disclosure requirements, which financial regulators in the European Union and Canada have been enforcing for four years, are ‘outside our area of expertise.’
“The Commission ignored overwhelming evidence in the record that the stronger international standard, inspired by Cardin-Lugar, has proven to pose no competitive harm to the oil or mining companies, nor to impose burdensome costs. The new rule will be inadequate to help stem the crippling corruption so common in resource-rich countries, as Sens. Richard Lugar (R, Ind.) and Ben Carson (D, Md.) intended, corruption that threatens American national security interests.”
"The two Democratic commissioners, Allison Herren Lee and Caroline Crenshaw, sharply disagreed with Clayton and the two GOP commissioners who voted with him. Lee noted that their reluctance to tackle oil and mining corruption overseas runs counter to the SEC’s current enforcement of the Foreign Corrupt Practices Acts, its anti-money laundering efforts, and its work on thwarting terrorist financing. ‘We are not taking the opportunity to further the SEC’s and the United States’ tradition as leaders in the fight against global corruption,’ Lee said.
“President-elect Biden has vowed to bring the U.S. back into global alliances. Remedying this Cardin-Lugar rule so that it conforms with the standards set by our allies in Canada and Europe would be one place to start.”
For background, see earlier blogs:
https://www.thelugarcenter.org/blog-will-the-sec-play-santa-for-big
https://www.thelugarcenter.org/blog-sec-whiffs-on-extractives-corruption
For more information, contact Jay Branegan, jay@thelugarcenter.org
