Play Live Radio
Next Up:
0:00
0:00
0:00 0:00
Available On Air Stations

Repeal Of Anti-Corruption Rule May Hurt National Security, Critics Warn

President Donald Trump signs a bill repealing a rule passed last July that required oil, gas and mining companies to disclose payments to overseas governments. The rule was meant to promote transparency. Critics of the repeal argue it served as an important national security tool since corruption often leads to violence, instability and terrorism.
Pool
/
Getty Images
President Donald Trump signs a bill repealing a rule passed last July that required oil, gas and mining companies to disclose payments to overseas governments. The rule was meant to promote transparency. Critics of the repeal argue it served as an important national security tool since corruption often leads to violence, instability and terrorism.

One of the very first bills President Trump signed into lawthis month killed a Securities and Exchange Commission rule meant to promote transparency in countries riddled with corruption. Trump said getting rid of the rule, which required oil, gas and mining companies to disclose overseas royalties and other payments, would bring back jobs and save extraction companies many hours of paperwork and, potentially, hundreds of millions of dollars.

But critics of this rollback say it could make the U.S. less safe. The rule was an important national security tool, they argue, since corruption often leads to violence, instability and terrorism.

Former Sen. Richard Lugar, the Indiana Republican who co-authored the original legislation to require the transparency rule, was disappointed to see his fellow Republicans vote overwhelmingly in both houses of Congress to invalidate the SEC rule, which hadn't even gone into effect yet.

"History shows that many resource-rich countries are very poor because the vast mineral resources have bred corruption that has led to poverty, hunger and instability," Lugar told NPR.

He said as he was working on this issue, Rex Tillerson, now secretary of state and then head of Exxon Mobil, came to see him to lobby against the reporting requirements. Tillerson argued that the rule would put American companies at a disadvantage.

But even as energy lobbyists worked to delay the SEC rule, the U.K., Canada, Norway and other countries picked up on Lugar's idea and ran with it.

"So the argument that the U.S. would be competitively at a disadvantage doesn't make sense at all," Lugar said, "because clearly, other countries have understood that corruption must stop."

There is a national security argument for promoting transparency, too, says Kate Bateman, a visiting fellow at the Center for a New American Security. Corruption fuels conflict and terrorism, she says — lessons "learned from our experiences in Iraq and Afghanistan."

Bateman, a former State Department official who worked with the Special Investigator for Afghanistan Reconstruction, says the SEC rule was a "simple transparency measure" that would show citizens of foreign countries — and U.S. bankers and investors — how much money was pouring into countries like Nigeria, where she says corruption has complicated the military's battle against the militant group Boko Haram.

"Resource-rich, underdeveloped countries often have weak institutions and rule of law," Bateman wroteafter the rule was repealed. "Payments by foreign companies can easily end up in the overseas bank accounts of a tiny, corrupt elite and do nothing to spur economic growth, provide basic services to deprived populations, or build capable, professional security forces."

The SEC is not the place for a social agenda, argues Rep. Bill Huizenga, a Michigan Republican who wrote the rule-killing legislation signed by Trump. "While this is may be a laudable goal, using federal securities law and the SEC to enforce social issues is inconsistent with the SEC's core mission and completely inappropriate," he said on the House floor in early February.

There is another SEC rule that could be on the chopping block soon. That one requires U.S. tech companies to report if they are getting so-called conflict minerals from Africa.

Copyright 2020 NPR. To see more, visit https://www.npr.org.

Michele Kelemen has been with NPR for two decades, starting as NPR's Moscow bureau chief and now covering the State Department and Washington's diplomatic corps. Her reports can be heard on all NPR News programs, including Morning Edition and All Things Considered.