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International Anti-Corruption NormsTheir Creation and Influence on Domestic Legal Systems$

Cecily Rose

Print publication date: 2015

Print ISBN-13: 9780198737216

Published to Oxford Scholarship Online: October 2015

DOI: 10.1093/acprof:oso/9780198737216.001.0001

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The Extractive Industries Transparency Initiative

The Extractive Industries Transparency Initiative

Targeting Corruption through Revenue Transparency Norms

(p.133) 4 The Extractive Industries Transparency Initiative
International Anti-Corruption Norms

Cecily Rose

Oxford University Press

Abstract and Keywords

This chapter examines the Extractive Industries Transparency Initiative, which emerged in 2003 to tackle the corruption, poverty, and conflict associated with natural resource wealth. EITI has created and successively revised a set of international norms on revenue transparency, which take the form of the EITI Standard. These non-binding revenue transparency norms have not only been implemented by participating States, but they have also influenced the legal systems of non-participating States, by virtue of the 2013 European Union Transparency and Accounting Directives. EITI’s status as a multi-stakeholder initiative has greatly enhanced its inclusiveness, as States as well as private sector entities and civil society organizations participate in the Initiative. But EITI’s inclusiveness has also diminished the effectiveness of the Standard. The Standard’s narrow focus on revenue transparency, as opposed to the transparency of contracts and expenditures, may limit its ability to reduce the grand corruption typically associated with the extractive industries.

Keywords:   Extractive Industries Transparency Initiative, EITI Standard, multi-stakeholder initiative, civil society, natural resource curse, theory of change, Publish What You Pay

I. Introduction

The extractive industries are among the most corrupt business sectors, as measured by Transparency International through surveys of over 3,000 business executives.1 According to Transparency International, the perceived level of corruption in the extractive industries (a term which refers to the oil, gas, and mining industries) was exceeded in only three other sectors: construction; utilities; and real estate, property, legal, and business services.2 The most common form of corruption in the extractive industries is the payment of bribes or ‘improper contributions’ to high-level government officials in order to gain influence.3 The extractive industries are particularly susceptible to grand corruption in part because they involve high levels of regulation and interaction between the public and private sectors.4 In addition, companies in this sector not only make high-value investments but also have substantial financial resources with which to pay bribes.5 By contrast to these large, well-financed oil, gas, and mining companies, most of the world’s resource-rich States rank among the poorest, as low income or lower middle income States.6

The Extractive Industries Transparency Initiative (EITI or ‘Initiative’) emerged in 2003 to tackle the corruption, poverty, and conflict associated with natural resource wealth through the creation of a set of international norms on revenue transparency.7 EITI specifically requires participating States to ensure that companies in the extractive industries disclose their payments to the State, and the State in turn must disclose its revenues so that the two sets of figures may (p.134) be reconciled. EITI aims to foster greater governmental accountability for the use of natural resource wealth through an enhanced public understanding of the revenues that States receive. EITI was slow to become operational, but it has forty-seven participating States as of January 2015, and four others have committed to implementing the EITI Standard, which sets out the transparency norms with which participating States must comply.8

Both the Initiative and its Standard are distinct from the other organizations and instruments discussed in this book. EITI takes the form of a multi-stakeholder initiative that is registered as a non-profit association in Norway, where the Initiative’s International Secretariat is based.9 The Initiative’s structure is therefore different from that of international organizations, like the Organisation for Economic Co-operation and Development (OECD) or the United Nations. Most significantly for our purposes, the Initiative’s main governing body, the EITI Board, includes both States as well as non-State actors, as it consists of representatives from States, the private sector, and civil society.10 These three constituencies participate equally in formulating the Standard and in evaluating compliance with it, unlike the drafting and monitoring of anti-corruption treaties, which is dominated by States that have the exclusive capacity to become parties to these instruments.

EITI’s multi-stakeholder structure makes it inherently more inclusive than the OECD Working Group on Bribery and the Implementation Review Mechanism of the United Nations Convention against Corruption (UNCAC). Yet, the Initiative has still suffered from legitimacy problems due to the division on the Board between representatives from developing States that are implementing the Standard, and representatives from developed States that are supporting the Initiative financially, without implementing the Standard themselves (with a few exceptions). The multi-stakeholder structure has also presented challenges for EITI’s legitimacy because the Standard represents the set of norms to which the stakeholders could agree, but not necessarily the set of norms most suited to achieving the Initiative’s objectives. EITI’s inclusiveness as an institution has led to a narrow and at times minimal Standard that may have limited utility as an instrument meant to help reduce corruption in implementing States.

The EITI Standard is distinct from the OECD Anti-Bribery Convention and UNCAC in that it is a free-standing, non-binding instrument. The Standard is not associated with any binding treaties, unlike the anti-bribery Recommendations of the OECD, which have both preceded and followed the OECD Anti-Bribery Convention. In addition, even though the Standard is a non-binding instrument, it arguably has a more binding character than the OECD Recommendations and the non-mandatory criminalization provisions of UNCAC. The EITI Standard sets forth a series of requirements, which for the most part must be met in order (p.135) for States to qualify as compliant. By contrast, the OECD Recommendations and UNCAC’s non-mandatory criminalization provisions use the word ‘should’ and compliance is optional.

The content as well as the form of the Standard may also be distinguished from the OECD anti-bribery instruments and UNCAC, as the Standard is sector-specific and embraces disclosure rather than criminalization. Unlike these anti-corruption treaties, which address specific types of corrupt conduct, the Standard targets the mismanagement of revenues from the extractive industries, without ever identifying the type of corrupt conduct most likely to arise in this context, namely embezzlement. While the OECD anti-bribery instruments and UNCAC apply across sectors, the EITI Standard applies only to the extractive industries, as these transparency norms have been tailored for these industries. Moreover, the Standard does not require the criminalization of any particular conduct, but instead relies on disclosure as a mechanism for preventing and potentially deterring corrupt conduct. Information disclosure represents a fundamentally different tool for approaching the problem of corruption, as it is premised on civil society holding governments accountable, instead of State-driven criminalization and enforcement actions. The Standard thus represents a relatively novel mechanism for combating corruption. A close examination of these transparency norms, however, raises doubts about whether EITI stakeholders have actually designed a regime capable of preventing or deterring corrupt conduct, if such an impact can even be measured at all. In particular, the Standard’s narrow focus on revenue transparency may limit its ability to reduce the grand corruption typically associated with the extractive industries.

This chapter begins by explaining how EITI came into existence, why it took the form of a multi-stakeholder initiative, and what this structure entails, particularly with respect to the composition of the Board (Section II). The chapter then focuses on the substance and form of the EITI Standard, by discussing transparency as an anti-corruption norm, the specific revenue transparency norms set out in the EITI Standard, and the form that the Standard takes as a non-binding instrument (Section III). The following section examines participation in EITI, including the incentives for States to implement the Standard, the composition of EITI’s participating States, the Initiative’s capacity to suspend or delist non-compliant States, and implementation by non-participants, namely the member States of the European Union (Section IV). Finally, the chapter concludes with a discussion of the difficulties involved in measuring EITI’s impact, given the absence of robust empirical evidence that greater transparency reduces corruption (Section V).

II. An Introduction to EITI

A. A brief history of the creation of EITI

The existence of EITI was hardly inevitable. Instead, it emerged out of a particular confluence of events and developments in the late 1990s and early 2000s. (p.136) Academic research on the natural resource curse fed into a concerted push by civil society organizations for greater transparency in the extractive industries, a campaign that caught the attention of the Chief Executive Officer (CEO) of BP-Amoco. At the same time, two other powerful individuals took up the cause of revenue transparency: financier and philanthropist, George Soros, and UK Prime Minister Tony Blair. The result was the creation of EITI.

The story begins in the mid-1990s, when economists and political scientists were developing a body of research on what has been called the ‘natural resource curse’, or, less commonly, ‘the paradox of plenty’.11 These terms refer to the phenomenon whereby States rich in natural resources (minerals, oil, and gas) fail to grow as rapidly as those without such wealth.12 Early research by economists Jeffrey Sachs and Andrew Warner provided empirical support for the proposition that economies with abundant natural resources tend to grow less rapidly than economies with scarce natural resources.13 Researchers have also used the term natural resource curse to refer more broadly to a demonstrated link between natural resource wealth and armed conflict and poor governance, including corruption.14

The London-based NGO, Global Witness, drew on this emerging body of academic research on the natural resource curse in its 1999 publication, ‘A Crude Awakening’, which concerned the role of the oil and banking industries in Angola’s armed conflict.15 After its founding in 1993, Global Witness initially focused on how the illegal timber trade between Cambodia and Thailand was funding the Khmer Rouge, but by the late 1990s, the focus of its advocacy had shifted to the role of oil and diamonds in fuelling armed conflict in Angola and elsewhere in Africa.16 In ‘A Crude Awakening’, Global Witness argued that oil companies were complicit in the misuse of oil revenues by the Angolan Government and it also pushed for an ‘urgent rethink’ of corporate accountability in host States that are in armed conflict or emerging from one.17 According to Global Witness, these are places where oil companies must adopt a level of transparency that exceeds what is required of them in their home States or western democracies.18

Global Witness specifically targeted BP-Amoco, which was a ‘major player’ among the oil companies operating off the coast of Angola at the time.19 BP-Amoco had also acknowledged the need for oil companies to increase their (p.137) involvement in the socio-economic, environmental, and political implications of their activities.20 Global Witness called on BP-Amoco to set a transparency ‘benchmark’ by publishing a full set of its Angolan accounts; its contracts with the Angolan Government and Sonangol, the Angolan State-owned corporation; and any other documentation of payments to Sonangol or the National Bank of Angola.21 Global Witness’ call for greater transparency did not fall on deaf ears at BP-Amoco. Its CEO, John Browne, wrote in his memoir that the perspective of Global Witness was so different from his own that it was ‘painful to read’, but he acknowledged that the report contained some recommendations that had never occurred to him.22 In February 2001, BP-Amoco responded to ‘A Crude Awakening’ by committing to publish, on an annual basis, its total net production by block, its aggregate payments to Sonangol under the Production Sharing Agreement, and the taxes and levies paid by it to the Angolan Government as a result of its operations.23 BP-Amoco began by publishing its recent signature bonus payments to Angola for offshore block 31, which amounted to US$111,689,000.24

BP-Amoco’s commitment to greater transparency prompted an angry response from Manuel Vicente, the Chairman and CEO of Sonangol, who sent a threatening letter to BP-Amoco and copied in all other oil companies operating in Angola.25 The letter warned that Sonangol would cancel BP-Amoco’s contract if it proceeded with the intended publication of information that purportedly violated confidentiality provisions in its agreements with Sonangol and in Angolan legislation.26 BP-Amoco subsequently withdrew from its transparency commitment, and the incident reportedly had a chilling effect on efforts to promote transparency within the industry.27 Following this episode, Lee Raymond, the Chairman and CEO of ExxonMobil, reportedly contrasted BP-Amoco’s decision to disclose its signature payment with his own company’s ‘scrupulous’ observance of the confidentiality provision of its contract with the Angolan Government.28 Raymond also reportedly remarked that the disclosure of oil revenues could be viewed as an inappropriate attempt by a private company to influence government expenditures.29 This remark highlights prevailing concerns about how revenue transparency threatens the host State’s control over the expenditure of natural resource revenues—concerns which are reflected in the content of the EITI Standard, as will be discussed below. The incident as a whole underscored the need for a ‘level playing field’ among companies (p.138) operating in States like Angola, as a unilateral approach proved to be unworkable in this instance.30

The publication of ‘A Crude Awakening’ and the BP-Sonangol incident led to the establishment of Publish What You Pay (PWYP) in June 2002, which in turn led to the establishment of the Extractive Industries Transparency Initiative one year later. PWYP is a ‘global network’ of civil society organizations that campaign for transparency in the extractive industries.31 PWYP was initially formed by a coalition of NGOs, including Global Witness along with CAFOD (Catholic Agency for Overseas Development), the Open Society Foundations, Oxfam GB, Save the Children UK, and Transparency International UK. PWYP’s membership has since expanded to include hundreds of other NGOs based in nearly sixty developed and developing countries.32 PWYP benefited from the early support of George Soros, the Founder and Chairman of the Open Society Initiative, which had already been pursuing revenue transparency through the Caspian Revenue Watch programme.33 Soros not only lent his financial support to PWYP, but was also involved in developing its campaign strategy, hosting launch events, and in reaching out to Prime Minister Tony Blair.34 Meanwhile, BP-Amoco’s CEO John Browne apparently also had the ear of the Prime Minister and his chief of staff, Jonathan Powell, both of whom he encouraged to back revenue transparency in the extractive industries.35

As it happened, the issue of revenue transparency was in keeping with Prime Minister Blair’s focus at this time on energy security as well as issues of poverty reduction, corporate responsibility, and governance. In February 2002 the UK Cabinet Office Strategy Unit had recommended the promotion of revenue transparency and good governance as a part of the UK’s energy security strategy.36 The UK’s strategic interests, along with personal appeals by Soros and Browne, appear to have led the Prime Minister to launch EITI in conjunction with the World Summit on Sustainable Development in Johannesburg in September 2002.37 Following this launch, in June 2003, the UK Government hosted a conference at Lancaster House, London, where 140 delegates from governments, civil society organizations, companies, industry groups, investors, and international (p.139) organizations met to formulate the twelve EITI Principles, which will be discussed below.38 This 2003 conference marked the official establishment of EITI.39

In the years following its establishment, however, EITI was quite slow to become fully operational. One commentator has described EITI as more of a ‘group commitment than an international institution’ in its early years, as it lacked a governance structure and had little administrative apparatus.40 The stakeholders did not agree on a Board and a Secretariat until 2006, and regular Board meetings did not commence until January 2007. Furthermore, a small team within the UK’s Department for International Development (DFID) ran EITI until September 2007, when the Secretariat was finally established in Oslo, Norway, where it has the legal status of a non-profit association named the EITI Association.41 EITI’s substantive standards were thus slow in the making, as the Board only agreed on a Validation methodology for evaluating compliance by candidate countries in February 2008.42 EITI’s slow evolution into a structured and operational institution may be explained in part by EITI’s emphasis on consensus-building, which is an inherently time-consuming method for decision-making.43 Moreover, EITI was designing its own governance processes with few relevant models to take as guidance.44 From a logistical perspective, EITI also lost some time and momentum during the transfer of the Secretariat from DFID’s offices in London to its ultimate home in Oslo.45 The following looks more closely at the governance structure that ultimately resulted.

