US oil sector seen as deficient on tax transparency

ExxonMobil and Chevron undermined an anti-corruption effort they help manage by refusing to disclose their tax payments in the US, the chair of the Extractive Industries Transparency Initiative (EITI) said today.

EITI chairman Fredrik Reinfeldt said the companies, although they support the initiative and serve on its board, did not follow a central requirement to report their tax payments in the US. ConocoPhillips, Hess and Noble Energy — three other US companies that are members of EITI but do not serve on its board — also did not report their US tax payments, the EITI said.

Reinfeldt said it was "unprecedented" to have supporting companies make a "conscious decision" not to comply with the group's own disclosure requirements.

"It is serious when supporters of the EITI as a group undermine EITI implementation," Reinfeldt said.

The EITI sets standards that encourage oil, gas and mining companies to disclose detailed information on payments to governments, allowing the public to track if funds are lost. The EU, Canada and others have adopted rules based on the initiative, but President Donald Trump blocked mandatory disclosure requirements in the US and last year pulled out of the initiative.

ExxonMobil, Chevron, ConocoPhillips and Hess each pay $60,000/yr as supporting members of the initiative. Noble Energy pays $40,000/yr.

Good government advocacy groups have pushed for ExxonMobil and Chevron to be kicked off of EITI's board, given their refusal to release their taxes. But Reinfeldt rejected that request.

"I consider it better for the realization of the EITI principles that they remain supporters and members," Reinfeldt said.

Chevron said it had a long-standing commitment to promoting revenue transparency but said it did not report its tax payments to the US Internal Revenue Service (IRS) because of the "confidential nature of IRS data."

ExxonMobil, ConocoPhillips, Hess and Noble Energy did not immediately respond for comment.

Payment disclosure advocates first raised concerns that ExxonMobil and Chevron were not following the initiative through a grievance letter on 7 February. They say Reinfeldt's criticism of the companies was a needed step to preserve the integrity of the EITI, which received $1.1mn, or 17pc of its funding, from the oil and gas industry.

"For companies like Exxon and Chevron to benefit from associating with this valuable transparency effort without themselves living up to its basic standards was degrading the entire effort," Project on Government Oversight executive director Danielle Brian said.

Disclosure groups say the public deserves to know how much US oil and gas companies are paying in taxes, particularly after the US last year cut corporate tax rates to 21pc from 35pc.

"If people saw that oil and gas companies were paying zero or negative taxes, I would bet that tax bill would have had a much harder time passing," International Corporate Accountability Roundtable advocacy director and EITI board member Jana Morgan said.

Publicly traded oil companies would have had to disclose their payments to governments under a 2016 rule required by the Dodd-Frank financial law. But Republicans in the US Congress last year voted to scrap that rule amid lobbying from the oil industry. The US Securities and Exchange Commission expects to propose a new disclosure rule by November.