The swipe at fiscally agile multinationals which gives this post its title comes from Richard Murphy at a recent event held in Brussels for NGOs, MEPs and other stakeholders to discuss the draft transparency directive issued by the European Commission. The new directive picks up the political momentum created by the US Dodd-Franks legislation passed more »
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It's always been a mystery to me why cost recovery, the process by which oil companies claim back billions of dollars in expenses from the governments of countries where they operate, is not formally part of EITI requirements. If EITI is supposed to capture all 'material' revenue flows between the companies and governments, why would it include a signature bonus of $50 million paid by a company to a government, and ignore cost recovery of $500 million allocated back to the company by the same government? And when you run the numbers, it becomes clear that two major trends in the oil industry in the past 20 years have significantly increased, not decreased, the importance of cost recovery in understanding the financial relationship between IOCs and governments around the world.