Subject: Disclosure of payments to governments (File Number ; Release number )

Transcription

1 2 ~ Ri Tint pic 2 Estburne Terrce Lndn W2 6LG United Kingdm T +44 (0) F +44 (0) Elizbeth M. Murphy, Secretry, U.S. Securities nd Exchnge Cmmissin, 100 F Street, NE, Wshingtn, D.C e-mil: rule-cmments@sec.gv Subject: Disclsure f pyments t gvernments (File Number ; Relese number ) Mrch 2, 2011 Der Ms Murphy, We welcme the pprtunity t cmment n the Cmmissin's prpsed rules, pursunt t Sectin 1504 f the Ddd-Frnk Wll Street Refrm nd Cnsumer Prtectin Act (the "Ddd Frnk Act"), relting t disclsure f pyments by resurce extrctin issuers. Ri Tint is dul listed cmpny, cmprised f Ri Tint pic, Lndn listed public cmpny hedqurtered in the UK, nd Ri Tint Limited, which is listed n the Austrlin Stck Exchnge, with executive ffices in Melburne, Austrli (cllectively, with its relevnt subsidiries nd sscited cmpnies, "Ri Tint"). Ri Tint is leding interntinl mining grup nd is freign privte issuer ("FPI") in the United Sttes, with respect t securities listed n the New Yrk Stck Exchnge. Ri Tint's mjr extrctive prducts include luminium, cpper, dimnds, energy prducts, gld, industril minerls (brtes, titnium dixide, slt nd tlc), nd irn re. Ri Tint's wrld-wide ctivities include significnt ctivities nd pertins in the United Sttes. As freign privte issuer, Ri Tint uses the frms nd rules designted fr freign privte issuers when reprting t the Cmmissin. We supprt the cmmitment f the U.S. Federl Gvernment t interntinl trnsprency prmtin effrts relting t the cmmercil develpment f il, nturl gs, r minerls. We hve, hwever, sme cncerns relting t the Cmmissin's prpsed rules. Ri Tint des nt hve ny il nd gs ctivities, nd therefre, we re respnding slely in ur cpcity s mining cmpny. We prticipte in the Ntinl Mining Asscitin ("NMA") nd hve cntributed t the NMA's seprte respnse. We wish t further supplement the NMA's respnse, with certin dditinl respnses, which re set ut in Appendix 1, nd summrised belw. T fcilitte the Cmmissin's review, we hve included, in the ppendix, the cptins nd numbered questins frm the Stff's prpsed rules in bld, itlicised text, nd hve prvided ur respnses immeditely fllwing ech numbered questin. Extrctive Industries Trnsprency Inititive (ItE/Tn Since its lunch in 2002, Ri Tint hs expressly supprted the EITI, which ims t strengthen gvernnce by imprving trnsprency nd ccuntbility in the extrctive Ri Tint pic. Registered ffice 2 Estburne Terrce, Lndn, W2 6LG, United Kingdm. Registered in Englnd N

2 sectr. Our business units supprt nd prmte the EITI, nd its implementtin, in thse cuntries where we hve prjects r revenue generting mining pertins. We fully supprt the EITl's trnsprency nd ccuntbility principles, which re similr t certin spects f the prpsed rules put frwrd by the Cmmissin. Becuse the EITI ls encmpsses disclsure by gvernments, f pyments they receive frm cmpnies, we believe it is mre effective thn the prpsed rules t imprving gvernnce nd eliminting crruptin in bth the privte nd public sectrs. Therefre, we urge the Cmmissin t fllw the EITI principles t the fullest extent pssible. Exemptin fr Freign Privte Issuers ("FPls'') We respectfully request tht the Cmmissin cnsiders minimising ny ptentil differences r discrepncies tht my rise between the prpsed disclsures nd the ther inititives / regultins tht re currently being develped. The Interntinl Accunting Stndrds Brd ("IASB") is currently cnsidering similr disclsures n pyments t gvernments s prt f its prpsed new stndrd fr the Extrctive Industry. The Eurpen Unin (lieu") is cnsidering its wn set f disclsure requirements relting t pyments t gvernments. Requiring freign privte issuers t cmply with the Ddd Frnk Act requirements wuld intrduce nther set f ptentilly cnflicting disclsures int the nnul reprts f thse cmpnies, which culd led t FPls hving t issue different versins f their nnul reprts, with different disclsures in their nnul reprt nd Frm 20-F (e.g. the current prctice f disclsing re reserves under JORC fr the IFRS nnul reprt, with the sme dt then hving t be mdified under Industry Guide 7 fr the 20-F). This culd led t cnsiderble cnfusin mngst investrs, nd we believe it wuld be n unwrrnted burden fr business. Definitin f "prject" We recmmend defining "prject" s reprting unit, similr t the definitin used fr segmentl reprting under IFRS. Cmpnies cn then chse t prvide disclsures t lwer level, if they hve the dditinl cpcity t d s. We d nt believe tht the term "prject" shuld, s the Cmmissin suggested in the prpsing relese, be defined t be " prject s tht terms is used by resurce extrctin issuer in the rdinry curse f business", becuse the term prject cn hve mny different menings t different levels within grup, nd in different prts f the grup. This definitin might require n issuer t identify / rellcte / ssign pyments rbitrrily t higher level f grnulrity thn tht t which it mnges its pyments t gvernments, which is typiclly t the cuntry level. Definitin f "de minimis" We gree with the NMA's prpsl, tht the term "nt de minimis" shuld nt be defined within the prpsed rules. Insted, cmpnies shuld be llwed t frm their wn interprettin f "de minimis", s lng s the methdlgy is disclsed. If the Cmmissin decides t define the term "de minimis", we recmmend percentge threshld fr the quntittive ssessment, t be determined nd disclsed by ech issuer, bsed n n ssessment f its wn specific risks, SUbject t n pprprite minimum threshld. This quntittive ssessment shuld be supplemented with qulittive ssessment, cnsistent with the principles cntined in the Cmmissin's guidnce in Stff Accunting Bulletin 99 ("SAB 99"). Cmpetitive disdvntge ApprOXimtely 60% f the lrgest cmpnies within the Extrctive industry, bsed n the Frbes Glbl 2000 (tp 2,000 publicly listed cmpnies glblly), re U.S. listed cmpnies (including FPls) (plese refer t ur respnse t Sectin H: Generl request 2

