Transparency in the commodities sector: Switzerland continues to shirk its responsibilities
Berne, 23 November 2016
The Federal Council sent a comprehensive proposal for the reform of Swiss company law to Parliament today. It addresses, among other things, the Swiss transparency gap in the global commodities sector but then goes on to exempt the very companies trading in commodities from the duty to disclose payments to governments and state-controlled companies – even though Switzerland is the world's leading commodities market. The Council even nixes the option contained in an earlier version of the law to extend the new transparency provisions to the commodities trade as soon as other countries do the same. It is now up to Parliament to correct the hesitancy of the Federal Council.
Meanwhile, the relevance of the transparency gap in the commodities trade is becoming more evident. A report published last week shows that the Geneva-based commodities company Trafigura alone paid 13.6 billion US-dollars to governments or state enterprises in 2015. These figures—which Trafigura is the only company to have disclosed voluntarily— also show that Switzerland cannot shift its responsibility to the primary producing countries because 93% of Trafigura's payments went to countries that are not affiliated with the global transparency initiative EITI. EITI has been trying to bring more transparency to the commodities trade since 2013 but so far has been unable to persuade important primary producers like Russia and Angola to join its ranks.
Transparency is an important instrument in the fight against widespread corruption in the commodities business. The Trafigura figures show that transparency is actually quite feasible in the commodities trade and does not, as the Federal Council evidently fears, entail a competitive disadvantage. A report published by SWISSAID and Public Eye shows just how important oil sales to Swiss commodities traders and other buyers are for resource rich countries: between 2011 and 2013 they accounted for fully 56 percent of all state revenue in the ten largest oil producing countries of Sub-Saharan Africa.
At the international level changes are underway to close this huge transparency gap. The commodities trade will no doubt be an important topic in the upcoming revision of the transparency laws of Great Britain—the second largest commodity market— and the EU. The British Parliament specifically asked the government to look into the commodities trade and "consider changes to increase transparency". And at the London anti-corruption summit in May, Great Britain, Switzerland and ten other countries pledged to increase transparency in this sector.
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