ADB backs transparency in extractive industries
By Purple Romero
March 2, 2008
The Asian Development Bank last week endorsed the Extractive Industry Transparencies Initiative (EITI), a global movement that pushes governments to disclose revenues gathered from corporations in the oil, gas and mining industries. EITI also calls for companies to publish their payments to governments.
EITI, launched in 2002 by the United Kingdom and endorsed by governments, international organizations and civil society networks in 24 countries, sets a global standard for the disclosure of revenues from extractive industries as well as company payments.
The criteria for the publication of revenues and payments include the following:
· Revenues received by government and payments given by corporations should be published regularly. The publications should be accessible and comprehensible to a ‘wide audience.’
· Independent auditing and reconciling of payments and revenues are to be conducted, following international auditing standards.
· Host governments will create a work plan for the above with mandatory assistance from international financial institutions. The work plan should have a timetable for implementation and assessment of limiting factors.
Once a country passes these criteria, EITI will grant it a candidate status. The status lasts for a two-year period, after which it should be able to conduct the processes stated in the validation guide. The processes include the appointment of an independent administrator and publication of all revenues and payments, in coordination with a multi-stakeholder group.
After these are met, the country will be elevated to compliant status. The multi-stakeholder group is then required to appoint an EITI-approved validator. The validator will be the one to report to the EITI board regarding the country’s compliance.
Five countries in Asia have vowed to meet the EITI standard. These are Azerbaijan, Kazakhstan, the Kyrgyz Republic, Mongolia, and Timor Leste.
EITI set the standard based on the belief that extractive industries help in economic growth, but could also cause corruption and poverty without the commitment to transparency and accountability.
Aside from the ADB, the EITI was endorsed by the African Development Bank, International Monetary Fund, World Bank, the Organization for Economic Co-operation and the European Bank for Reconstruction and Development.