In May 2010 BHP Billiton indicated their intention to disclose all payments to governments on a country-by country basis in support of the Extractive Industries Transparency Initiative. This is a welcome development, and if fully implemented, would demonstrate BHP Billiton is responding to global best practice.
Revenue transparency, the full disclosure by oil, gas and mining companies of all payments to government on a country-by-country basis, is increasingly recognised as an essential aspect of effective resource management and responsible mining conduct. BHP Billiton’s initiative preceded financial reform in the U.S which sets a new standard for energy and mining transparency. The new law requires all oil, gas and mining companies listed on the U.S Securities and Exchange Commission (SEC) to publicly report how much they pay governments for access to their oil, gas and minerals. This will impact on BHP Billiton as a US listed company.
BHP Billiton has commenced country-by country reporting of taxes and royalties in the 2010 Sustainability Report. However, BHP Billiton should have disclosed all payments to governments, including ‘minor payments’, as these include countries with weak regulatory governance, such as Indonesia, Guinea, Cambodia and Mozambique. It is unclear if this disclosure includes all payments to secure exploration rights.
In many of the countries where BHP Billiton is active, bribery and corruption are common and human rights violations are a very real risk. Full disclosure of all payments to governments would have assisted BHP Billiton avoid the allegations of ‘Tea Money’ corruption and payments of US$3.5 million to Cambodian officials in 2010. The US Securities and Exchange Commission is investigating.