Commentary: More reform for oil industry needed

NEW YORK (CNNMoney) -- Raymond Baker and Corinna Gilfillan are members of the Task Force on Financial Integrity and Economic Development, an organization of NGOs, governments and economists working to create greater transparency in the global financial system for the benefit of the world's poor.

The two year anniversary of the passing of the Dodd-Frank Wall Street Reform and Consumer Protection Act has just passed. While it was meant to bring an end to the era of "too big to fail" banks, it might also be able to also help the lives of the poor in resource-rich countries around the world.

The 849 page law also includes a six-and-a-half page provision that applies to companies -- both international and American -- engaging in the commercial development of oil and gas.

Known as Section 1504 or the "Cardin-Lugar" amendment, it requires energy firms to report to the Securities and Exchange Commission the payments they make to governments in the countries where they operate.

With this information, ordinary citizens, NGOs, and journalists in developing countries will be able to see how much money from natural resources is going into the coffers of governments around the world.

This would help reduce the possibility for corruption by creating transparency. It would also provide information upon which to base requests for funds for projects such as schools, roads, and hospitals.

As Senators Benjamin Cardin and Richard Lugar stated in a recent letter to the SEC, their amendment "will empower citizens to hold their governments to account for the decisions made by their governments in the management of valuable oil, gas and mineral resources and revenues".

Taken a step further, the amendment's supporters believe it could create greater price stability for these crucial resources by providing more information about global commodities markets.

This could benefit Americans by laying the foundation for greater stability in the countries that supply these resources, which may lead to a fairer distribution of wealth and less social unrest.

In early July, well over a year after it was legally required, the SEC finally announced that it would release implementation regulations for 1504 on August 22.

The public record on this rule includes substantive comments from close to 60 members of Congress, the Department of Interior, numerous investors and civil society representatives from around the world.

Unfortunately, the amendment still risks being gutted due to behind-the-scenes lobbying by some oil industry executives who claim it would hurt the competitiveness of American and European companies in international markets.

The American Petroleum Institute, whose members include Shell (RDSA), Chevron (CVX, Fortune 500), Exxon (XOM, Fortune 500) and BP (BP), has made a lawsuit threat against the SEC in a letter sent to the agency in January.

But nine of the ten world's largest mining companies and a great majority of the world's largest multinational oil companies are also expected to be covered by the amendment.

What's more, the European Union is currently working on similar disclosure legislation. It would cover public oil firms, mining firms and logging companies listed on European exchanges as well as large private firms registered in Europe.

Some opponents of the amendment are also asking the SEC to exclude countries where disclosure of information regarding payments is prohibited.

These critics have pointed to four countries -- Qatar, Cameroon, Angola and China -- that they think would not allow such disclosures. But no evidence has been provided to the SEC of specific prohibitions in any of these countries.

It would be a tragedy if the SEC were to succumb to industry pressure on this essential point.

As activist and Nobel Peace Prize winner Aung San Suu Kyi recently explained about her own country Burma (officially known as Myanmar), financial transparency "is very important for the future of Burma because we've got to start right where investment is concerned. And without financial transparency we will never know who is going to be benefiting from the new opportunities."

The SEC should show global leadership by implementing strong regulations regarding the disclosure of payments by energy and mining companies to governments, in order to provide poorer countries with much-needed tools for financial oversight and reform.