B. How EITI came to be a multi-stakeholder initiative

EITI’s structure as a multi-stakeholder initiative (MSI) reflects the prevailing trends in the early 2000s, when MSIs represented a novel and progressive method for regulating corporate conduct. This section sketches the rise of MSIs generally, as well as some of the more specific considerations that led to the selection of this structure for EITI. The issue of revenue transparency came to prominence at a time when policy-makers had come to view MSIs as the way forward with respect to the regulation of the social and environmental implications of corporate conduct. Approaches towards the regulation of corporate conduct have evolved considerably since the 1960s and 1970s, when State-led ‘command and control’ (p.140) regulation prevailed.46 During a subsequent period of increasing economic liberalization in the 1980s and 1990s, government-led regulation of the social and environmental performance of corporations gave way to an increasing emphasis on corporate self-regulation through codes of conduct.47 But this approach led to criticisms about the sheer proliferation of codes, a lack of attention to stakeholder concerns, a lack of independent monitoring, and ‘greenwashing’48 by corporations wishing to improve their reputations without actually altering their conduct.49

Co-regulation, by two or more actors or stakeholders, thus emerged in the late 1990s and early 2000s as the preferred method for regulating corporate conduct. The Global Reporting Initiative, the Ethical Trading Initiative, the Fair Labor Association, and the Global Compact are all early examples of MSIs, dating back to the late 1990s.50 Co-regulatory arrangements or MSIs tend to involve not only States and the private sector, but also civil society organizations.51 The inclusion of civil society in co-regulation reflected influential academic theories at this time, which stressed, among other things, the importance of responsiveness to stakeholders, stakeholder dialogue, and more participatory forms of global governance.52 MSIs represented an improvement upon self-regulation, as they sought to introduce some harmonization and standardization amidst the proliferation of codes of conduct, and to reduce greenwashing through independent verification and monitoring mechanisms.53

The founders of EITI apparently decided at an early stage that EITI should not take the form of a multilateral international organization, as this was viewed as too time-consuming and potentially detrimental for EITI’s efficiency as an organization.54 As noted above, however, the multi-stakeholder form appears to have done little to promote EITI’s speed and efficiency, at least in its early years. The multi-stakeholder form was also arguably well-suited to the issue of revenue transparency in the extractive industries. While the criminalization of corruption and money laundering and the enforcement of such laws remain largely State functions, the generation and implementation of revenue transparency norms are (p.141) inherently more amenable to stakeholder involvement, as they do not depend on State-driven prosecution.55

Most significantly, it appears that the founders gravitated towards a multi-stakeholder structure in part because the United Kingdom had recently been involved in the establishment of two other MSIs that address issues related to the extraction of natural resources: the Voluntary Principles on Security and Human Rights, and the Kimberley Process Certification Scheme. In 2000 the United Kingdom, along with the United States, was involved in establishing the Voluntary Principles on Security and Human Rights, a set of principles designed to guide companies in the extractive and energy sectors with respect to maintaining the safety and security of their operations while respecting human rights.56 In the same year, the United Kingdom was also involved in establishing the Kimberley Process, which represents a set of requirements that are implemented by participating States to ensure that rough diamonds are ‘conflict-free’ and to prevent conflict diamonds from entering legitimate trade.57

Both the Voluntary Principles and the Kimberley Process requirements were formulated by States as well as companies and civil society organizations, thus providing a model of inclusiveness, which was emulated by EITI just a few years later when delegates met at Lancaster House, London. Unlike these two organizations, however, EITI slowly developed into a relatively robust institution that actively monitors compliance with its Standard. Meanwhile, the Voluntary Principles appear to have faded into inactivity without ever developing a real institutional structure. In addition, the Kimberley Process has suffered from a loss of credibility, due to the continued participation of States such as Zimbabwe, where diamonds continue to fuel violence and human rights abuses, at least according to Global Witness, which withdrew from the Kimberley Process in December 2011.58 Thus far, EITI has fared better than the MSIs that inspired its tripartite structure in the first place.

C. EITI’s structure as a MSI

EITI’s multi-stakeholder structure is embodied in the Board, which consists of a chair and representatives from each of the three constituencies engaged in EITI: States; companies in the extractive industries and investors; and civil society organizations.59 For the purposes of this chapter, it is important to note that three (p.142) of the State representatives are from ‘supporting countries’ that provide financial support to EITI, and five are meant to be from ‘implementing countries’ that are implementing the Standard.60 Each constituency is responsible for selecting and nominating its own representatives, who are then formally elected to the Board at EITI Members’ Meetings, which occur at the same time as the biennial EITI Conferences.61 Peter Eigen, a former World Bank economist and the founder of Transparency International was the first Chair of EITI. Eigen served for two terms from 2007 to 2011, after which the position was taken up by Clare Short, a former member of the UK Parliament and Secretary of State for International Development.

At the Board meetings, which usually take place four times a year in various locations, the members endeavour to reach decisions through consensus-building, rather than vote-taking.62 Decisions taken at Board meetings deal in part with procedural, budgetary, or managerial matters concerning the EITI Association, EITI Conferences, Members’ Meetings, and the Secretariat, whose work the Board oversees.63 The Board also deals with substantive issues such as the revision of the EITI Standard, and the determination of candidate or compliant status for implementing States.64

The division on the Board between implementing and supporting countries has been a challenge for EITI’s perceived legitimacy, as the implementing States have, until recently, been almost entirely resource-rich developing States,65 (p.143) while the supporting States are mostly (but not entirely) resource-scarce developed States. Since the Board began meeting regularly in January 2007, a total of thirteen supporting countries have sat on the Board.66 Of these thirteen supporting States, only four may be considered resource-rich, and therefore in a position to potentially benefit from EITI implementation: Australia, Canada, Norway, and the United Kingdom. While the United States technically does not qualify as resource-rich, according to the IMF indices to be discussed below, the extractive industries generate US$10 billion in annual revenues in the United States.67 The EITI Standard therefore has relevance for the United States as well. Among these five supporting States (Australia, Canada, Norway, and the United Kingdom, plus the United States) only Norway, the United Kingdom, and the United States are implementing the Standard as of January 2015. For many years Norway was the only developed State implementing the Standard; it became a Candidate in 2009 and Compliant in 2011, while the United Kingdom and the United States did not become Candidates until 2014. Australia is currently conducting an EITI pilot, without having yet committed to implementation.68 Finally, France and Germany have also announced their intention to implement the Standard, but as States without significant extractive industries (Germany’s mining industry accounts for 1 per cent of its GDP), it is not clear how they will benefit from implementation.69 Instead, their participation is explicitly geared towards demonstrating their commitment to EITI and encouraging implementation by eastern European States with ‘significant energy transit and production’.70

States that both support and implement the EITI Standard may decide whether to be part of the constituency of supporting or implementing States on the Board.71 Because both Norway and the United States have opted to remain supporting countries, a complete divide persists with respect to the development status of supporting and implementing countries. As the number of developing States that implement the EITI Standard continues to grow, the allocation of (p.144) three out of the eight seats on the Board for State representatives may become increasingly untenable, and both commentators and the Board itself have noted that reform may be necessary in the future.72

In a 2008 report about EITI, the World Bank attempted to explain the disparity in development status of supporting and implementing States by noting that relatively few developed countries have extractive industries that are a dominant source of government and export revenue, thus suggesting that the EITI Standard would be less relevant for these States.73 The World Bank further noted that developed, resource-rich countries have already mainstreamed key aspects of the EITI Standard, namely transparency and disclosure.74 But the extent to which transparency and disclosure have already been mainstreamed in the United States, for example, may be questioned in light of the contentiousness of the transparency regulations that are yet to be successfully enacted under the Dodd-Frank Act, as will be discussed below.

Regardless of the reasons for the imbalanced development status of the implementing and supporting States on the EITI Board, this disparity has apparently contributed to a negative perception among implementing States (or would-be implementers) that they are subject to standards that do not apply to resource-rich supporting States.75 The composition of State representatives on the Board creates the impression that developed States have a disproportionate role in formulating norms that do not apply to them, either because they lack relevance for resource-scarce developed States, or because resource-rich developed States have chosen not to subject themselves to these norms. Consequently, EITI’s inclusion of stakeholders has not necessarily enhanced its perceived legitimacy, due to the split between the group of States involved in formulating the EITI Standard, and the States that are subject to it.

III. The Substance and Form of the EITI Standard

This section begins by elaborating on the relationship between revenue transparency and corruption, with a focus on how transparency represents an anti-corruption norm, in addition to comprising an element of legitimacy, as discussed in Chapter 1. The remainder of this section explores the substance of the Standard’s provisions on revenue transparency, and its form as a non-binding instrument. (p.145)

A. Transparency as an anti-corruption norm

The EITI Standard may be viewed as an anti-corruption instrument to the extent that it appears to be premised on the assumption that transparency prevents corruption. EITI’s Articles of Association state that ‘strengthened transparency of natural resource revenues can reduce corruption’, though neither the Articles nor the EITI Standard elaborates any further upon the link between transparency and corruption.76 In fact, the word ‘corruption’ appears nowhere else in the EITI Standard. The unstated assumption seems to be that the publication of information with respect to natural resource revenues will help to prevent government officials from embezzling and laundering State funds derived from natural resource extraction. In addition, such information may also contribute to the exposure of corrupt conduct, which could have a deterrent effect that reduces corruption.

Similar assumptions underlie the provisions in UNCAC that require States Parties to make public procurement processes and the management of public finances more transparent.77 These provisions concern issues such as the publication of invitations to tender and information on the award of contracts, procedures for the adoption of a national budget, and timely reporting on revenues and expenditures.78 These provisions, which form part of UNCAC’s chapter on the prevention of corruption, appear to be based on the assumption that transparency in the context of public procurement and the management of public finances will discourage public officials from embezzling State revenues or accepting bribes in connection with the award of a contract, for example. Transparency norms, as embodied in the EITI Standard and UNCAC, are thereby prospective. These norms are designed to prevent or deter future corrupt conduct, whereas the criminalization norms set out in UNCAC and the OECD Anti-Bribery Convention are more retrospective, as they provide for the punishment of past corrupt conduct (as well as the deterrence of future corruption).

Transparency norms are further premised on the assumption that information about natural resource revenues or invitations to tender will actually be reviewed and put to use in order to prevent or expose corrupt conduct. The EITI Standard appears to anticipate that civil society—both NGOs and the public at large—will review the EITI Reports and use them to hold their governments to account. EITI also appears to anticipate that government officials will be less likely to misappropriate natural resource revenues in a context in which reports detailing payments and revenues are published and reviewed. These expectations may not always accord with reality, however, as the information contained in EITI Reports is relatively technical.79 Comprehension and analysis of EITI Reports may require some knowledge of the extractive industries, and accounting and auditing principles.80 While certain individuals at NGOs may have this expertise, those citizens most affected by natural resource extraction in developing countries may not be equipped (p.146) with the educational background needed to engage with such information.81 Moreover, the capacity of NGOs to make use of EITI Reports may vary depending on funding and staffing situations, which can fluctuate from year to year, as NGOs are typically dependent on grants and donor funding. The audience for EITI Reports may therefore be thinner and more fragile than envisioned by EITI.82

B. The content of the EITI Standard

To the extent that the EITI Standard addresses the problem of corruption, it does so indirectly, through the EITI Principles, the EITI Requirements, and the Validation Guide, which together set out revenue transparency norms, and the steps that must be taken in order to implement them by participating States. While the EITI Principles briefly set out the broad goals of EITI and the commitments of stakeholders, the EITI Requirements consist of lengthy, detailed provisions to which implementing countries must adhere.83 In addition, the Validation Guide sets out guidance for both EITI Validators and implementing countries on EITI’s independent monitoring mechanism or Validation process. Much of the EITI Requirements and the Validation Guide comprise rules governing participation in the organization, but revenue transparency norms are, in fact, embedded within these membership rules. The following provides an overview of what the EITI Standard requires of States that aspire to be Candidate or Compliant countries. The EITI Board has ultimately produced a Standard that is narrow, and in some respects imposes minimal requirements on implementing States.

1. EITI Principles

The 12 EITI Principles, which date back to the 2003 Lancaster House Conference, form the ‘cornerstone’ of the EITI Standard.84 The Principles resemble the preamble of a treaty in that they are relatively brief (under a page) and they provide a context for the Standard while broadly setting out the beliefs and commitments of the stakeholders. The first and over-arching Principle articulates the stakeholders’ belief that while natural resource wealth can contribute to sustainable economic development and poverty reduction, it can also have negative economic and social impacts if managed improperly.85 The Principles envision greater revenue transparency resulting in a range of beneficial outcomes, such as fostering public debate and informing choices about government expenditure of revenues from the extractive industries.86 The Principles also conceive of revenue transparency enhancing public financial management and accountability, as well as the environment for domestic and foreign direct investment.87 The Principles conceive of these goals being achieved in part through disclosure by all extractive industry (p.147) companies operating in a given country, and through all stakeholders contributing to problem solving.88

In contrast with these commitments and beliefs, the Principles also affirm that the management of natural resource wealth falls within the domain of sovereign governments, and they recognize that greater revenue transparency ‘must be set in the context of respect for contracts and laws’.89 The twelve EITI Principles thus have conflicting strands, much like the preambular language of many treaties. The Principles’ emphasis on the importance of accountability and public debate about the use of natural resource wealth is in tension with the notion that control over natural resource wealth ultimately falls to ‘sovereign governments’.

2. EITI Requirements

If the EITI Principles are the ‘cornerstone’ of the EITI Standard, then the EITI Requirements are the edifice. The core of the EITI’s revenue transparency norms consists of seven Requirements that set out the conditions that implementing States must fulfil in order to achieve Candidate or Compliant status. These seven Requirements span twenty-two pages, and resemble regulations due to their relatively high level of detail. The following provides an overview of the substance of these Requirements, without delving into all of the particulars.

In order to qualify as an EITI Candidate, States must comply with four ‘sign-up steps’ that are geared towards requiring States to ensure that a national multi-stakeholder group exists and is effectively overseeing implementation. States must: (1) ‘issue an unequivocal public statement of its intention to implement the EITI’; (2) appoint a senior individual to lead EITI implementation; (3) ‘commit to work with civil society and companies, and establish a multi-stakeholder group’ to oversee EITI implementation; and (4) ensure that the multi-stakeholder group maintains a current workplan that addresses issues such as the scope of EITI reporting and plans to address any legal or regulatory obstacles to implementation.90 Workplans must also be fully costed and aligned with the deadlines set by the EITI Board for reporting and the Validation process.91 In essence, to become an EITI Candidate, an implementing State must be able to demonstrate that it has committed to implementation, established government oversight of the implementation process, created a national multi-stakeholder group, and agreed to a workplan.

