Prime Minister Stephen Harper announced on June 12, 2013 that Canada has committed to adopting a G8 initiative establishing a mandatory foreign-payment disclosure regime for the resources industry. This mandate will require Canadian extractive companies to publicaly disclose any payments made to foreign governments in exchange for a benefit, such as a contract or permission to operate in that country.
Canada is following the lead of several other countries, such as the United States, those in the European Union and Hong Kong which already require the extractive industry to report taxes, royalties and other fees paid to foreign governments. The U.S. reporting rules were adopted in 2012 by the U.S. Securities and Exchange Commission under the Dodd-Frank Wall Street Reform and Consumer Protection Act, however the E.U.'s directive has yet to be fully implemented.
Further, The Extractive Industries Transparency Initiative already has a disclosure framework where currently 23 countries voluntarily disclose payments to governments, and governments disclose the money they receive. The figures are then audited independently to detect any discrepancies.
The details of the new Canadian regime, including how mandatory reporting would be enforced, what penalties would attach for non-compliance and whether the provincial securities regulators would be involved, have yet to be determined. Over the next two years, the federal government intends to work with the provinces, industry, aboriginal groups and civil society organizations to develop the reporting framework.
The Canadian government has also stated that it is aware of the industry concern that inconsistencies and complexities may arise as between countries which adopt this initiative, potentially creating voluminous reporting and contradictions. This concern creates a push for a global standard that levels inconsistencies between countries and avoids burdening companies with too much extra paperwork.
The Canadian extractive industry is a major global player accounting for sixty percent of the world's mining and exploration companies with thirty-five percent of all oil and gas companies being listed on Canadian stock exchanges. This new mandatory reporting regime is the Government of Canada's next step in supporting the global effort to fight corruption and address accountability.