Global corruption, and related threats to the rule of law, have emerged as an important national security challenge. In a number of U.S. partner states, mineral revenues have contributed to corruption, leading to poverty, hunger, and instability, with consequences for American national security.
When Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, it included a provision developed by Senators Richard Lugar and Ben Cardin, which required oil, gas, and mining companies listed on U.S. stock exchanges to disclose to the Securities and Exchange Commission (SEC) all payments made to the U.S. and foreign governments. The bipartisan Cardin-Lugar anti-corruption provision, also known as Section 1504 of Dodd-Frank, was a major step forward in U.S. efforts to combat corruption. U.S. leadership in addressing the increasingly prevalent issue of corruption also led other countries to follow suit by passing similar laws in 30 countries. On June 27, 2016, the SEC issued a final rule implementing Section 1504. As explained by Senator Cardin following the SEC’s ruling, “Transparency is the enemy of corruption, and today the United States has sent a clear message to government officials who seek to siphon off public funds for personal gain.”
In places where the U.S. provides military and development assistance, corruption can hollow out partner militaries, or lead directly to U.S. weapons or aid ending up in the hands of terrorist organizations. Corrupt governments create an opening for terrorist groups like the Taliban and ISIS to rail against their illegitimacy and a failure to put citizens first. Countries with significant oil and gas resources can fall prey to the “resource curse,” where abundance of valuable natural resources paradoxically fuels authoritarianism and weak economic growth. Corruption can also spawn criminal networks that span the public and private sectors and undermine the rule of law far beyond national borders.
Transparency efforts, like Publish What You Pay, can make an important difference in weeding out corruption. Global investors rely on the disclosure of information required by the Cardin-Lugar provision to evaluate the risk of doing business in the often opaque oil, gas, and mining sectors. The ONE Campaign has also collected case studies from around the world citing instances of citizens using public information to fight corruption. Since it applied to all companies listed on U.S. exchanges and those based abroad, especially Chinese state-owned companies, Cardin-Lugar positioned the United States as a leader in the global fight against corruption.
On February 3, 2017, Republican lawmakers used the Congressional Review Act to repeal the rule implementing the provision, which was signed into law on February 15, 2017 by President Trump. Though the SEC could no longer implement the June 2016 rule, the underlying statute still stands. But in October 2017, the Treasury Department published a report recommending a repeal of Section 1504. Then on December 1, 2017 Rep. Bill Huizenga introduced H.R. 4519 to repeal Cardin-Lugar. On January 9, 2018, H.R. 4519 was placed on the Union Calendar, but was never voted on in the House. In 2018 The United States dropped 4 points in the Corruption Perceptions Index (CPI), placing the U.S. outside of the top 20 on the CPI for the first time since 2011. The United States was also listed as a country to watch.
While the United States moves closer to a full repeal of the Cardin-Lugar provision, American allies head in the opposite direction. As explained in a January 2018 analysis by Oxfam, “Cardin-Lugar set a worldwide example for disclosures, and the EU and Canada enacted similar legislation following its passage in the US.” In addition to the Cardin-Lugar reversal, the Trump administration has moved further from global anti-corruption efforts in its withdrawal as an implementing country of the Extractive Industries Transparency Initiative (EITI). The EITI now consists of 51 implementing countries.
WHAT YOU CAN DO
We’re asking Congress to support new legislation to fight global corruption at home and abroad. That means restoring the Cardin-Lugar anti-corruption provisions, but also clamping down on anonymous shell corporations and money laundering here in the U.S.
Call your representatives today at (202) 224-3121 to urge them to support legislation that clamps down on corruption. Here are two bills they can support:
This Is One of Our Top Strategies for Fighting Terrorism – By Sarah Sewall, former Under Secretary for Civilian Security, Democracy, and Human Rights, CNBC
Put the American People First: Keep the Anti-Corruption Rule – By former Sen. Richard Lugar and Sen. Ben Cardin, The Hill
The Trump Administration Rolls Back Anti-Corruption Efforts in the Oil Industry – By Steve Coll, The New Yorker
Effort to Repeal Oil, Gas, and Mining Law Could Fuel Corruption – Op-ed by Isabel Munilla, policy lead for Transparency in Extractive Industries at Oxfam America
Trust in Government in the Trump Era - Center for American Progress