The multi-stakeholder structure of EITI, as an international initiative, is effectively replicated at the domestic level by implementing States, which must establish multi-stakeholder groups that include representatives from at least the private sector, civil society, and the government.92 The Standard sets forth relatively detailed requirements that are designed to ensure that the groups roughly (p.148) mirror the EITI itself, and operate in a sufficiently inclusive, transparent manner that allows for public debate and provides for the dissemination of information about the EITI process. Implementing States must enable the participation of companies and civil society by removing any obstacles to their involvement or restrictions on public debate about EITI implementation.93 Members of the multi-stakeholder group, and stakeholders in general, must be allowed to speak freely about transparency and natural resource governance, and to speak about EITI without ‘restraint, coercion or reprisal’.94 These Requirements carry particular significance in implementing States that lack a robust civil society due to laws limiting the establishment or operation of NGOs, or due to the repression of individuals or organizations critical of government policies or actions.95

Once a State has completed these four sign-up steps, it must then submit a formal EITI Candidature Application, which the Board will review and decide whether or not to accept.96 Within two-and a-half years after a State becomes an EITI Candidate, it must begin its first Validation process, which involves determining whether the implementing State has achieved the status of EITI Compliant by meeting all seven EITI Requirements.97 If a State has not yet met all of the EITI Requirements but has made ‘meaningful progress’ towards doing so, then it may remain an EITI Candidate, though it may hold this status for no more than five years, and after three-and-a-half years as a Candidate, the State will be designated as suspended, a status to be discussed below.98

In order to attain EITI Compliant status, implementing States must fulfil the remaining six Requirements, which primarily focus on the publication of EITI Reports that meet certain criteria. Implementing States must ensure that EITI Reports: (1) are timely; (2) comprehensively disclose government revenues and company payments in the extractive industries; (3) include contextual information about the extractive industries; (4) contribute to public debate; and (5) contain credible data.99 The following takes each of these requirements in turn.

First, the requirement of timely reporting means that implementing States must produce their first EITI Report within eighteen months of becoming an EITI Candidate, and then on a yearly basis thereafter.100 This requirement of timeliness also means that EITI Reports must contain data that goes back no more than two complete accounting periods—in other words, the data must be no more than two years old.101 The ‘timeliness’ of data that is two years old may be questioned, however, as data that is not from the most recent accounting period may be of marginal utility in holding governments to account for the use of natural resource revenues.102 (p.149)

Second, with respect to the comprehensive disclosure of revenues and payments, the EITI Standard requires the disclosure of ‘material’ payments and revenues—a threshold that the national multi-stakeholder groups must themselves define and specify in their EITI Reports.103 Material payments and revenues from a range of different revenue streams must be reported, namely: the production entitlement of the host State and national State-owned enterprises; taxes; royalties; dividends; bonuses (eg signature, discovery, and production bonuses); and fees (eg licence, rental, and entry fees).104 EITI Reports must also disclose the sale of a State’s share of production or other revenues collected in kind, agreements involving the provision of goods and services, social expenditures mandated by law or contract, and revenues from the transportation of natural resources.105 The EITI Standard notably requires reporting by both private sector companies and State-owned companies, as EITI Reports must include payments to and from State-owned enterprises.106 Multi-stakeholder groups may, however, decide whether or not direct payments from companies to sub-national government entities qualify as material, and therefore require inclusion in the EITI Report.107

Third, EITI Reports must include a range of contextual information about the extractive industries, which is meant to help ensure that the reports will be comprehensible and useful to the public.108 The necessary contextual information includes: (1) a description of the legal framework and fiscal regime governing the extractive industries; (2) an overview of the extractive industries, including significant exploration activities; (3) an overview of the extractive industries’ contribution to the economy for the fiscal year covered by the Report; (4) production data for the fiscal year covered by the report; (5) information about State participation in the extractive industries; (6) the distribution of revenues from the extractive industries; (7) registers of licences in the extractive industries and the allocation of such licences through awards or transfers; (8) information regarding beneficial ownership of corporate entities that bid for, operate, or invest in extractive assets; and (9) information about contracts or licences that provide for exploitation.109 As a result of this requirement, EITI Reports typically include a section at the beginning with relatively extensive background information.110 (p.150)

Fourth, multi-stakeholder groups must ensure public awareness of the EITI reports by producing and distributing paper copies of the report, by making the report available online, and by undertaking outreach events.111 Multi-stakeholder groups must also ensure that the report is written in appropriate languages, and in a clear and accessible style.112 In practice, making EITI Reports accessible to the general public may require significant outreach efforts. Some of the reports are relatively lengthy (at well over 100 pages) and they all include technical information that requires some knowledge of the extractive industries, auditing, and accounting. Moreover, outreach efforts may be complicated by the fact that illiteracy rates are high in many EITI-implementing States,113 such that the dissemination of information contained in EITI Reports must take place in part through radio, television, and meetings.114

Fifth, implementing States must also ensure that EITI reports contain reliable data, gathered through a credible EITI-reporting process.115 The national multi-stakeholder group must, in particular, appoint an Independent Administrator to reconcile government revenues and company payments in accordance with international professional standards, and to explain any discrepancies identified.116 The Independent Administrator, which is typically an auditing firm such as Deloitte or Ernst & Young, is responsible for actually producing the EITI Report.117

Finally, the EITI Requirements impose one additional condition on implementing States that goes beyond the content of EITI Reports. Multi-stakeholder groups must act upon lessons learned during EITI implementation, investigate and address discrepancies in EITI Reports, and review the outcomes and impact of EITI implementation on natural resource governance.118 Furthermore, multi-stakeholder groups must actually detail such efforts in annual activity reports.119

3. EITI Validation

In keeping with MSIs generally, EITI establishes an ‘external, independent evaluation mechanism’, known as Validation, by which EITI assesses whether implementing States are actually complying with the seven EITI Requirements.120 The process begins with the EITI International Secretariat (p.151) procuring a Validator from a list of more than a dozen accredited organizations that the Board has approved through a competitive bidding process.121 The Validator is responsible for impartially assessing compliance with the Requirements by reviewing available documentation and also by consulting with the national multi-stakeholder group, the Independent Administrator, and other stakeholders.122 The Validator produces a draft Validation Report which conforms to a standard template produced by the EITI International Secretariat—an aspect of the Validation Process that helps to safeguard EITI’s integrity by ensuring that all implementing States are being held to ‘the same global standard’.123 The Report assesses whether the seven Requirements are ‘met’, ‘unmet with meaningful progress’, or ‘unmet with limited progress’.124 The Report also addresses broader aspects of EITI implementation, including lessons learned and EITI’s impact, which may be measured against the national priorities for the extractive industries, as set out in the workplan of the multi-stakeholder group.125

The Validator submits this draft Validation Report both to the national multi-stakeholder group, which may comment on it, and also to the EITI Board’s Validation Committee, which reviews the comprehensiveness and adequacy of the Report.126 Then, on the basis of a final Validation Report produced by the Validator, the Board’s Validation Committee decides whether the implementing State has achieved or maintained the status of EITI Compliant.127 In its decisions on Validation, the EITI Board aims for consistency by giving comparable treatment to implementing countries.128 Validation is an iterative process, as EITI Candidates must not only undertake Validation within two-and-a-half years of becoming a Candidate, but must continue to do so every three years after having initially achieved Compliant status.129

EITI’s Validation process may be contrasted with the peer review mechanisms employed by the OECD Working Group on Bribery and the Financial Action Task Force. Whereas EITI relies on external evaluators to assess compliance, the Working Group and FATF depend on States monitoring each other, in addition to undertaking self-evaluation. EITI’s decision to require external monitoring rather than peer review may have been motivated by practical concerns—namely the financial and human resources involved in peer review. While peer review has been quite successful for the developed States that participate in the OECD Working Group and FATF, it would be likely to strain (p.152) the resources of the group of mostly developing States that implement the EITI Standard. Peer review may not be a realistic mechanism for monitoring compliance with the EITI Standard, given the low development status of many of the implementing States. While peer review has also been adopted by the States Parties to UNCAC, which include many least developed States, as well as OECD member States, peer review has thus far proven to be slower, and less effective in this context, perhaps due to both the sheer number of States involved and the range of capacity among them.

4. The narrowness of the EITI Standard

The EITI Standard is narrow in scope, even though some stakeholders have advocated for a broader approach, and research suggests that the Standard may lack utility as a result of its narrowness. The Standard is narrow insofar as it only requires States to ensure that company payments and government revenues are disclosed and reconciled, without imposing transparency requirements with respect to other types of information, such as the contracts that allowed for the exploitation in the first place, and government budgetary information that reveals revenue expenditures. In other words, the Standard focuses on revenue transparency, as opposed to contract or expenditure transparency. The Standard does, however, encourage implementing States to go further by publicly disclosing contracts and licences,130 by reporting information on revenue management and expenditures,131 and by maintaining a ‘publicly available register of the beneficial owners of the corporate entity(ies) that bid for, operate or invest in extractive assets’.132 Though listed as Requirements in the EITI Standard, these are really optional recommendations, which do not factor into whether a State qualifies as EITI Compliant.

As discussed below, a divergence of views and interests among stakeholders has evidently prevented the Standard from evolving to a point where it mandates more than just revenue transparency. EITI’s inclusiveness as an organization has thereby had notable consequences for the Standard’s utility as an anti-corruption norm, such that the legitimacy gained from its inclusiveness has arguably been off-set by the narrowness of the Standard produced. If the Standard’s scope limits its capacity to reduce corruption in compliant States, in keeping with one of EITI’s stated goals, then this may raise legitimacy problems for the Initiative and its Standard.133

The EITI Board has resisted the expansion of its mandate beyond revenue transparency, though it has repeatedly revisited this policy decision in response to the views of Board Members and outside commentators who have argued that (p.153) the EITI Standard ought to go further. At EITI’s 10th Board Meeting in 2009, for example, the Head of the EITI International Secretariat, Jonas Moberg, noted ‘a huge demand for EITI to go beyond its present mandate’.134 Moberg stressed, however, the importance of explaining that the implementation of EITI’s narrow Standard can help to set off a wider debate about the governance of natural resources in implementing States.135 Moberg and others have argued that revenue transparency is necessary but not sufficient for ensuring that natural resource wealth contributes to the economic development of host States.136 According to Moberg, the EITI Standard is designed to bring about ‘incremental change’ and should not be taken as a ‘silver bullet solution’.137

During the consultation process that led to the 2013 revised EITI Standard, however, the expansion of EITI’s mandate was a major topic of discussion. The World Bank, the Revenue Watch Institute, and Global Witness submitted a series of proposals that advocated for the disclosure of contracts and licence allocations in EITI Reports.138 The World Bank, in particular, submitted a paper to the Board on the feasibility of including licence transparency in the EITI Standard.139 The paper noted that States already have registry databases for the management of licences in the extractive industries, and suggested that States could be required to post basic information about these licences on a website in order to qualify as EITI Compliant.140 The World Bank estimated that licence transparency could be achieved at a relatively low cost and in a very short period of time.141

In addition, the Board consulted implementing States with respect to the issue of contract transparency.142 Although more than half of the implementing States preferred the mandatory disclosure of contracts (without exceptions), the Standard ultimately just encourages States to disclose contracts.143 (p.154) In light of the fact that both implementing States and civil society organizations supported contract transparency, the final outcome reflects the fact that stakeholders from the private sector did not fully support this expansion of EITI’s mandate.144 Such an outcome is unsurprising, as private sector companies in the extractive industries typically view contract transparency as potentially undermining their competitiveness through the disclosure of crucial information that may be used by other companies, such as information about cost structure and pricing strategies.145 Similarly, transparency with respect to licence allocation may be viewed by private sector companies as undermining their negotiating strategies.146

The Standard’s mere encouragement of licence, contract, and expenditure transparency may have consequences for the Standard’s utility as an anti-corruption instrument. Commentators have argued that the narrowness of the EITI Standard may impede its ability to bring about change, whether incremental or large scale, because it prioritizes the wrong issues.147 Expressed conversely, the narrowness of the EITI Standard’s mandatory provisions only represents an advantage to the extent that they focus on the right issues.148 Economists Ivar Kolstag and Arne Wiig have argued that with respect to the problem of corruption, more pertinent issues are the expenditure of revenues, and contracts and procurement. According to Kolstag and Wiig, rent-seeking and patronage underlie the natural resource curse, but such conduct, involving transfers of funds or positions to supporters, takes place at the expenditure stage, not at the revenues stage.149 In their view, transparency efforts should therefore focus on expenditures rather than revenues. Kolstag and Wiig further suggest that EITI introduces transparency too late in the extraction value chain, as corruption may also take place at the earlier stages of awarding contracts and conducting procurement processes.150 Their research indicates that EITI has targeted a mid-point in the value chain, when earlier or later stages may actually represent the key opportunities for corrupt conduct. (p.155)

By contrast to EITI, PWYP has expanded its objectives since its establishment in 2002. Like EITI, PWYP originally focused on revenue transparency in the extractive industries, though PWYP has specifically campaigned for the promulgation of listing regulations in capital markets, while the EITI Standard does not require any particular method of domestic implementation.151 In 2012, however, PWYP issued a new strategic framework that expanded the scope of the campaign, thereby formalizing what appears to have been a broader approach for some time.152 PWYP’s new framework consists of three pillars which cover contract transparency (pillar 1), revenue transparency (pillar 2), and expenditure transparency (pillar 3).153 Thus, while EITI has maintained its narrow focus, PWYP has expanded its scope so that it includes other elements of the value chain. Such an expansion is arguably less burdensome for PWYP, which encourages its coalitions to select from an ‘a la carte menu’ of ‘strategic options’ regarding transparency in the extractive industries. An expansion of EITI’s mandate, however, would require a consensus among stakeholders, who would have to agree on the imposition of additional mandatory Requirements for EITI-implementing States.154

EITI’s narrow approach leaves other elements of the value chain to other institutions or initiatives, such as PWYP, the Natural Resource Charter (to be discussed below), and EITI++, an initiative facilitated by the World Bank. EITI++ seeks to build on EITI by providing technical assistance to States in implementing good policies and practices along the entire value chain of the extractive industries.155 Because of its narrow approach, EITI has potentially reduced its own capacity to shape these sorts of related normative developments regarding contract and expenditure transparency.156

5. The EITI Standard as the lowest common denominator

Not only is the EITI Standard narrow, but elements of it also represent the lowest common denominator—that is, minimal requirements that were capable of attracting the support of all the stakeholders on the Board. The Secretariat has explained that this ‘minimum standard’ is designed to be manageable for States facing major challenges to reform, and to otherwise encourage continuing improvements in other States.157 The Standard is (p.156) weak insofar as it does not require the reconciliation of all reported data. Instead, the Standard encourages, but does not actually require, States to task Independent Administrators with the reconciliation of volumes sold and revenues received in connection with a State’s share of production or other revenues collected in kind;158 material social expenditures and transfers mandated by law or contract;159 material payments and revenues associated with the transportation of oil, gas, and minerals;160 and sub-national transfers.161 In addition, the Standard only specifies which revenue streams ‘should’ rather than ‘must’ be included in EITI Reports.162 With respect to revenues from the transportation of oil, gas, and minerals, the Standard only indicates what EITI Reports ‘could’ include.163

The use of hortatory language in these provisions reveals a lack of agreement among stakeholders on the EITI Board regarding the type of data that ought to be included in EITI Reports and subject to reconciliation by an Independent Administrator. The proposals and comments received by the Board during the consultation process show that the World Bank and Revenue Watch Institute, in particular, pushed for both the disclosure and reconciliation of in-kind revenues and sub-national transfers, for example.164 These proposals evidently attracted some support, but not enough to bring about mandatory disclosure as well as reconciliation.

