Transparency in commodity trading: The Swiss Government misses regulatory opportunity offered by company move
Bern / Zurich / Lausanne, 28 November 2014
The Federal Council has today opened the public consultation on the wide-ranging revision of Swiss stock corporation law. The government also intends to use this opportunity to close the Swiss gaps in transparency in the worldwide commodities business as promised in a report on payment transparency published in June. However, it is precisely the trading of commodities that according to the government should be exempted from the rule to disclose all payments to states – even though Switzerland is the world's largest commodity trading hub.
The Swiss government’s transparency draft is almost a copy of the respective EU Directives that enter into force across the EU, starting in the United Kingdom on 1st of December. The exclusion of commodity trading makes this draft bill a red herring. This is because the payments from the extractive activities of the big Swiss commodity companies are anyway covered by the EU regulation, with the result that this proposal adds virtually no additional value. Curiously, the government has nevertheless requested the competence from Parliament to include trading in the regulation at a later date – just in case other countries decide to include it.
But the Federal Council fails to see that in fact, other countries have indeed already included trading: the Extractive Industries Transparency Initiative (EITI) already obliges its 48 member states and their state-owned companies to disclose all their revenues, irrespective of whether they stem from extraction or trading. Last week the Swiss-based trading giant Trafigura announced its intention to disclose all payments to governments in EITI countries, starting in 2015. So even one of the most controversial commodity companies is ahead of the Swiss government when it comes to transparency of payments. This also demonstrates that payment disclosure is not a competitive disadvantage - a fact that the Federal Council completely ignores with its overly-cautious economic policy.
- Oliver Classen, BD Media Spokesman, +41 44 277 70 06
- Lorenz Kummer, Swissaid commodities expert, +41 79 307 25 92
Transparency of resource payments
…is an important first step in tackling the resource curse and corruption in developing countries. Only in this way can the population hold its government to account for the spending of resource revenues. Just how important the payment flows relating to commodity trading are, was demonstrated by a recent study by NRGI, Swissaid and Berne Declaration. From 2011 to 2013, Swiss traders purchased approximately $55 billion worth of oil from national oil companies (NOCs) in the top ten sub-Saharan oil-producing countries. This sum is equal to 12 percent of the countries’ combined government revenues, and is double what they received in foreign aid.