LONDON Britain announced that energy and mining firms would have to disclose from next year any payments made to governments in countries where they operate as it aims to curb corruption in the natural resources sector.
UK-registered companies will have up to 11 months after the end of their financial year to report payments to Companies House under the new rule, which will take effect from Jan. 1 2015.
"The UK is determined to lead by example, which is why we have introduced reporting requirements on UK-based extractives companies early," Business Minister Jo Swinson said in a statement.
"Oil, gas and mining can, if well managed, deliver precious economic benefits to the populations of developing countries. Too often, though, the assets from resource-rich countries are not benefiting local people or the local economy."
The announcement on Friday follows a period of consultation with industry and the public on the proposal.
“While these reforms may be a step in the right direction to eradicate corruption, tax evasion and reduce extreme poverty in emerging markets, a disclosure regime is not of itself a cure," Rachel Speight, a partner at law firm Mayer Brown, wrote in an email to Reuters.
"The changes may also negatively impact upon the commercial prospects for companies, with significant increased compliance costs and disclosure of sensitive information in circumstances where not all companies operating in the extractive industry are subject to the same regulations.”
In the consultation, oil and mining majors including BHP Billiton, Chevron and ExxonMobil expressed concerns about the potential costs of implementing such measures.
Some of them said that a British move ahead of other countries could hit companies as well as the attractiveness of Britain as a place to list shares and establish operations.
BP estimated costs of about $6.5 million to deliver the first filing and $2.5 million a year thereafter, mainly related to setting up a team to interpret the legislation, develop relevant processes and implement them in the various locations where the company operates.
The Association of British Independent Oil Exploration Companies (BRINDEX) said the requirements might affect its smaller members disproportionately, since their systems may not be as sophisticated as the large companies.
"There appear to be very few benefits to our members of publishing the new extractive report, but instead it is imposing another administrative and unnecessary burden on our sector at a time of other similar transparency initiatives," it said.
(Additional reporting by Karolin Schaps; editing by Jason Neely and Jane Baird)
Our top photos from the last 24 hours.