With respect to the issue of disaggregation, however, the EITI Standard no longer represents the lowest common denominator.165 Aggregation refers to the consolidation of payments made by individual companies, or the consolidation of different types of payments made by an individual company, thus preventing the identification of either individual company payments or individual payment types.166 The 2011 EITI Rules allowed national multi-stakeholder groups to determine the degree of aggregation of data in their EITI Reports.167 This aspect of the 2011 Rules appears to have reflected the interests of companies in minimizing the need to disaggregate data. While the EITI Standard still allows multi-stakeholder groups a degree of discretion, it now imposes certain requirements: EITI data must be presented by individual company, government entity, and revenue stream, and it must be reported at the project level (provided that this is consistent with US and EU regulations).168 The EITI Standard thus raises the minimum bar and ensures less variation among EITI Reports with respect to the issue of aggregation. (p.157)

C. The Form of the EITI Standard

1. The EITI Standard as a non-binding international instrument

As a non-binding instrument, the EITI Standard takes a form that is quite distinct from multilateral treaties. While the recommendations produced through the OECD Working Group on Bribery bear strong resemblance to the OECD Anti-Bribery Convention, the EITI Standard looks, at first glance, like a glossy, sixty-page brochure. Closer examination, however, reveals a set of rules that are far more precise and detailed than those found in treaties such as the OECD Anti-Bribery Convention and UNCAC (and they are certainly not brochure-like). The Standard not only contains the Principles, Requirements, and Validation Guide described above, but it also includes a series of procedural documents: a Protocol on the participation of civil society, the EITI Articles of Association, the EITI Openness Policy, and the Draft EITI Constituency Guidelines.169 All of these components of the Standard, from the Principles to the Constituency Guidelines, could have been set out in a lengthy treaty that might have progressed from substantive provisions on revenue transparency to more procedural provisions on the monitoring mechanism and the Initiative’s governance structure. But it appears that the stakeholders never gave serious thought to drafting a treaty as opposed to a non-binding instrument.170 Nor is it likely that the Standard will evolve into a binding multilateral treaty in the future, as the non-binding form has significant advantages in the context of revenue transparency, as will be discussed below.

By contrast to the EITI Standard, the drafters of the non-binding Natural Resource Charter anticipated that this instrument might evolve into a binding treaty at some point in the future. Like the EITI Standard, the Charter addresses the ‘opportunities and special challenges’ raised by non-renewable natural resource wealth, but it does so in a broader fashion.171 The Charter aims to assist the ‘governments and societies of countries rich in non-renewable resources in managing those resources in a way that generates economic growth, promotes the welfare of the population, and is environmentally sustainable’.172 The Charter contains twelve ‘Precepts’ that address a range of issues, from the decision by a government to extract natural resources, to the use of the revenues generated from extraction.173 Eleven of the twelve Precepts are addressed to States (host and home States), while the final Precept calls on companies in the extractive industries to ‘follow best practice in contracting, operations and payments’.174 Unlike the (p.158) EITI Standard, which was drafted by stakeholders, the Charter was drafted by an independent group of expert economists, lawyers, and political scientists working under an Oversight Board of ‘distinguished international figures’.175

An explanatory section about the Charter itself states that this instrument ‘has the potential to be an international convention, but one that will be built by a participatory process guided by academic research’.176 Given that the Charter’s Precepts are addressed mainly to States, it may be inherently more amenable to conversion into a treaty, which would ultimately be signed by States alone, regardless of how participatory the drafting process might be. The EITI Standard, however, is directed at disclosure by States and by companies, and it counts on civil society to review the disclosed information and to hold governments accountable. Because the EITI Standard directly affects companies, and is premised on the involvement of civil society, this instrument is not as amenable to transformation into a treaty, which would necessarily exclude such non-State actors.

The fact that non-State actors, such as companies and civil society organizations, can participate in the drafting of instruments such as the EITI Standard represents one of the key advantages of non-binding instruments as a form for international norm creation. Non-binding instruments are a more inclusive mechanism for generating norms, as they are not bound by the rules of the Vienna Convention on the Law of Treaties (VCLT), which specifies that only States may conclude treaties.177 As a result, all affected parties (States, the private sector, civil society, etc), may have an equal seat at the negotiating table—at least in theory, if not in practice. While non-State actors have in some instances had significant influence on the drafting of treaties, such as civil society groups in the case of the Anti-Personnel Landmine Convention, they will never be in a position to negotiate treaty language at a level on par with States themselves.178

The consultation process undertaken by the EITI Board during its latest revision of the EITI Standard shows that non-State actors have considerable influence over the formulation of these transparency norms. During the consultation process, which stretched from July 2011 to April 2013, the EITI Board sought comments and proposals from stakeholders on the independent evaluation of EITI by Scanteam, on a succession of Board Papers setting out various options for reform, and on drafts of the revised Standard.179 The Board received over fifty comments and proposals from civil society organizations; entities representing the oil, gas, and mining industries; supporting and implementing States, as well as (p.159) the World Bank.180 It could even be said that participation by the Revenue Watch Institute, the World Bank, and Publish What You Pay outpaced participation by implementing States by a considerable margin. The EITI consultation process thus not only included non-State actors on an equal footing, but it was arguably dominated, particularly at the early stages, by a small group of institutions with knowledge about transparency in the extractive industries.

The other major advantage of the Standard’s non-binding form is the fact that it is highly capable of revision. While treaties may also be subject to revisions, the VCLT’s rules on amendment and modification are cumbersome and time consuming, with the result that treaties are considerably less amenable to revision than many non-binding instruments.181 Such flexibility is desirable in the revenue transparency context, as many of the ideas and procedures adopted by EITI were relatively untested when stakeholders began formulating these norms in 2005 and 2006. Because EITI’s revenue transparency norms were embodied in non-binding instruments, rules formulated in the abstract were capable of modification after the EITI Board had an opportunity to observe their implementation in practice. By 2010, for example, the Validation Committee of the EITI Board found that as it reviewed validation reports and made decisions on compliance status, certain rules lacked detail and clarity and were sometimes contradictory, making them difficult to understand and apply in practice.182 The non-binding form of these rules allowed the Board to fix such problems with relative ease. In addition, when a consensus emerged among the Board Members on the issue of aggregation, for example, this norm could be revised accordingly.

While the flexibility of EITI’s revenue transparency norms represents an advantage, this feature can also be taken too far, as frequent, successive revisions can generate confusion, and may give the impression that the rules are a moving target. EITI’s transparency norms originally took the form of a 2005 EITI Source Book and a 2006 EITI Validation Guide, but these documents were supplanted by the EITI Rules, which the Board issued in 2009 and later revised in 2011. Most recently, the 2011 version of the EITI Rules was supplanted by the 2013 EITI Standard, the instrument that forms the subject of this chapter. This succession of instruments has been quite rapid in comparison to the FATF 40 Recommendations, which were originally issued in 1990, and then revised in 1996, 2003, and 2012. As of this writing, the FATF 40 Recommendations had undergone three revisions in twenty-four years, whereas the EITI Standard had undergone three revisions in nine years. While EITI has sought to continually improve and streamline its revenue transparency norms, it has pursued revisions to a relatively extreme degree thus far. (p.160)

Finally, it bears noting that the progression from the ‘EITI Rules’ to the ‘EITI Standard’ is misleading when viewed from the perspective of the academic ‘rules vs standards debate’, which does not appear to have influenced the Board’s choice of terminology. Whereas rules are relatively precise norms that define permissible and impermissible conduct in advance or ex ante, standards are relatively less precise norms that set forth ‘more open-ended tests, whose application depends on the exercise of judgment or discretion’, ex post.183 In the international legal field, standards tend to evolve into rules, as States acquire more information and engage in consensus-building about how to address particular problems.184 The Board’s use of the terms rules and standards, however, is at times interchangeable and does not appear to correspond to this fundamental distinction, as the Rules evolved into a Standard, rather than the reverse, and the Standard is a relatively precise, refined version of the Rules.

2. The EITI Standard as binding or non-binding at the domestic level

While the EITI Standard takes the form of a non-binding instrument at the international level, it may be incorporated at the domestic level through binding or non-binding means, as implementing States are free to choose how to give effect to this instrument. States must remove any regulatory, administrative, or legal obstacles to EITI implementation, but they may otherwise employ a range of methods to ensure that companies disclose their payments.185 An implementing State may make legislative or regulatory changes, but it may also waive confidentiality clauses in contracts with companies through a letter of comfort, or conclude a Memorandum of Understanding (MoU) with companies to ensure that they disclose the necessary information.186 States may also secure company participation in domestic EITI processes through informal agreements that involve none of the above.187

In practice, however, it appears that most States have chosen to implement the EITI Standard through binding legislation or regulations, rather than through non-binding letters of comfort or MoUs. In 2007 Nigeria was the first State to enact a law implementing the EITI Standard, and many other implementing States have since followed suit.188 Legislation or regulations that implement the Standard typically address a number of issues, beyond simply mandating the disclosure of payments and revenues.189 EITI laws or regulations may also allocate responsibility for overseeing EITI implementation to a government department (p.161) or agency; allocate a budget line to support the cost of EITI implementation; establish reporting standards; and require the appointment of an Independent Administrator. A minority of EITI implementing States has eschewed legislation or regulations, and opted instead to conclude non-binding MoUs with companies and civil society, with Azerbaijan being the first to do so in 2004.190

Implementation of the EITI Standard through binding legislation or regulations may carry a number of advantages. First, an EITI law or regulation can help to ensure that implementation will be more likely to survive a change in government.191 Second, laws can also provide for penalties when companies or government entities fail to report the required data.192 The Nigeria EITI Act, for example, provides that companies, company directors or management, and government officials that fail to comply with the Act may be fined, and in some cases imprisoned.193 The Azeri MoU, by contrast, explicitly states that the Parties to it shall ‘aim in good faith to fulfill’ its provisions, but non-performance ‘shall not create any legal liability’, as the MoU does not represent a legally binding contract.194 Finally, binding implementation of the EITI Standard may also be the fastest and most reliable way to ensure that all companies and government entities report the necessary data, and that the Independent Administrator has access to it.195

The fact that the EITI Standard does not require implementing States to incorporate revenue transparency norms at the domestic level via binding laws or regulations has been a basis for PWYP’s criticism of EITI. PWYP has repeatedly emphasized the distinction between PWYP, as a campaign for the mandatory disclosure of company payments, and EITI, as an MSI that merely encourages natural resource-rich governments to voluntarily establish a framework for disclosure.196 The distinction that PWYP has sought to draw between mandatory and voluntary approaches to revenue transparency is misleading in a number of respects. First, PWYP does indeed campaign for mandatory laws or regulations, while EITI allows for binding as well as non-binding solutions. But in order to be EITI Compliant, an implementing State must ensure that companies and government entities report revenues and payments. For States that wish to be EITI Compliant, ensuring such disclosure is mandatory, not voluntary, as PWYP has suggested. Second, while the decision to participate in EITI in the first place is (p.162) voluntary, the same is true for those States that have decided to respond to PWYP’s call for a legal or regulatory solution. As will be discussed below, both the United States and the European Union have opted to adopt stock market regulations concerning revenue transparency. States voluntarily commit or consent not only to campaigns such as PWYP, but also to all international legal instruments, from treaties to non-binding instruments like the EITI Standard.

IV. Participation in EITI

In light of the fact that implementation of the EITI Standard requires compliance with a complicated array of Requirements, one may question why States would voluntarily participate in the Initiative. What incentives might explain the decision of States to subject themselves to a potentially burdensome set of revenue transparency norms that could potentially expose the corrupt practices of government officials? This section begins by discussing a number of possible incentives, before looking at how the EITI Board guards the perceived legitimacy of the EITI Standard by suspending or delisting participating States that have failed to meet the necessary Requirements. Finally, this section argues that participation in EITI is both over- and under-inclusive, in that many resource-rich States remain outside of EITI, while some of the participating States do not qualify as resource-rich.

A. Incentives for participation

Self-interest, coercion, and legitimacy all appear to have motivated decisions by States to implement, and subsequently comply with, the EITI Standard. Self-interest may motivate participation to the extent that some States may expect to benefit materially from joining the Initiative. States may, for example, expect to receive development aid and other support after joining EITI because participation in the Initiative may allow them to bolster their reputations for combating corruption, and to signal a general willingness to reform their management of natural resource revenues.197 Implementation of EITI has also been an explicit condition for debt relief in Liberia and Cameroon under the Heavily Indebted Poor Countries (HIPC) Initiative, and it has reportedly been an explicit condition for development aid in Yemen.198 Anecdotal evidence (p.163) thus supports the notion that the expectation of development aid or debt relief motivates participation in EITI, but more systematic empirical research is needed on this issue.199 In situations where development aid or debt relief has been formally conditioned on participation in EITI, participation may take on a coerced rather than purely self-interested character, and the line between the two may be difficult to trace.

Concerns about the legitimacy of the EITI Standard appear to be the most relevant motivator for the few developed States that have implemented the Standard (Norway and the United States) or have committed to doing so (France, Germany, and the United Kingdom). As none of these States has a reputation for particularly high levels of corruption, and none receives development aid or debt relief, their reasons for participation must be distinct from those of developing States. These States appear to have recognized that their participation in EITI, as implementing as well as supporting States, could help to enhance the Initiative’s legitimacy, by demonstrating that revenue transparency norms are relevant and applicable in both developing as well as developed States that are resource-rich. The implementation of EITI by high income OECD States may be particularly important if EITI is to attract the participation of resource-rich, middle-income countries. France and Germany both committed to EITI following the 2013 G8 Summit hosted by the United Kingdom in Lough Erne, where UK Prime Minister David Cameron pushed for G8 States to implement the Standard.200 In the lead up to the Summit, Prime Minister Cameron asserted that the G8 could not call on other States to comply with the EITI Standard if the G8 States were not prepared to do so themselves.201 In the case of the United States, participation in EITI also happened to fit nicely with the Department of Interior’s response to the 2010 Deepwater Horizon oil spill, and thus was not motivated solely by legitimacy concerns.202

B. Guarding the Standard’s legitimacy through suspensions and delisting

By suspending and delisting States that have failed to implement the EITI Standard, the EITI Board has worked towards enhancing the legitimacy of the Initiative, though the Board itself has described these decisions on participation (p.164) as protecting the ‘integrity’ and ‘credibility’ of the organization.203 Participation, as an element of legitimacy, commonly refers to the inclusion of stakeholders in decision-making processes, though it can also refer to the composition of the participants, as discussed above. Participation may also, however, refer to restrictions on membership as a means for enhancing legitimacy, and it can involve the exclusion of actors that fail to comply with the substantive or procedural rules established by the organization. EITI’s ability to exclude non-compliant States from participation in the Initiative has allowed it to ensure that States do not engage in ‘greenwashing’ by using participation as a means to enhance their reputations for combating problems like corruption, without actually undertaking any meaningful reform.

