A civil society group is calling for ExxonMobil to be removed from the EITI board for failing to disclose their taxes. ExxonMobil was a founding member of the EITI.
The group in a letter to the EITI board noted that they believe ExxonMobil is violating the EITI Code of Conduct.
“Specifically, we urge that the February EITI Board meeting include a discussion about the refusal of ExxonMobil and Chevron to disclose their tax payments through the term of implementation of the EITI Standard in the United States. We believe strongly that the refusal to engage in this most basic aspect of compliance with the EITI Standard constitutes a repeated and willful violation of the EITI Code of Conduct, the EITI Constituency Guidelines, the Terms of Reference of the now defunct USEITI MSG, and an act of bad faith that is counter to the spirit of the EITI movement itself. These actions not only contributed to the demise of the USEITI process, but damaged the credibility of the Standard and of the EITI both in practice and in the eyes of the global community.”
ExxonMobil and Chevron were members of the USEITI MSG from its creation in December 2011 to its disbandment in November 2017. Both companies are members of the EITI International Board’s industry constituency and have served in that role, with a few brief exceptions, since its creation in 2003. From its founding, the EITI and its Standard have required comprehensive disclosure of material payments from companies to governments, including taxes. In fact, no EITI implementation has ever excluded the disclosure of tax payments.
In the USEITI report issued in 2016, 12 of the 38 eligible companies disclosed their taxes. In the USEITI report issued in 2015, 12 of the 41 eligible companies disclosed their taxes. ExxonMobil and Chevron were among the companies that refused to disclose their tax payments in both cases. In its 2016 USEITI Annual Progress Report to the EITI Secretariat, the USEITI MSG acknowledged, “With the exception of corporate income taxes, the 2016 Report comes very close to fully meeting the requirements of the EITI Standard.”
During the December 2015 USEITI MSG Meeting, an ExxonMobil representative provided the following explanation of his company’s decision not to disclose taxes through the USEITI process:
“… knowing that income tax reporting will soon be required under Section 1504 of the Dodd-Frank Act, companies may have chosen to wait until that rule was finalized and the requirements more clear. (ExxonMobil representative) added that many of these companies have exercised leadership in EITI around the world, and are very committed to USEITI and to tax reporting, but are awaiting the finalization of the SEC’s rulemaking.”
ExxonMobil and Chevron had indicated that US laws prohibit tax payment disclosure, however, Dallas-based Kosmos Energy has voluntarily disclosed its U.S. tax payments for years, and BHP Billiton, one of the largest mining companies in the world, voluntarily disclosed its tax payments to the U.S. government before it was required to do so by the EU Directives.
This issue could have been avoided if there was a standard that required companies to practice what they preach and disclose their payments fully as a condition of being an EITI supporting company or EITI Board member.
In the absence of this, and in light of the ongoing circumstances outlined above, we recommend strongly that these companies be removed from the EITI Board for violating the EITI Code of Conduct, as well as the spirit of EITI, thus endangering the EITI Standard, the letter noted.