3 ~ d fr cmments, in Appendix 1). A sizeble prprtin f the Extrctive industry will, therefre, be unffected by the prpsed disclsures, nd cmpnies tht list in the U.S. re, by cntrst, cmpetitively disdvntged. We re, hwever, cmmitted t trnsprency, nd we urge the Cmmissin nd the U.S. gvernment t wrk with ther regultrs nd gvernments rund the wrld t issue regultins tht re cnsistent with the EITI principles, t ensure tht pprprite disclsures re mde crss ll cmpnies, nd tht investrs hve ccess t cnsistent types nd levels f infrmtin. This will help t ensure tht investrs re ble t bse their investment mking decisins n the sme type nd level f infrmtin. If nn U.S. listed issuers re ble t prvide limited r n disclsures, cmpred t U.S.-listed issuers, investrs my end up mking investment decisins bsed n incmplete infrmtin (which we believe is nt the intent f the prpsed disclsure requirements). As result, the prpsed rules my fil t chieve their disclsure nd trnsprency gls. Avilbility finfrmtin Fr the prpsed disclsures, we expect t cllect infrmtin frm ver 100 individul pertins in ver 40 cuntries (which pertins themselves hve t cnslidte dt frm individul sites), deling with different ccunting systems, multiple chrts f ccunts, freign currencies, different finncil sttement lyuts, etc. Dt hs t be extrcted frm the underlying ledgers, frmtted int the required lyut, nd then uplded nt centrl system by lcl mngement. The dt is then reviewed nd nlysed centrlly by hed ffice, nd ny queries wuld hve t be reslved with lcl mngement, befre the dt is then cnslidted nd prepred fr publictin (ssuming n udit is required). This tkes time, nd the infrmtin is nt "redily vilble t the push f buttn", cntrry t wht sme prties my think (see Appendix 1 fr further detils). Burden nlysis (time nd csts) We respectfully disgree with the Cmmissin's estimte, tht it will tke FPls 75 hurs t prepre the prpsed disclsures, with the cst f utside prfessinls t US$22,500 (75% f the burden t n verge cst f US$400 per hur). As described in ur respnse t the generl request fr cmment in Sectin H (see Appendix 1), ur internl estimtes fr the prpsed disclsures re 40 t 80 hurs fr ech f ur business units nd the centrl functins relevnt t the disclsures, t ttl cst f US$2 millin t US$4 millin per nnum (ssuming n udit is nt required). Plese let us knw if yu hve ny queries. We wuld be plesed t discuss ur respnses with yu. Yurs fithfully, Ben Mthews Cmpny Secretry Ri Tint pic 3