Under the EITI Standard, a suspension represents a temporary measure that may be applied for up to twelve months, while delisting is indefinite, although delisted States may reapply to participate in EITI.204 The EITI Board may decide to suspend an implementing State due to breaches of the EITI Principles and Requirements, or on account of political instability or conflict.205 Breaches of the Principles and Requirements must be manifest, and can involve a failure to comply with deadlines for reporting or achieving compliance more generally.206 In cases of political instability or conflict, the unrest must manifestly prevent the State from ‘adhering to a significant aspect of the EITI Principles and Requirements’.207 A suspension may lead to a delisting when the suspended State fails to resolve the matters at issue within the agreed deadline and to the satisfaction of the EITI Board.208 A delisting may also result where the EITI Board concludes that a State has not made meaningful progress in implementing the EITI Standard.209 By contrast to a suspension, a delisting involves a revocation of a State’s status as an EITI implementing State.210

As of January 2015, there was only one suspended State (Central African Republic (CAR)) and two delisted States (Gabon and Equatorial Guinea). Over the course of EITI’s history, however, suspended States have included Democratic Republic of Congo (DRC), Madagascar, Mauritania, Sierra Leone, and Yemen. In addition, São Tomé and Príncipe was delisted from April 2010 to October 2012.211 The EITI Board suspended DRC and Sierra Leone for their failure to achieve compliance during their second Validation rounds, and it suspended Madagascar and CAR because it considered that political instability, arising from unrecognized or disputed governments, precluded effective implementation in (p.165) these States.212 The Board delisted Equatorial Guinea and Gabon due to their failure to comply with Validation deadlines.213 The delisting of São Tomé and Príncipe resulted from the Board’s determination that EITI implementation was stalled because São Tomé and Príncipe lacked effective coordination with respect to the Joint Development Zone (JDZ), which it shares with Nigeria.214 The Board admitted São Tomé and Príncipe as an EITI Candidate in 2012, following the resolution of these issues through, among other things, the establishment of the JDZ Tripartite Subcommittee, which is responsible for the implementation of EITI in the JDZ.215

C. Participation in EITI as both over- and under-inclusive

While participation in EITI has expanded steadily (and it will likely continue to do so, as half a dozen States have committed to joining EITI in the future), participation in the Initiative is both over- and under-inclusive when compared with indices of resource-rich States. Due to the lack of an authoritative definition of resource-rich, this chapter identifies resource-rich States by aggregating a number of different indices produced by the IMF.216 Combining these various indices, each of which define ‘resource-rich’ in a distinct manner, results in a total of seventy-four resource-rich States.217 Implementing States that appear on (p.166) only one of these indices have been counted as ‘resource-rich’ for the purposes of this analysis. This chapter’s assessment of the composition of EITI implementing States is thus based on the broadest possible understanding of resource-rich.

A comparison of EITI-implementing States with natural resource-rich States reveals that thirty-three of the seventy-four resource-rich States (or 44 per cent) currently do not participate in EITI as Candidate or Compliant States, or as ‘Other’ States that have committed to implementing EITI in the future.218 These figures show that EITI has failed to attract the participation of a significant number of resource-rich States, despite the attention paid by the Board to this issue, and the Secretariat’s attempts to increase participation by resource-rich States through the application of ‘diplomatic and commercial leverage’ by supporting States, as well as peer and regional pressure.219 At the same time, eleven out of the fifty-one Candidate, Compliant, or Other States (or 22 per cent) do not qualify as resource-rich according to any of the IMF indices. In other words, only forty of these fifty-one States are actually resource-rich.220

Even though the EITI Standard is explicitly directed at resource-rich States, applicants for EITI Candidacy need not demonstrate that they are resource-rich. As a result, approximately one-fifth of EITI implementing States are incorporating revenue transparency standards into their domestic legal systems even though their extractive industries are relatively insignificant, and thus may not merit the disclosure of revenues and payments. As discussed above, the participation of France, Germany, and the United States may be explained in part by their interest in enhancing EITI’s perceived legitimacy by ensuring that the participating States include developing as well as developed States. Among the other eight resource-scarce States that participate in EITI, some appear to be on their way towards becoming prospective resource-rich States, and a more current IMF index might list some of them. These eight States all appear to be anticipating an increase in revenues from the extractive industries, and may have joined EITI due to some expectation that forward-looking reforms would enhance their international reputations, possibly bringing material benefits like development aid, as described above. While participation in EITI by resource-scarce States like France (p.167) and Germany may enhance the Initiative’s legitimacy, widespread participation by resource-scarce States may actually strain the Initiative’s resources, and those of the Multi-Donor Trust Fund, a World Bank administered fund that provides technical assistance to implementing States.221

Participation in EITI could also be considered over-inclusive to the extent that the Initiative includes some States that generally lack a free civil society. Although the EITI Board may decline applications for EITI Candidacy, and suspend or delist non-compliant States, States that have repressive laws and policies with respect to civil society organizations, such as Ethiopia and Myanmar, are nevertheless among EITI-implementing States.222 The participation of such States in EITI raises questions about the degree to which the Board upholds the requirement that States ensure that there are no obstacles to civil society participation in the EITI process.223 EITI may play a role in bringing about greater freedom for civil society in repressive States by catalyzing reform, but the Initiative may also harm its own legitimacy when States that fail to undertake genuine reform continue to participate in the Initiative.

D. Implementation of EITI-inspired revenue transparency standards by non-participants

Although none of the twenty-eight EU member States is currently an EITI-implementing State (as Germany, France, and the United Kingdom have only announced their intention to implement EITI), the 2013 EU Transparency and Accounting Directives have significantly expanded the normative influence of the EITI Standard.224 Due to come into force by 20 July 2015,225 these (p.168) Directives are designed to complement EITI by requiring ‘large undertakings and all public-interest entities active in the extractive industry or the logging of primary forests to prepare and make a public report on payments made to governments on an annual basis’.226 The Accounting Directive explicitly conceives of these reports as complementary to EITI, as they ‘should serve to help governments of resource-rich countries to implement the EITI principles and criteria and account to their citizens for payments such governments receive’.227 The Directives thus explicitly acknowledge their link to EITI, while making no reference to the Publish What You Pay coalition, which has actually campaigned for stock exchange regulations as an approach to revenue transparency.

The Directives’ application is fairly extensive, as the reports must be filed not only by companies registered in the EU/EEA (‘large undertakings’), but also by companies listed on an EU-regulated stock market (‘public interest entities’), thus including the Euronext securities markets in Amsterdam, Brussels, Lisbon, London, and Paris.228 The scope of the reports is also extensive, as they must include the total amount of payments made to each government, and the total amount per type of payment, meaning production entitlements; taxes; royalties; dividends; signature, discovery, and production bonuses; licence, rental, and entry fees and other considerations for licences or concessions; and payments for infrastructure improvements.229 In enumerating the various payment types, the Directive nearly replicates the list set forth in the EITI Standard.230 The Directive also requires project-level reporting, such that payments attributed to a specific project must be reported by the total amount paid for each project and by the payment type for each project.231 None of the above payments need to be reported, however, if they fall below €100,000, the threshold for materiality in these Directives.232

The Accounting Directive differs from the EITI Standard in several respects, such that it ultimately complements, but does not mirror the Standard. First, and most significantly, the reports only disclose payments by companies. They do not disclose State revenues, or reconcile payments and revenues, as do EITI Reports. Second, the Directive goes beyond the EITI Standard by requiring the reports to include payments related to the logging of primary forests, whereas the EITI Standard encourages but does not require such extensions to other sectors.233 Finally, the Directive specifies what project-level reporting must entail, while the EITI Standard merely indicates that project-level reporting is required, provided that it is consistent with the EU Directive as well as the SEC regulations in the United States.234 The Accounting Directive thereby informs the content of the EITI Standard, which refers implementing States to these stock exchange (p.169) regulations. Thus, the EITI Standard has normatively influenced the Accounting Directive, which has in turn normatively influenced the Standard itself.

In the United States, by contrast, EITI’s influence on SEC regulations has been stymied by a lawsuit brought by the American Petroleum Institute, a trade association that represents the US oil and gas industry. In 2010, before the United States had even committed to implementing EITI, the US Congress included a provision on revenue transparency in the Dodd-Frank Wall Street Reform and Consumer Protection Act.235 At the tail end of an extremely lengthy bill that otherwise largely responded to the global financial crisis, Congress included a provision requiring resource extraction issuers to disclose annual payments made to the US federal government or foreign governments for ‘the purpose of the commercial development of oil, natural gas, or minerals’.236

Like the EU Directives, the Dodd-Frank Act makes explicit reference to the EITI Standard, which provides the basis for the provision’s enumeration of what constitutes a payment in the context of natural resource extraction.237 As directed by Congress, the SEC issued a Final Rule implementing this provision on 22 August 2012, and it was due to take effect on 1 October 2013.238 The American Petroleum Institute subsequently challenged the Rule, however, and on 2 July 2013 the District Court of the District of Columbia vacated it partly on the ground that the SEC had misread the Dodd-Frank Act to require the public disclosure of reports.239 The District Court remanded the Rule to the SEC, which has yet to issue a revised Rule. In the meantime, EITI’s normative influence in the United States is undeniable, as implementation of the EITI Standard is currently underway.

V. Anticipating and Measuring EITI’s Impact

EITI links the norms it has generated to large-scale socio-economic change to a much greater extent than the other institutions studied in this book, namely the OECD Working Group on Bribery, the UNODC, and FATF. At the same time, the EITI Board has also acknowledged, to an unusual extent, its lack of empirical support for the assumption that implementation of the EITI Standard actually leads to such changes. The following discusses EITI’s anticipated impact, its lack of an evidence base, as well as the difficulties involved in actually measuring impact in this context. This section concludes by discussing anecdotal, as opposed to empirical evidence of the Standard’s effects in implementing States. (p.170)

A. EITI’s ambition

The 2009 EITI Articles of Association make the most ambitious claims about the objectives of the organization and the Standard. According to Article 2(2), the Association’s objective is:

to make the EITI Principles and the EITI Requirements the internationally accepted standard for transparency in the oil, gas and mining sectors, recognizing that strengthened transparency of natural resource revenues can reduce corruption, and the revenue from extractive industries can transform economies, reduce poverty, and raise the living standards of entire populations in resource rich countries.240

This provision begins by articulating an ambitious normative objective, in that the stakeholders aim to make the Principles and Requirements ‘the internationally accepted standard for transparency in the oil, gas and mining sectors’.241 In light of the fact that the Standard focuses narrowly on just one aspect of revenue transparency, the feasibility of this objective may be questioned as long as the Standard excludes mandatory norms on contract and expenditure transparency.

In addition, the goals articulated in this provision—the reduction of corruption and poverty, the transformation of economies, and higher living standards—are notably more ambitious than those set out in the EITI Principles, which were formulated in 2003 at the Lancaster House Conference. The Principles identify sustainable development and poverty reduction as goals, but the issue of corruption goes without mention, as noted above. Moreover, instead of identifying economic transformation and higher living standards as objectives, the Principles just indicate that natural resource wealth ‘should’ contribute to sustainable economic growth and that financial transparency ‘may bring’ an ‘enhanced environment for domestic and foreign direct investment’.242 The stakeholders’ conception of EITI’s goals in 2003 was thus more tentative and modest than those articulated in 2009, after the institution had actually become operational.

In further contrast to the Articles of Association, some of the literature produced by the EITI Secretariat describes somewhat more precise and modest benefits from EITI implementation. In a 2008 Guide on communicating about the EITI process, for example, the Secretariat described the primary benefits of implementation as ‘greater trust among stakeholders’, as well as the ‘lessening of risks to communities and companies, a greater ability of citizens to hold companies and their government to account, and an improved investment climate based on reduction of risks’.243 Fostering greater trust and dialogue among domestic stakeholders may be one of the most direct, if intangible, consequences of implementation of the multi-stakeholder format at the national level. Yet, both the EITI Principles and the Articles of Association omit any reference to such societal (p.171) impacts, perhaps because of their evident focus on large-scale, socio-economic changes.

Another report about EITI in the mining sector suggests that the key tests of EITI’s ‘macro-level’ success should be ‘whether the embezzlement of resource revenues by corrupt elites has been halted or significantly reduced, and whether the multi-stakeholder discussion about the use to which those revenues are put is contributing to greater trust, consensus and, ultimately, social and economic development’.244 This represents the view not of the EITI Secretariat or the EITI Board, but rather a single member of the Board, Edward Bickham, who was then the Executive Vice President of External Affairs for Anglo American plc.245 This passage shows that EITI stakeholders, including those sitting on the Board, do not necessarily ascribe to the exact set of objectives laid out in the Principles and Articles of Association, and may in large part view EITI as enhancing dialogue between national stakeholders, a smaller-scale impact that could lead to larger-scale changes. Bickham also articulated a more precise understanding of how EITI could reduce corruption: through a reduction in embezzlement by government officials. As discussed above, the narrowness of the EITI Standard makes it ill-suited for addressing corruption more broadly, but neither the Principles nor the Articles of Association specifically identify embezzlement as the conduct at issue. While the Articles broadly identify certain large-scale socio-economic objectives, the Secretariat’s own reports suggest a more nuanced understanding of the Initiative’s goals, both within the Secretariat and among EITI’s Board Members. As a consequence, the following discussion of EITI’s impact looks beyond the objectives identified in the Articles and Principles.

