Trump administration is blasted for pulling out of effort to fight corruption in the energy sector

Key Points
  • The U.S. has withdrawn from a global coalition to root out corruption in the energy sector, attracting bipartisan criticism of the Trump administration.
  • The administration argues the coalition's initiatives did not fit within the U.S. legal framework, but critics say that justification is a front to mask Big Oil and Gas' power.
President Donald Trump speaks at the White House, October 18, 2017.
Chris Kleponis | Pool | Getty Images

A global coalition coordinating the effort to root out widespread corruption in the energy sector is decrying the Trump administration's decision to pull out of the effort.

The Interior Department informed the Extractive Industries Transparency Initiative on Thursday that the United States is withdrawing as an implementing country. That means the United States will no longer align its rules and regulations to be fully compliant with the global effort to reduce corruption connected to drilling and mining in typically poor, resource-rich countries.

"This is a disappointing, backwards step. The EITI is making important gains in global efforts to address corruption and illicit financial flows," EITI Chairman Fredrik Reinfeldt said in a statement.

"It's important that resource-rich countries like the United States lead by example. This decision sends the wrong signal."

Earlier this year, an Interior Department spokesperson denied the agency was planning to pull out of EITI. The spokesperson made the claims after CNBC inquired about reports that Interior officials canceled all of the remaining scheduled meetings with nonprofit and industry groups linked to EITI.

On Thursday, the director of Interior's Office of Natural Resources Revenue said the United States would not become a full member because "domestic implementation of EITI does not fully account for the U.S. legal framework." The United States will remain a supporting country and "remains fully committed to institutionalizing the EITI principles of transparency and accountability consistent with U.S. law," Director Gregory Gould told Reinfeldt in a letter.

EITI Chairman Fredrik Reinfeldt.
Suzanne Plunkett | Reuters

EITI guidelines require energy companies to make public certain financial information related to operations in the countries where they operate. The goal is to make it easier for citizen groups in those countries to identify corruption. Opponents of U.S. participation claim the disclosures would put U.S. companies at a disadvantage, though under EITI those companies' foreign competitors are bound by the same rules.

The Trump administration and Republicans in February repealed a related U.S. rule called the Cardin-Lugar Amendment that would have required drillers and miners listed on U.S. stock exchanges to disclose payments to foreign governments.

At the time, former Republican Sen. Richard Lugar told CNBC he remained hopeful the United States would tackle the corruption that robs citizens in oil-producing nations of mineral wealth and enriches a small elite — a phenomenon known as the resource curse. On Tuesday, he issued a blistering statement with Democratic Sen. Ben Cardin.

"The Department's justification for withdrawing from EITI — because the initiative contravenes the U.S. legal framework — is a front meant to mask Big Oil and Gas' money and influence, the real reason fueling this sad day in the movement toward greater global sunlight and transparency in extractive industries," they wrote.

"There is no U.S. law that prevents oil, gas or mining companies from voluntarily disclosing their federal tax payments to the American people. The Trump Administration's move today is a painful abdication of American leadership on transparency and good governance."

U.S. participation in EITI hit a roadblock when energy companies refused to provide certain tax information, advocacy groups and Reinfeldt said.

"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, head of the U.S. office of Global Witness.

"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?"

An Exxon Mobil spokesperson referred CNBC to a January op-ed outlining the company's cooperation with IETI to date, as well as it's problems with the initiative. Chevron did not return a request for comment.