Can the SEC Cut Down on Foreign Corruption?

Resource-rich developing countries have long struggled to overcome the “resource curse,” which includes a strong streak of corruption, but now they’re getting a little help from the SEC.  Here‘s Jeff Colgan of Foreign Policy:

[T]he SEC finally enacted long-overdue regulations requiring any oil company that is publicly listed on a U.S. stock exchange to report the tax, royalty, and other payments it shells out to foreign governments where it operates. Previously, companies were able to conceal this information, enabling a culture of corrupt payoffs that kept the petrodollars flowing into authoritarian leaders’ coffers — even where it directly contravened U.S. interests.

Colgan argues that in addition to helping developing countries, the regulation will reduce violence, which is good news for the U.S. as well.  “Research shows that oil-producing states led by revolutionary governments like that of ousted Libyan leader Muammar al-Qaddafi are more than three times as likely to instigate militarized international conflicts as a typical state,” he writes.


frankenduf

i dont understand the logic here- economic imperialism serves us interests unless there are kickbacks involved?- it's actually more likely that the us would prefer a strong, corrupt govt to do business with- this is precisely why saddam was left in power after gulf I- colgan may not realize the other historical option is for a State to nationalize its oil industry, which is a much worse option for the imperialist than a corrupted exchange- so when Nasser nationalized the Egyptian oil industry, he was overthrown by force

James

I'm sure I don't see the logic either, but for quite a different reason. Revolutionary governments like Qaddafi's may well instigate more conflicts (indeed, isn't that pretty well inherent in the definition of revolutionary?), but I'm not so sure that they are in fact corrupt by any unbiased standard.

Much the same applies to Saddam's Iraq, where the problem seems to have been a lack of corruption. Instead of oil revenues being spent largely on the high living of corrupt officials, they went to fund the state's armaments & military adventurism.

Don

I have a tough time with this. Our central government keeps getting bigger and more expensive, yet time and time again they let us down. They seem to always be closing the barn door once all the horses are out. I think of Bernie Madoff and the SEC being tipped off something like 6 times, yet they were too busy watching internet porn on taxpayer supplied computers to do their job. Then Mary Schaperio gets hauled in front of Congress, instead of contrition and a resignation we get a smart-assed complaint that she needs more money and better training.

I getting tired of hearing that, if our federal government was only a little bit bigger, why they could heal the sick and raise the dead. What I think we really need is a 4th branch of goverment who's sole purpose is to do cost analysis and can fire agencies who let us down. They should also have the power to handicap votes for incumbents who can't ballance the federal checkbook. It's a simple fact of life that a big federal deficit is a vote buying scheme paid for by those in the future who are too young at present to vote the bums out.

Regardless of who was in office and when, the Great Recession is living proof that federal agencies on many different levels were asleep at the wheel and let us down when we needed them the most. HUD, the FED, FDIC, OHFEO, bank regulators, and a whole alphabet soup of other agencies need to be critically reviewed and held accountable for their omissions.

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Michael Peters

Ah yes, the good old "the referees blew the call so let's not have any refs" argument. It wouldn't work in football and it won't work in financial markets either.

Mark

This is a provision of Dodd-Frank passed in 2010 and the final rule released in 2012:
http://www.sec.gov/news/press/2012/2012-164.htm
It would be interesting to see if mining and oil companies comply with the rule or seek to circumvent it. If bribes paid to foreign government officials become visible to all, does it change the behavior or will it increase the business of discrete offshore banks ?

Eric M. Jones.

What?! Report bribes and payoffs to thugs and corrupt dictators? Next you'll be saying Wall St. should shoulder some responsibility for the recent economic collapse....

Get real; That train has left the station. Beans and bullets, THAT'S what the smart money is in.

SAO

Transparency is always good, so I'm not arguing against more reporting. However, with long experience in the developing world, I don't see a difference between the resource rich ones and the resource poor ones. All tend towards corruption.

Why? Because in the absence of a social safety network, whether public or, through insurance, private, that safety network is created by informal transactions. People belong to patronage networks where they provide favors or support leaders/warlords/insurance-agents in return for an expectation of help if they need it. This means helping your crony is a virtue and expected, not a vice. Leaders get to power by making sure they provide for supporters.

It happens to be a bigger problem in resource-poor countries as there are fewer resources to go around.
But then, those unimportant countries tend to get ignored until some big crisis shows up.

Ken

For FAQ: the Steven Levitt-Daniel Pink Smackdown.

Daniel Pink's book, "Drive", claims that to boost productivity for creative fields, and even for most fields, employers should let their intrinsic motivation drive them rather than incentivize them with extrinsic rewards (at least after they already receive a fair compensation). Steven Levitt always interprets economic behavior based on their incentives. It would be great to hear an intelligent debate on this which examines the merits and limits of each perspective. Or at least, does Levitt concede any limits where individual behavior is not the consequence of incentives?

Jerome Solanum

WE ARE AMERICA AND WE WILL DECIDE WHAT IS BEST FOR EVERYONE ELSE!

Did I sum that up about right?