B. EITI’s missing ‘evidence base’

Commentators, and EITI’s own advisers and consultants, have criticized the Initiative not only for lacking empirical evidence that the Standard leads to socio-economic change, but also for lacking a theory of change that explains the link between the Standard and such transformations. EITI’s International Advisory Group (IAG) first noted the lack of an ‘evidence base’ in its 2006 Report.246 IAG noted that few academic studies had been carried out on the impact of transparency initiatives such as EITI, and that an evidence base would help the Initiative to communicate with stakeholders about incentives for implementation.247 Over the course of the following years, however, it appears that neither EITI nor academics made significant progress in this regard. In a 2011 Report, EITI’s consultancy firm, Scanteam, reiterated IAG’s call for empirical evidence that links the international Standard to societal change, such as better (p.172) governance, economic growth, and poverty reduction.248 In its own research, Scanteam found that there were no major differences between EITI and non-EITI States with respect to ‘big picture indicators’ such as credit ratings, Transparency International’s Corruption Perception Index, and GDP growth.249 Scanteam also warned that EITI’s ‘fairly sweeping statements of impacts’ could create a credibility gap over time, as EITI informational material may present over-optimistic expectations about its impact.250

The lack of a robust body of empirical evidence stems in part from the difficulties involved in measuring the impact of the EITI Standard in the first place. The existence of EITI as an operational institution, with a set of transparency norms and compliant States, is still relatively recent, even though stakeholders launched the initiative more than a decade ago, in 2003. EITI’s revenue transparency norms have only been in existence since the Board agreed to a Validation methodology in 2008, and States only began to achieve Compliant status in 2009, with Azerbaijan being the first. When Scanteam produced its report in 2011, EITI’s norms had only been in existence for three years, quite a short period of time for shifts in ‘big picture indicators’ to have taken place. Thus, with the continued existence of EITI as an active institution, researchers and consultancy firms like Scanteam may be able to identify impacts over the course of many years.

Yet, even with many years of data, measuring EITI’s impact may be difficult in part because of the Standard’s narrow focus, which may limit the extent of its impact, if any. The EITI Standard represents the set of norms that was capable of garnering support from all stakeholders, but not necessarily the set of norms most likely to bring about quantifiable change.251 Moreover, EITI itself has not offered a theory of change that explains the link between this Standard, and large-scale, socio-economic changes, as discussed above. Although the Board established a Working Group on Theory of Change, it appears to have been short-lived, with little progress made on this issue during its existence.252 Yet, even if EITI had done so, it would be difficult, if not impossible, for researchers to isolate the impact of EITI as opposed to other variables, and to capture non-events like the deterrence of corruption. Two economists, for example, have concluded that it is ‘unfortunately impossible’ to establish a causal relationship between EITI membership and the reduction of corruption.253 They were unable to rule out the possibility that lower levels of corruption may be caused by factors other than EITI membership, and that both a reduction in corruption and EITI membership may be driven by the same causal factor, such as a shift in political regime.254 (p.173)

In light of these challenges, much of the evidence of EITI’s impact is anecdotal and country-by-country rather than empirical and cross-national. The World Bank’s Multi-Donor Trust Fund has established a ‘results measurement framework’ designed to help EITI States measure the results and outcomes of EITI implementation through certain performance indicators, such as Transparency International rankings, the World Banks’ country ratings (Country Policy and Institutional Assessment), credit ratings, and FDI levels.255 The MDTF used this framework to evaluate seven different EITI States during the Initiative’s early years, but the framework since appears to have fallen into disuse, which may be for the best, as it appears to suffer from some methodological problems. Despite the challenges involved in isolating EITI’s impact, this framework appears to assume that there are causal rather than merely correlative relationships between these indicators and EITI implementation.

The EITI Secretariat has itself gathered and disseminated anecdotal evidence of EITI’s impact, resulting in brief reports that discuss the results of EITI implementation in Liberia and Nigeria, for example.256 A case study about Liberia explains that an EITI Report showing discrepancies between revenues and payments generated substantial dialogue about revenues from natural resource extraction.257 Academic researchers have also pointed to anecdotal evidence suggesting that ‘the impact of EITI on increasing dialogue is quite strong’, as EITI implementation has provided forums for the discussion of contentious issues in several EITI States.258 Anecdotal evidence concerning Azerbaijan also supports the theory that EITI implementation may result in improved credit ratings for sovereign States. In 2010 Fitch Ratings upgraded Azerbaijan’s long-term foreign currency issue default rating (IDR) and its Country Ceiling from BB+ to BBB- (ratings of BB+ and lower are considered ‘vulnerable’ whereas ratings of BBB- and higher are considered ‘secure’).259 Fitch also upgraded Azerbaijan’s short-term foreign currency IDR from B to F3 (a B rating indicates uncertain capacity for timely payment of financial commitments, while an F3 rating indicates adequate capacity).260 In explaining its upgrade decisions, Fitch ‘underlined’ that Azerbaijan was the first EITI Compliant State, and it also ‘drew comfort’ from the transparency of the State Oil Fund of Azerbaijan, which leads on EITI.261 Because Fitch explicitly linked Azerbaijan’s upgrade to its membership in EITI, a causal (p.174) relationship between EITI membership and an improvement in a performance indicator may be identified in this instance.

VI. Conclusion

As a stand-alone non-binding instrument, the EITI Standard takes a form that is distinct from the OECD anti-bribery instruments and UNCAC. Despite its non-binding form, the Standard has had a normative influence that is comparable to that of anti-corruption treaties, as implementing States must comply with the Standard’s mandatory provisions in order to achieve Compliant status. Just as the States Parties to the OECD Anti-Bribery Convention and UNCAC have enacted implementing legislation in order to bring about domestic criminalization of corruption conduct, most, though not all, EITI States have implemented the Standard through the enactment of binding legislation that ensures revenue transparency. The EITI Standard has also had a considerable normative influence among non-participating States, as evidenced by the 2013 EU Transparency and Accounting Directives, and the 2010 US Dodd-Frank Act, which the US Congress passed before the United States even committed to implementing the Standard. The Standard’s non-binding form has certainly not hindered its normative impact among both participating and non-participating States.

Moreover, the form of this instrument, coupled with the structure of EITI as a MSI, has enabled non-State actors to participate in the formulation of these norms on an equal footing with States. This level of inclusiveness is unattainable in the context of treaty negotiations, in which civil society organizations and companies may influence negotiations, but cannot play a role in consensus-building. Inclusiveness is particularly significant in the context of the EITI Standard, which directly impacts companies in the extractive industries, which must report their payments to host States. In addition, the Standard’s successful implementation depends in part on the involvement of civil society organizations, as well as the general public, in reviewing the information published in EITI Reports. While the inclusion of these non-State actors in the formulation and revision of the Standard may contribute to its normative legitimacy, the division on the EITI Board between implementing and supporting States has at the same time created legitimacy problems for the Initiative from a descriptive perspective. The balance between implementing and supporting States on the Board has apparently contributed to a perception that resource-rich developed States are not subject to the same norms as their developing counterparts. With Norway and the United States now implementing the Standard, and the United Kingdom and possibly Australia likely to follow suit, this challenge to the Initiative’s legitimacy is diminishing.

While the participation of non-State actors in the formulation and revision of the EITI Standard has, on the one hand, arguably contributed to its normative legitimacy, it has, on the other hand, detracted from the Standard’s capacity to help reduce corruption in implementing States. Just as UNCAC’s non-mandatory (p.175) criminalization provisions reflect a range of interests among the many negotiating States, the Standard’s reporting requirements reflect the range of interests among its stakeholders. Even though corruption takes place throughout the value chain in the extractive industries, the Standard only addresses revenue transparency because contract, licence, and expenditure transparency did not garner enough support among the private sector stakeholders for the formulation of mandatory provisions on these issues. The Standard likewise includes many provisions that encourage rather than require States to ensure that companies report various types of information with respect to revenue transparency. Thus, while the Standard represents a novel approach to combating corruption, a close reading of its provisions shows that they are in some respects narrow and minimal due to the need for consensus-building among a range of stakeholders with varying interests. The normative legitimacy gained by the inclusion of stakeholders may ultimately be counter-balanced by the substantive outcome produced through consensus-building. The Standard may yet evolve into something broader and stronger, and in the meantime, much work remains to be done by social scientists in determining what impact, if any, the current Standard is having on corruption. (p.176)


(1) Transparency International, ‘Bribe Payers Index 2011’ (2011) 15, Appendix A: Bribe Payers Index Methodology.

(2) ibid.

(3) ibid 14, 19.

(4) ibid.

(5) ibid.

(6) See Appendix I for EITI implementing States.

(7) EITI, ‘EITI Standard’ (11 July 2013) Principles.

(8) EITI, ‘EITI Countries’ <http://eiti.org/countries>; EITI, ‘Other Countries’ <http://eiti.org/countries/other>.

(9) EITI, ‘EITI Standard’ EITI Articles of Association, art 3(1).

(10) ibid art 5(2).

(11) Terry Lynn Karl, ‘The Perils of the Petro-State: Reflections on the Paradox of Plenty’ (1999) 53 Journal of International Affairs 31

(12) Jeffrey Frankel, ‘The Natural Resource Curse: A Survey’ NBER 15836 (2010)

(13) Jeffrey Sachs and Andrew Warner, ‘Natural Resource Abundance and Economic Growth’ NBER WP 5398 (1995)

(14) Frankel (n 12).

(15) Global Witness, ‘A Crude Awakening: The Role of Oil and Banking Industries in Angola’s Civil War and the Plunder of State Assets’ (1999)

(16) Global Witness, ‘20 Years of Global Impact’ <http://new.globalwitness.org/20yearsimpact.php>

(17) Global Witness (n 15) 2, 4.

(18) ibid 13.

(19) John Browne, Beyond Business: An Inspirational Memoir from a Visionary Leader (2010) 113

(21) Global Witness (n 15) 9.

(22) Browne (n 19) 114.

(23) n 19Human Rights Watch, ‘Some Transparency, No Accountability: The Use of Oil Revenue in Angola and its Impact on Human Rights’ (2004) 54–56

(25) Browne (n 19) 115–16; Human Rights Watch (n 23) 54–56.

(26) ibid.

(27) Human Rights Watch (n 23) 56.

(28) David Buchan and Sheila McNulty, ‘A Dinosaur Still Hunting for Growth’ Financial Times (12 March 2002)

(29) Buchan and McNulty (n 28).

(30) n 19Mabel van Oranje and Henry Parham, ‘Publishing What We Learned: An Assessment of the Publish What You Pay Coalition’ (2009) 32 <http://www.publishwhatyoupay.org/sites/pwypdev.gn.apc.org/files/Publishing%20What%20We%20Learned%20-%20EN.pdf>

(31) Publish What You Pay, ‘About Us’ <http://www.publishwhatyoupay.org/about>.

(32) PWYP, ‘History’ <http://www.publishwhatyoupay.org/about/history>. For a list of members, current as of 21 March 2011, see Publish What You Pay, ‘Members of Publish What You Pay’ <http://www.publishwhatyoupay.org/sites/pwypdev.gn.apc.org/files/Membership% 20PDF_2.pdf>.

(33) van Oranje and Parham (n 30) 35–36, Annex 4, Letter from George Soros to UK Prime Minister Tony Blair, 13 May 2002.

(35) Browne (n 19) 117.

(36) van Oranje and Parham (n 30) 39, 42, 57.

(37) For reasons that are not entirely known, Prime Minister Blair departed from the text of his prepared speech at the Summit, and therefore did not actually announce the launch at the Summit. Instead, the Prime Minister’s office posted the full text of his prepared speech on the internet following his speech. van Oranje and Parham (n 30) 43.

(38) Extractive Industries Transparency Initiative (EITI) London Conference 17 June 2003, Final Attendance List <http://collections.europarchive.org/tna/20070701080507/http://www.dfid.gov.uk/pubs/files/eitidraftreportattendance.pdf>

(39) EITI, ‘History of EITI’ <http://eiti.org/eiti/history>; Report of the Extractive Industries Transparency Initiative (EITI) London Conference (17 June 2003) <http://collections.europarchive.org/tna/20070701080507/http:/www.dfid.gov.uk/news/files/eitireportconference17june03.asp>.

(40) Virginia Haufler, ‘Disclosure as Governance: The EITI and Resource Management in the Developing World’ (2010) 10 Global Environmental Politics 53, 65

(41) EITI, ‘History of EITI’ <http://eiti.org/eiti/history>

(43) Graham Baxter, ‘The EITI Story So Far: A Personal Reflection’ EITI Blog (11 February 2009) <https://eiti.org/blog/eiti-story-so-far-personal-reflection>

(46) Peter Utting, ‘Regulating Business Via Multistakeholder Initiatives: A Preliminary Assessment’ in Rhys Jenkins, Peter Utting, and Renato Alva Pino (eds), Voluntary Approaches to Corporate Responsibility: Readings and a Resource Guide (NGLS/UNRISD 2002) 65, 67. See also Mark Pieth, ‘Multi-stakeholder Initiatives to Combat Money Laundering and Bribery’ in Christian Brütsch and Dirk Lehmkuhl (eds), Law and Legalization in Transnational Relations (Routledge 2007) 83–84, 93–95.

(48) The term ‘greenwash’ refers to ‘misleading publicity or propaganda disseminated by an organization, etc., so as to present an environmentally responsible public image’: Oxford English Dictionary.

(49) Utting (n 46) 62, 69–71.

(50) Sébastien Mena and Guido Palazzo, ‘Input and Output Legitimacy of Multi-Stakeholder Initiatives’ (2012) 22 Business Ethics Quarterly 527, 534

(51) Utting (n 46) 65.

(52) ibid 68–69

(53) ibid 84

(54) Jonas Moberg and Eddie Rich, ‘Beyond Governments: Lessons on Multi-Stakeholder Governance from the EITI’ in Andrew Robertson and Rupert Jones-Parry (eds), Commonwealth Governance Handbook 2013/2014 (Commonwealth Secretariat 2013) 123

(55) MSIs have, however, played a role even in this State-dominated field. See eg the Wolfsberg Principles and Partnering Against Corruption Initiative. Pieth (n 46) 84.

(56) Voluntary Principles on Security and Human Rights, ‘What are the Voluntary Principles?’ <http://www.voluntaryprinciples.org/what-are-the-voluntary-principles/>

(57) Kimberley Process, ‘About’ <http://www.kimberleyprocess.com/en/about>

(58) Global Witness, ‘Global Witness Leaves Kimberley Process, Calls for Diamond Trade to be Held Accountable’ (5 December 2011)

(59) EITI Standard, Governance and Management, 43. The 20 member Board consists of one Chair, five representatives from civil society, five representatives from companies, one representative of investors, and eight representatives from States. EITI, ‘The Selection Criteria and Process of Civil Society Representatives to the EITI International Board (2013–2015)’ <http://eiti.org/files/EITI-Nomination-criteria-and-process.pdf> 2. In addition to these twenty ‘full members’ of the Board, ‘alternate members’ for each of these constituencies may also attend the meetings, but without participating in discussions or voting, unless the ‘full member’ is absent and the alternate member is deputized. ibid.

