(Adds industry view, comment from law firm)
By Silvia Antonioli and Karolin Schaps
LONDON Aug 22 Britain announced that energy and
mining firms would have to disclose from next year any payments
made to governments in countries where they operate as it aims
to curb corruption in the natural resources sector.
UK-registered companies will have up to 11 months after the
end of their financial year to report payments to Companies
House under the new rule, which will take effect from Jan. 1
"The UK is determined to lead by example, which is why we
have introduced reporting requirements on UK-based extractives
companies early," Business Minister Jo Swinson said in a
"Oil, gas and mining can, if well managed, deliver precious
economic benefits to the populations of developing countries.
Too often, though, the assets from resource-rich countries are
not benefiting local people or the local economy."
The announcement on Friday follows a period of consultation
with industry and the public on the proposal.
"While these reforms may be a step in the right direction to
eradicate corruption, tax evasion and reduce extreme poverty in
emerging markets, a disclosure regime is not of itself a cure,"
Rachel Speight, a partner at law firm Mayer Brown, wrote in an
email to Reuters.
"The changes may also negatively impact upon the commercial
prospects for companies, with significant increased compliance
costs and disclosure of sensitive information in circumstances
where not all companies operating in the extractive industry are
subject to the same regulations."
In the consultation, oil and mining majors including BHP
Billiton , Chevron and ExxonMobil
expressed concerns about the potential costs of
implementing such measures.
Some of them said that a British move ahead of other
countries could hit companies as well as the attractiveness of
Britain as a place to list shares and establish operations.
BP estimated costs of about $6.5 million to deliver
the first filing and $2.5 million a year thereafter, mainly
related to setting up a team to interpret the legislation,
develop relevant processes and implement them in the various
locations where the company operates.
The Association of British Independent Oil Exploration
Companies (BRINDEX) said the requirements might affect its
smaller members disproportionately, since their systems may not
be as sophisticated as the large companies.
"There appear to be very few benefits to our members of
publishing the new extractive report, but instead it is imposing
another administrative and unnecessary burden on our sector at a
time of other similar transparency initiatives," it said.
(Additional reporting by Karolin Schaps; editing by Jason Neely
and Jane Baird)