The Interior Department alerted the head of a 52-nation anti-corruption pact on Thursday that the U.S. will pull out of the organization, citing U.S. law.
Critics, meanwhile, contended the move is a favor to large oil companies such as ExxonMobil that don’t want others to know about their taxes.
While the agency said the U.S. remains committed to “fighting corruption” in the oil, natural gas and mining sector, it can no longer be a member of the Extractive Industries Transparency Initiative, or EITI. The U.S. joined the group in 2014, but it was founded in 2003.
“It is clear that the domestic implementation of EITI does not fully account for the U.S. legal framework,” a letter to the director in Oslo, Norway, read. “Effective immediately, therefore, the United States must withdraw as an EITI implementing country.”
It does not say exactly what about the U.S. legal framework makes the nation unable to continue under the pact’s transparency protocols. The Interior Department says that its office of revenue management intends to internalize the group’s standards as far as U.S. law permits.
EITI Chairman Fredrik Reinfeldt called the decision “a disappointing, backwards step.” He said one of the principal function of the group’s work is to support efforts to “combat transnational crime and terrorist financing,” adding the it is “important that resource-rich countries like the United States lead by example.”
A statement from EITI said that the Interior Department has moved ahead with reforms of its oil revenue system. Although it developed a “simple” process to gather data on corporate income tax payments, “regrettably, the majority of companies declined to report.”
Proponents of the U.S. remaining part of the group said the U.S.’s “retreat from this important initiative” sends the wrong signal to other countries and companies, said the group Global Witness, which was instrumental in the creation of the pact.
The group said it is obvious why the Trump administration is taking the action: It fulfills the desires of ExxonMobil and other major oil producers that have pressed for the U.S. not to reveal the taxes they pay the government.
“We strongly dispute the U.S. government’s claim that U.S. laws prevent compliance with the EITI standard when it is Exxon and Chevron’s preference for secrecy that made it impossible for the U.S. to comply,” said Corinna Gilfillan, the head of Global Witness’ U.S. office.
The watchdog group Project On Government Oversight said the legal case that Interior is attempting to make in leaving the organization is perpetuating a false narrative.
“The government is suggesting that U.S. laws restrict companies from revealing information, including taxes, but this is not the truth,” said Danielle Brian, POGO’s executive director. “The government is perpetuating a false narrative created by the oil and gas industries that protect themselves and not the American people.”
Gilfillan asked: “When major Russian and Chinese oil companies are disclosing more information about their deals around the world than their U.S. counterparts, you have got to ask: what are Exxon and Chevron so desperate to hide?”
The Interior Department said the State Department, now headed by former ExxonMobil CEO Rex Tillerson, will continue to “lead the U.S. commitment” as a “supporting country,” but all its decisions with regard to the pact’s standards will be done unilaterally.
“By choosing not to implement the requirements of the EITI, the U.S. will send a message to other EITI members that they, too, can opt out of it, which would increase the potential for conflict and put U.S. troops at risk,” Gilfillan said, adding that the U.S. had been a leader in getting the rest of the world’s energy companies to be more transparent about their revenues.