(60) ibid. For a list of the Board members for the 2013–15/16 term, see EITI, ‘EITI Board Members 2013–2015/6, updated 3 February 2014’ <http://eiti.org/files/EITI-Board-Members- 2015-16%28January-2014%29.pdf>. In practice, however, the number of representatives from implementing States has ranged from five down to two or three, with the result that the number of supporting and implementing States sitting on the Board may be about the same.

(61) EITI, ‘The Selection Criteria and Process of Civil Society Representatives to the EITI International Board (2013–2015)’ 1–2. In the case of civil society, PWYP serves as the coordinating body for the selection and nomination process. Board members represent their constituencies at the Board meetings, which means that they are supposed to hold regular consultations, receive input from their constituencies before each meeting, and report back afterwards. While in practice there appears to be a fair amount of oscillation between ‘full’ and ‘alternate’ members from meeting to meeting, the Chair is a constant presence for his or her two-year term, which may be renewed once.

(62) EITI, ‘Minutes of the 1st EITI Board Meeting’ (23 January 2007) 3. In the event of a vote among the nineteen voting members of the Board (the Chair is a non-voting member), there must be a super-majority of thirteen votes, which must include one-third of each constituency. Christian Fr Michelet, ‘The Role and Responsibilities of the EITI Board Members’ (24 May 2013) 8; EITI, ‘Minutes of the 2nd EITI Board Meeting’ (11 April 2007) 5–6.

(65) As of January 2015, the implementing States (excluding suspended and delisted States) are: Afghanistan, Albania, Azerbaijan, Burkina Faso, Cameroon, Chad, Colombia, Côte d’Ivoire, Democratic Republic of Congo, Ethiopia, Gabon, Ghana, Guatemala, Guinea, Honduras, Indonesia, Iraq, Kazakhstan, Kyrgyz Republic, Liberia, Madagascar, Mali, Mauritania, Mongolia, Mozambique, Myanmar, Niger, Nigeria, Norway, Papua New Guinea, Peru, Philippines, Republic of the Congo, São Tomé and Príncipe, Senegal, Seychelles, Sierra Leone, Solomon Islands, Tajikistan, Tanzania, Timor-Leste, Togo, Trinidad and Tobago, Ukraine, United Kingdom, United States of America, Yemen, and Zambia.

(66) As of January 2015, these States are: Australia, Belgium, Canada, Finland, France, Germany, the Netherlands, Norway, Spain, Sweden, Switzerland, the United Kingdom, and the United States. Australia and Belgium have served only as alternate members on the Board. Out of this group, the United States, the United Kingdom, Germany, and Canada have arguably exercised an outsized influence, as they have collectively filled nearly two-thirds of the seats for supporting States during the Board Meetings.

(67) United States Extractive Industries Transparency Initiative, ‘EITI Candidacy Application Form’ <http://www.doi.gov/eiti/upload/USEITI-Candidacy-Application-MSG-Approved-2.pdf> 3

(68) EITI, ‘EITI Countries, Other Countries’ <http://eiti.org/countries/other>

(69) EITI, ‘Germany Announces Full EITI Implementation’ (2 July 2014) <http://eiti.org/news/germany-announces-full-eiti-implementation>; France Diplomatie, ‘L’adhésion de la France à l’Initiative pour la Transparence dans les Industries Extractives’ (23 May 2013) <http://www. diplomatie.gouv.fr/fr/politique-etrangere-de-la-france/diplomatie-economique-901/actualites-liees- a-la-diplomatie/article/l-adhesion-de-la-france-a-l>.

(70) EITI, ‘Germany Announces Full EITI Implementation’ (n 69).

(71) EITI, ‘Minutes of the 24th EITI Board Meeting’ (24 May 2013) 4

(72) ibid; EITI ‘Strategy Working Group: Discussion Paper’ Board Paper 18–10 (3 October 2011) 22; Diarmid O’Sullivan, ‘What’s the Point of Transparency? The Extractive Industries Transparency Initiative and the Governance of Natural Resources in Liberia, Timor Leste and Other Countries’ (2013) 41.

(73) Anwar Ravat and Sridar P Kanna, World Bank, ‘Implementing the Extractive Industries Transparency Initiative: Applying Early Lessons from the Field’ (2008) 9

(75) EITI, ‘Minutes of the 8th EITI Board Meeting’ (18 February 2009) 5; O’Sullivan (n 72) 7.

(76) EITI Standard, EITI Articles of Association art 2(2).

(77) UNCAC art 9.

(78) UNCAC art 9(1)(a), (2)(a), (b).

(79) O’Sullivan (n 72) 32.

(82) ibid. 29

(83) EITI Standard, Introduction 8.

(84) ibid 9.

(85) ibid Principle 1.

(86) ibid Principle 4.

(87) ibid Principles 5, 7.

(88) ibid Principles 11–12.

(89) ibid Principles 2, 6.

(90) ibid Requirements 1.4(c)(ii)–(iii), 1.3(g).

(91) ibid Requirement 1.4.

(92) ibid Requirement 1.3.

(93) ibid Requirement 1.3(b)–(d).

(94) ibid Requirement 1.3(e)(i), (iv).

(95) See eg EITI, ‘Minutes of the 11th EITI Board Meeting’ (18 March 2010) 8 (discussion of restrictions on civil society in Ethiopia).

(96) EITI Standard, 11.

(97) ibid Requirement 1.6(a).

(98) ibid.

(99) ibid Requirements 2, 3, 4, 6.

(100) ibid Requirement 2.1.

(101) ibid Requirement 2.2.2.

(102) O’Sullivan (n 72) 9, 11, 37–38.

(103) EITI Standard, Requirement 4.1(a). Requirement 4.1(a) provides a limited degree of guidance with respect to the materiality threshold: ‘Payments and revenues are considered material if their omission or misstatement could significantly affect the comprehensiveness of the EITI Report’. In addition, the multi-stakeholder group ‘should consider the size of the revenue streams relative to total revenues’.

(104) ibid Requirement 4.1(b).

(105) ibid Requirements 4.1(c), (d), (e), (f).

(106) ibid Requirement 4.2(a).

(107) ibid Requirement 4.2(d). Unlike sub-national payments, however, sub-national transfers between national and sub-national government entities must be disclosed when they are material, related to revenues generated by the extractive industries, and are mandated by a national constitution, statute, or other revenue sharing mechanism. ibid Requirement 4.2(e).

(108) ibid Requirement 3.

(109) ibid.

(110) Mongolia Extractive Industries Transparency Initiative, ‘Mongolia Seventh EITI Reconciliation Report—2012’ (2013)

(111) EITI Standard, Requirement 6.1(a), (b), (d).

(112) ibid Requirement 6.1(c).

(113) eg Afghanistan, Burkina Faso, Cameroon, Chad, Côte d’Ivoire, Equatorial Guinea, Ethiopia, Ghana, Guinea, Liberia, Mali, Mauritania, Mozambique, Niger, Nigeria, Papua New Guinea, São Tomé and Príncipe, Senegal, Tanzania, Timor-Leste, Togo, and Zambia. World Bank, ‘World Development Indicators: Education Completion and Outcomes’ <http://wdi.worldbank.org/table/2.13>.

(114) O’Sullivan (n 72) 16, 23–24.

(115) EITI Standard, Requirement 5.

(116) ibid Requirement 5.1. The EITI Standard specifies that the relevant professional standards are the International Standards on Auditing (for companies) and the International Standards of Supreme Audit Institutions (for public entities).

(117) EITI, ‘The EITI Glossary’ <http://eiti.org/glossary#Independent_Administrator>

(118) EITI Standard, Requirement 7.

(119) ibid Requirement 7.2(a).

(120) ibid The Validation Guide, 3.1.

(121) ibid The Validation Guide, 3.3.2. The accredited validators are: Adam Smith International Ltd, CAC 75, Deloitte Australia, Forensic Risk Alliance, Hart Resources Ltd, INNOVAPUCP, IPAN, Moore Stephens LLP, Resource Consulting Services Limited, Scanteam BDO Norway, SIPU International AB, Social Science Dimensions, Sustainable Development Strategies Group, the IDL group. EITI, ‘EITI Validators’ <http://eiti.org/validation/validators>.

(122) EITI Standard, The Validation Guide, 3.2.3.

(123) ibid The Validation Guide, 3.1, 3.2.4.

(124) ibid The Validation Guide, 3.4.

(125) ibid The Validation Guide, 3.2.5.

(126) ibid.

(127) ibid The Validation Guide, 3.2.7.

(128) ibid The Validation Guide, 3.1.

(129) ibid.

(130) ibid The Validation Guide, 3.12.

(131) ibid The Validation Guide, 3.8.

(132) ibid The Validation Guide, 3.11.

(133) Strategy Working Group, ‘EITI Strategy Review: Strategy Options and Trade-offs’ Board Paper 19-10-B (December 2011) 8.

(134) EITI, ‘Minutes of the 10th EITI Board Meeting’ (October 2009) 8.

(135) ibid; see also EITI, ‘Minutes of the 18th EITI Board Meeting’ (2 December 2011) 10–11.

(136) Jonas Moberg and Eddie Rich, ‘Beyond Governments: Lessons on Multi-Stakeholder Governance from the Extractive Industries Transparency Initiative (EITI)’ (n 54) 118; Jonas Moberg, ‘EITI Expectations—Necessary But Not Sufficient’ EITI Blog (2 October 2009) <https://eiti.org/blog/eiti-expectations-necessary-not-sufficient>; EITI, ‘Business Guide: How Companies Can Support EITI Implementation’ (2013) 12.

(137) Moberg, ‘EITI Expectations—Necessary But Not Sufficient’ (n 136).

(138) Revenue Watch Institute and Global Witness, ‘Advancing the Transparency of Licenses and License Allocations Through the EITI’ (April 2012); Revenue Watch Institute, ‘Contract Disclosure Through the EITI: Background Paper for the EITI Strategy Working Group’ (April 2012); World Bank, ‘Transparency in Licensing Activities’ (April 2012); Revenue Watch Institute and World Bank, ‘License and Contract Disclosure’ (23 July 2012).

(139) World Bank, ‘Feasibility of Including License Transparency in the EITI’ Board Paper 21-2-D (17 September 2012)

(140) ibid 2

(141) ibid 3

(142) EITI, ‘Consultation on Contract Transparency’ (14 February 2013). The Board specifically asked them to indicate their preference among four different options for contract transparency, ranging from requiring disclosure (with and without exceptions), to encouraging disclosure, to leaving disclosure as a matter of discretion (without mandating or encouraging it). ibid 2.

(143) ibid 3.

(144) Strategy Working Group, ‘EITI Strategy Review: Strategy Options and Trade-offs’ Board Paper 19-10-B (December 2011) 11; ‘ICCM Workshop on Next Steps for the Extractive Industries Transparency Initiative’ <https://eiti.org/files/ICMM%20draft%20workshop%20summary% 20on% 20next%20steps%20for%20EITI.pdf> 4; EITI Board Oil and Gas Constituency (10 April 2013) <https://eiti.org/files/Oil%20and%20gas_10APril.pdf> 1; ‘Comments by the Mining Constituency Board Representatives on the Draft EITI Rules Circulated on 10th April as Part of Board Circular 146’ (15 April 2013) <https://eiti.org/files/Mining_10April.pdf> 1–2; Comments by the Investor Board Representative on the Draft EITI Rules (April 10th edn) <https://eiti.org/files/Comments%20by%20the%20Investor%20Board%20Representative%20on%20the% 20Draft%20EITI%20Rules.pdf> 1.

(145) ibid; Peter Rosenblum and Susan Maples, ‘Contracts Confidential: Ending Secret Deals in the Extractive Industries’ (Revenue Watch Institute 2009) 43.

(146) Strategy Working Group, ‘EITI Strategy Review: Strategy Options and Trade-offs’ Board Paper 19-10-B (December 2011) 11.

(147) See eg O’Sullivan (n 72) 6.

(148) Ivar Kolstad and Arne Wiig, ‘Is Transparency the Key to Reducing Corruption in Resource-Rich Countries?’ (2009) 37 World Development 521, 528

(149) ibid 527

(150) ibid 528

(151) Publish What You Pay, ‘Our Activities: Publish What You Pay’ <http://publishwhatyoupay.org/about/publish-what-you-pay>

(152) Publish What You Pay, ‘Vision 20/20’ (2012)

(154) Publish What You Pay, ‘A La Carte Strategic Options’ (2012)

(155) World Bank, ‘Extractive Industries Transparency Initiative Plus Plus: EITI++’ <http://go.worldbank.org/XYLUR236T0>

(156) Incidentally, EITI also appears to lack control over the use of the EITI ‘logo’, as the World Bank has apparently been using the name EITI++ against the wishes of EITI. EITI, ‘Minutes of the 6th EITI Board Meeting’ (24 November 2008) 10.

(157) Jonas Moberg, ‘Charting the Next Steps for Transparency in Extractives’ (10 May 2013) <http://eiti.org/blog/charting-next-steps-transparency-extractives>

(158) EITI Standard Requirement 4.1.c.   

(159) ibid Requirement 4.1.e.iii.

(160) ibid Requirement 4.1.f.v.   

(161) ibid Requirement 4.2.e.

(162) ibid Requirement 4.1.b.   

(163) ibid Requirement 4.1.f.

(164) World Bank, ‘EITI Reporting by Key Producing-Region’ (April 2012); Revenue Watch Institute, ‘Reporting on In-Kind Revenues Through the EITI: Background Paper for the EITI Strategy Working Group’ (April 2012); Revenue Watch Institute and World Bank, ‘EITI Reporting on Sub-National Revenues’ (23 July 2012).

(165) EITI Standard, 6.

(166) EITI, ‘Glossary’ <http://eiti.org/document/glossary>

(167) EITI Standard, Requirement 9.c.v.

(168) ibid Requirement 5.2.e.

(169) The Openness Policy concerns the transparency of EITI as an organization, and the Draft Constituency Guidelines set out guidelines for the internal working of constituency processes.

(170) In response to a comment on the EITI Blog, however, Jonas Moberg suggested that EITI would probably need something like a UN Convention on natural resource governance, which would include the EITI Standard. Clare Short, ‘Message from EITI Chair Clare Short’ EITI Blog (26 July 2012) <https://eiti.org/blog/message-eiti-chair-clare-short>.

(171) Natural Resource Charter, Preamble para 1.

(172) ibid Preamble para 2.

(173) ibid Preamble para 6.

(174) ibid Precept 12.

(175) ibid Preamble para 5.

(176) ibid 20.

(177) VCLT art 1(a).

