Legislation aiming to improve the transparency and traceability of funds paid by mining companies to local governments is already in force in the United States and the European Union, but Canada lagging behind in adopting similar legislation.
A group of U.S. investors, managing $5.8 trillion worth of assets, has stepped in and is lobbying the Canadian government to improve transparency, which will deter corrupt government officials and leaders from pocketing funds from mining companies.
The group recently sent a letter to Natural Resources Canada, calling for the introduction of standards that will require mining companies to disclose how much they are paying to governments. The group wants any Canadian legislation to mirror the current legislation in the U.S. and the EU. It also calls for adopting of a disclosure threshold of $100,000, Mining.com reported.
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Similar recommendations have already been presented to the Canadian government by local industry groups and organizations. Several months ago, a coalition of Canadian mining industry representatives and civil society organizations, called for the implementation of rules that will make governments more accountable and will enable investors to better choose where to invest their money.
Canada's prime minister Stephen Harper recently announced that the country will be making a move to adopt a legislation that will require mining companies to reveal how much they are paying various governments for extracting resources, but no time framework has been identified so far, a statement which has not satisfied the consortium of the U.S. investors pressing for the changes.
The group claims in the letter that transparency legislation will help to prevent "forum-shopping by issuers that might otherwise be tempted to seek out less rigorous disclosure regimes," adding that the lack of such legislation can "harm well-governed companies as well as investors through higher risk."