(178) Kenneth Anderson, ‘The Ottawa Convention Banning Landmines, the Role of International Non-governmental Organizations and the Idea of International Civil Society’ (2000) 11 European Journal of International Law 91

(179) Clare Short, ‘Is the EITI Working? Have Your Say on the EITI Evaluation’ (4 July 2011) <http://eiti.org/blog/eiti-working-have-your-say-eiti-evaluation>; EITI Strategy Working Group, ‘EITI Strategy Review: Strategy Options and Trade-offs’ Board Paper 19-10-B (December 2011); EITI, ‘EITI Strategy Review: Consultation Plan, Draft’ (15 May 2012).

(180) EITI, ‘EITI Strategy Review’ <http://eiti.org/about/strategy-review>

(181) VCLT arts 39–41.

(182) EITI, ‘Minutes of the 13th EITI Board Meeting’ (12 November 2010) 5 (views of Board Member Julie McDowell, Head of SRI, Standard Life Investments); see also EITI, ‘EITI Strategic Options’ Board Paper 20-2-A (8 June 2012) 16. (The Board noted that ‘[t]‌he present 21 requirements are overlapping, repetitive, not necessarily sequential, and mix up process with outcomes’.)

(183) Daniel Bodansky, ‘Rules vs. Standards in International Environmental Law’ (2004) 98 Proceedings of the Annual Meeting (American Society of International Law) 275, 276; Cass Sunstein, ‘Problems with Rules’ (1995) 83 California Law Review 953.

(184) Bodansky (n 183) 278.

(185) EITI Standard, Requirement 1.4.

(186) EITI Rules 2011, Requirement 11.

(187) ibid.

(188) EITI, ‘Nigeria EITI: Making Transparency Count, Uncovering Billions, Case Study’ (20 January 2012)

(189) World Bank, ‘Implementing EITI for Impact: A Handbook for Policy Makers and Stakeholders’ (2012) 125

(190) Memorandum of Understanding on Implementation of the Extractive Industries Transparency Initiative in the Republic of Azerbaijan (2013)

(191) EITI, ‘EITI Guide for Legislators: How to Support and Strengthen Resource Transparency’ (2009) 47

(193) Nigeria Extractive Industries Transparency Act 2007 art 16.

(194) Memorandum of Understanding on Implementation of the Extractive Industries Transparency Initiative in the Republic of Azerbaijan, clause 4.1. The Parties are, however, ‘liable for full confidentiality of any information it obtains verbally, in written form or electronically with regards to this Memorandum, as well as in connection with the activities of the MSG, except information disclosed by decision of the MSG’. ibid clause 3.

(195) World Bank, ‘Implementing EITI for Impact: A Handbook for Policy Makers and Stakeholders’ (2012) 125

(196) van Oranje and Parham (n 30) 29, 54.

(197) Elizabeth Dávid-Barrett and Ken Okamura, ‘The Transparency Paradox: Why Corrupt Countries Join the Extractive Industries Transparency Initiative’ American Political Science Association 2013 Annual Meeting Paper <http://ssrn.com/abstract=2299731>; O’Sullivan (n 72) 33; Maya Schmaljohann, ‘Enhancing Foreign Direct Investment via Transparency? Evaluating the Effects of the EITI on FDI’ Discussion Paper Series No 538 (January 2013); Peter Eigen, ‘Fighting Corruption in a Global Economy: Transparency Initiatives in the Oil and Gas Industry’ (2007) 29 Houston Journal of International Law 327, 338.

(198) Dávid-Barrett and Okamura (n 197) 11; O’Sullivan (n 72) 33; Dilan Olcer, ‘Extracting the Maximum from EITI’ OECD Development Centre Working Paper (2009) fn 21, pp 27–28; African Development Bank Group, ‘Liberia Completing Point Document Under the Enhanced HIPC Initiative’ (2010) paras 2.12–2.13; African Development Bank Group, ‘Cameroon: HIPC Approval Document Completion Point Under the Enhanced Framework’ (2006) paras 2.22, 2.24.

(199) Dávid-Barrett and Okamura (n 197) 11.

(201) Cabinet Office and the Rt Hon David Cameron MP, ‘Prime Minister’s Letter to G8 Leaders’ (2 January 2013) <https://www.gov.uk/government/news/prime-ministers-letter-to-g8-leaders>.

(202) Secretary Ken Salazar, ‘The Department of the Interior Leads in Natural Resources Transparency’ DOI News (16 March 2012) <http://www.doi.gov/news/blog/The-Department-of-the-Interior-Leads-in-Natural-Resources-Transparency.cfm>.

(203) EITI, ‘Minutes of the 11th EITI Board Meeting’ (18 March 2010) 5; EITI, ‘Minutes of the 12th EITI Board Meeting’ (26 May 2010) 8; EITI, ‘Minutes of the 13th EITI Board Meeting’ (12 November 2010) 5.

(204) EITI Standard, Requirements 1.7, 1.8(2).

(205) ibid Requirement 1.7(a), (b).

(206) ibid Requirement 1.7(a).

(207) ibid Requirement 1.7(b).

(208) ibid Requirement 1.8(1).

(209) ibid Requirement 1.8(2).

(210) ibid Requirement 1.8.

(211) EITI, ‘São Tomé and Príncipe, Implementation’ <http://eiti.org/sao-tome-and-principe/implementation>.

(212) EITI, ‘Central African Republic “suspended” following coup d’état’ (12 April 2013) <http://eiti.org/news/central-african-republic-suspended-following-coup-d-etat>; EITI, ‘Minutes of the 22nd EITI Board Meeting’ (12 April 2013) 8; EITI, ‘Minutes of the 18th EITI Board Meeting’ (2 December 2011) 7.

(213) Letter from Dr Peter Eigen, Chairman, EITI to HE Teodoro Obiang, President of the Republic of Equatorial Guinea (29 April 2010) <http://eiti.org/files/2010_04_29_letter_he_ president_obiang_equatorial_guinea.pdf>; EITI, ‘Minutes of the 22nd EITI Board Meeting’ (12 April 2013) Annex A.

(214) EITI, ‘Minutes of the 12th EITI Board Meeting’ (26 May 2010) 6; Letter from Dr Peter Eigen to HE President Fradique de Menezes, Democratic Republic of São Tomé e Príncipe (29 April 2010) <http://eiti.org/files/2010_04_29_letter_he_president_menezes_sao_tome_e_principe.pdf>.

(215) EITI Candidature Application Form: São Tomé and Príncipe (4 May 2012) 5; EITI, ‘Minutes of the 21st EITI Board Meeting’ (21 November 2012) 20.

(216) The first index covers States in which the extractive industries sector rose to macroeconomic significance during the period from 2001 to 2010. International Monetary Fund, ‘Fiscal Regimes for Extractive Industries: Design and Implementation’ (15 August 2012) Appendix Table 8, Countries in Sample (listing fifty-seven States where the extractive industry sector rises to macroeconomic significance). The second index covers States that were economically dependent on natural resources during the period from 2006 to 2010. Thomas Baunsgaard, Mauricio Villafuerte, Marcos Poplawski-Ribeiro, and Christine Richmond, ‘Fiscal Frameworks for Resource Rich Developing Countries’, IMF Staff Discussion Note, SDN/12/04 (16 May 2012) (listing resource-dependent States). A third set of indices covers low income or lower middle income States that were prospective natural resource exporters as of 2010, or had natural resource revenues or exports that were at least 20 per cent of total fiscal revenue and exports on average during the period from 2006 to 2010. International Monetary Fund, ‘Macroeconomic Policy Frameworks for Resource-Rich Developing Countries’ (24 August 2012) Appendix 1, Tables 1–2. A final set of indices covers resource-rich upper middle income and upper income States during the period from 2006 to 2010. ibid Tables 2, 3.

(217) Afghanistan, Albania, Algeria, Angola, Australia, Azerbaijan, Bahrain, Bolivia, Botswana, Brazil, Brunei, Canada, Cameroon, Central African Republic, Chad, Chile, Colombia, Democratic Republic of Congo, Republic of Congo, Côte d’Ivoire, Ecuador, Equatorial Guinea, Gabon, Ghana, Guatemala, Guinea, Guyana, Indonesia, Iran, Iraq, Kazakhstan, Kuwait, Kyrgyz Republic, Lao PDR, Lesotho, Liberia, Libya, Madagascar, Malaysia, Mali, Mauritania, Mexico, Mongolia, Mozambique, Myanmar, Namibia, Niger, Nigeria, Norway, Oman, Papua New Guinea, Peru, Philippines, Qatar, Russia, São Tomé and Príncipe, Saudi Arabia, Sierra Leone, Sudan, Suriname, Syria, Tanzania, Timor-Leste, Togo, Trinidad and Tobago, Turkmenistan, Uganda, United Arab Emirates, United Kingdom, Uzbekistan, Venezuela, Vietnam, Yemen, and Zambia.

(218) Algeria, Angola, Bahrain, Bolivia, Botswana, Brazil, Brunei, Canada, Chile, Ecuador, Equatorial Guinea, Gabon, Iran, Kuwait, Lao PDR, Lesotho, Libya, Malaysia, Mexico, Namibia, Oman, Qatar, Russia, Saudi Arabia, Sudan, Suriname, Syria, Turkmenistan, Uganda, United Arab Emirates, Uzbekistan, Venezuela, and Vietnam.

(219) EITI, ‘Secretariat Workplan 2009’ (7 November 2008).

(220) These 11 resource-scarce States are: Burkina Faso, Ethiopia, France, Germany, Honduras, Senegal, Seychelles, Solomon Islands, Tajikistan, Ukraine, and, technically speaking, the United States.

(221) O’Sullivan (n 72) 38.

(222) EITI, ‘Minutes of the 10th EITI Board Meeting’ (October 2009) 6; EITI, ‘Minutes of the 11th EITI Board Meeting’ (18 March 2010) 8; Candidature Assessment of Ethiopia (4 February 2014) <https://eiti.org/files/Candidature%20assessment%20of%20Ethiopia_20140204.pdf> 3–5; Freedom House, ‘Ethiopia’s EITI Process Needs Larger Role for Civil Society’ (14 February 2014) <http://freedomhouse.org/article/ethiopia-eiti-process-needs-larger-role-civil- society#.U-kIFCj8ReI>; Publish What You Pay, ‘Statement from Civil Society Constituency on Ethiopia’s Admission to EITI’ (27 March 2014) <http://www.publishwhatyoupay.org/resources/statement-civil-society-constituency-ethiopias-admission-eiti>. See also Paul Vrieze, ‘Burma Accepted for EITI Scheme, But NGOs Remain Concerned’ The Irrawaddy (3 July 2014) <http://www.irrawaddy.org/business/burma-accepted-eiti-scheme-ngos-remain-concerned.html>.

(223) EITI Standard, Requirement 1.3(d).

(224) European Parliament and Council Directive 2013/50/EU of 22 October 2013 amending Directive 2004/109/EC of the European Parliament and of the Council on the harmonization of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market, Directive 2003/71/EC of the European Parliament and of the Council on the prospectus to be published when securities are offered to the public or admitted to trading and Commission Directive 2007/14/EC laying down detailed rules for the implementation of certain provisions of Directive 2004/109/EC; European Parliament and Council Directive 2013/34/EU of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660EEC and 83/349/EEC.

(225) Directive 2013/34/EU art 53(1).

(226) ibid art 42(1).

(227) ibid para 45.

(228) Publish What You Pay, ‘Fact Sheet—EU rules for disclosure of payments to governments by oil, gas and mining (extractive industry) and logging companies’ (July 2013).

(229) Directive 2013/34/EU arts 43(2), 41(5).

(230) EITI Standard, Requirement 4.1(b).

(231) Directive 2013/34/EU art 43(2)(c).

(232) ibid art 43(1).

(233) EITI Standard, Validation Guide 3.2.4.

(234) ibid Requirement 5.2.e.

(235) 15 USC 78m(q).

(236) 15 USC 78m(q)(2). Publish What You Pay United States, ‘Legislative History: Cardin-Lugar Amendment or Section 1504 of the Dodd-Frank Financial Reform and Consumer Protection Act’ <http://www.publishwhatyoupay.org/about/stock-listings/cardin-lugar-amendment-dodd- frank-1504>.

(237) 15 USC 78m(q)(1)(C)(ii).

(238) 17 CFR Parts 240 and 249.

(239) American Petroleum Institute v SEC, 2013 WL 3307114 (DDC).

(240) EITI Standard, EITI Articles of Association art 2(2).

(241) Emphasis added.

(242) EITI Standard, EITI Principles 1, 7.

(243) EITI, ‘Talking Transparency: A Guide for Communicating the Extractive Industries Transparency Initiative’ (2008) 13–14

(244) Edward Bickham, ‘The Business Case for EITI’ in ‘EITI, Advancing the EITI in the Mining Sector: A Consultation with Stakeholders’ (2009) 7

(245) ibid 120

(246) EITI, ‘Report of the International Advisory Group’ (2006) 5

(247) ibid 25

(248) Scanteam, ‘Achievements and Strategic Options: Evaluation of the Extractive Industries Transparency Initiative, Final Report’ (2011) 36

(249) ibid 83

(250) ibid 49

(251) ibid 3

(252) EITI, ‘Minutes of the 20th EITI Board Meeting’ (30 July 2012) 4; EITI Strategy Working Group (SWG) Meeting, ‘Report from Working Group on Theory of Change’ (April 2012).

(253) Dávid-Barrett and Okamura (n 197) 24.

(254) ibid. See also Alexandra Gillies and Page Dykstra, ‘International Campaigns for Extractive Industry Transparency in Post-Conflict Settings’ in Christine S Cheng and Dominik Zaum (eds), Corruption and Post-Conflict Peacebuilding: Selling the Peace? (Routledge 2012) 250.

(255) World Bank, ‘Results Framework’ <http://go.worldbank.org/89PBOBCC30>

(256) EITI, ‘Nigeria EITI: Making Transparency Count, Uncovering Billions, Case Study’ (20 January 2012); EITI, ‘EITI Case Study: Addressing the Roots of Liberia’s Conflict Through EITI’ <https://eiti.org/files/EITI%20Case%20Study%20-%20Liberia.pdf>.

(257) ‘EITI Case Study: Addressing the Roots of Liberia’s Conflict Through EITI’ (n 256) 2.

(258) Gillies and Dykstra (n 254).

(259) Fitch Ratings, ‘Fitch Upgrades Azerbaijan to Investment Grade; IDRs to BBB-’ 20 May 2010 (press release on file with author); Fitch Ratings, ‘Definitions of Ratings and Other Forms of Opinion’ (2014) 29.

(260) Fitch Ratings, ‘Fitch Upgrades Azerbaijan to Investment Grade; IDRs to BBB-’ (20 May 2010); Fitch Ratings, ‘Definitions of Ratings and Other Forms of Opinion’ (2014) 35.

(261) EITI, ‘International Credit Rating Agency Upgrades Azerbaijan to Investment Grade’ <http://eiti.org/news-events/international-credit-rating-agency-upgrades-azerbaijan-investment-grade>