4 ~ Appendix 1: Detiled respnses t certin questins in the Prpsed Rules B Definitin f "Resurce Extrctin Issuer" 2. Wuld ur prpsed rules present undue csts t smller reprting cmpnies? Ifs, hw culd we mitigte thse csts? Als, if ur prpsed rules present undue csts t smller reprting cmpnies, d the benefits f mking their resurce extrctin pyment infrmtin publicly vilble justify these csts? Shuld ur rules prvide mre limited disclsure nd reprting bligtins fr smller reprting cmpnies? If s, wht shuld these limited requirements entil? Shuld ur rules prvide fr delyed implementtin dte fr smller reprting cmpnies in rder t prvide them dditinl time t prepre fr the requirement nd the benefit fbserving hw lrger cmpnies cmply? We believe tht ll issuers, regrdless f size, shuld be required t cmply with the sme disclsure requirements, t ensure tht pprprite disclsures re mde crss ll cmpnies, nd tht investrs hve ccess t cnsistent types nd levels f infrmtin. This will help t ensure tht investrs re ble t bse their investmentmking decisins n the sme type nd level f infrmtin. If smller issuers re ble t prvide limited disclsures, cmpred t lrger issuers, investrs my end up mking investment decisins bsed n incmplete infrmtin (which we believe is nt the intent f the prpsed disclsure requirements). As result, the prpsed rules my fil t chieve their disclsure nd trnsprency gls. 3. Shuld the Cmmissin prvide n exemptin t llw freign privte issuers t fllw their hme cuntry rules nd disclse in their Frm 20-F the required hme cuntry disclsure? We believe freign privte issuers ("FPls") shuld be given the ptin t prvide such disclsures in the mnner tht their hme cuntry requires, if their hme cuntry hs legl requirement fr similr disclsures f pyments t gvernments. This wuld be similr t the ptin prvided t FPls, t disclse their finncil sttements under IFRS in the Frm 20-F, insted f US GAAP. If there re n lcl equivlents, then the exemptin fr FPls need nt pply. The Interntinl Accunting Stndrds Brd (IASB) is lredy cnsidering similr disclsures s prt f its prpsed new stndrd fr the Extrctive Industry, nd the Eurpen Unin (EU) is cnsidering its wn set f disclsure requirements. Requiring FPls t cmply with the Ddd Frnk Act requirements wuld intrduce nther set f ptentilly cnflicting disclsures fr stkehlders t cnsider. This culd led t FPls hving t prepre similr tbles, with tw (r mre) sets f disclsures, tht culd be similr, but with ptentilly different bses. This ptentilly cuses cnfusin mngst investrs, nd wuld be n unwrrnted burden f time nd expense fr businesses. An unfrtunte exmple f such cnfusin, cmplexity nd burden is the definitins fr re reserves. Ore reserves re currently disclsed under the Jint Ore Reserves Cmmittee ("JORC") definitins fr IFRS nnul reprts, but the sme dt hs t be mdified nd reclculted under Industry Guide 7 fr the Frm 20-F filings. This cn smetimes result in different quntities nd vlues f reserves being disclsed, fr the sme issuer, relting t the sme reprting perid, n utcme tht shuld be vided. 4. Shuld the rules pply t issuers tht re wned r cntrlled by gvernments, s prpsed? If s, why? If nt, why nt? Shuld the disclsure requirements be vried fr such entities? 4

5 We believe the prpsed disclsure requirements shuld pply t issuers tht re either wned r cntrlled by gvernments, t ensure tht the pprprite disclsures re mde crss ll cmpnies, nd tht investrs hve ccess t cnsistent levels f infrmtin. This will help t ensure tht investrs re ble t bse their investment mking decisins n the sme type nd level f infrmtin. 5. Generl Instructins I nd J t Frm 10-K cntin specil prvisins fr the missin f certin infrmtin by whlly-wned subsidiries nd sset-bcked issuers. Shuld either r bth f these types f registrnts be permitted t mit the prpsed resurce extrctin pyment disclsure in the nnul reprts n Frm 10-K? As freign privte issuer, we d nt file reprts n Frm 10-K. We believe, hwever, tht the disclsures shuld relte t the cnslidted grup s whle, nd nt t individul entities. Whlly-wned subsidiries shuld nt be required t prvide seprte disclsures, s lrge multintinl crprtins cn hve thusnds f individul entities, nd t require disclsures by individul entities culd be unnecessrily nerus nd ptentilly cnfusing/misleding fr stkehlders. C Definitin f "Cmmercil Develpment f Oil, Nturl Gs, r Minerls" 9. As nted, we d nt believe the prpsed definitin f "cmmercil develpment f il nturl gs, r minerls" wuld include trnsprttin t the extent tht the il, nturl gs, r minerls re trnsprted fr purpses ther thn exprt, nd we nte tht pyments relted t trnsprttin ctivities generlly re nt included in EITI prgrms.51 Shuld the definitin include trnsprttin f il, nturl gs, r minerlsr 2 Shuld cmpressin f nturl gs be treted s prcessing, nd therefre subject t the prpsed rules, r trnsprttin, nd therefre nt subject t the prpsed rules? We believe tht issuers shuld be llwed t chse whether r nt t include trnsprttin in their definitin f cmmercil develpment f il, nturl gs r minerls, s lng s they disclse the bsis fr their definitin. 02 The "Nt De Minimis" Requirement 27. Shuld we define "nt de minimis" fr purpses f the prpsed rules? Why r why nt?72 Wht wuld be the dvntges r disdvntges f nt defining tht term? If the finl rules d nt prvide definitin, shuld n issuer be required t disclse the bsis nd methdlgy it used in ssessing whether pyment munt ws "nt de minimis?" We gree with the NMA's prpsl, tht the term "nt de minimis" shuld nt be defined within the prpsed rules. Insted, cmpnies shuld be llwed t frm their wn interprettin f "de minimis", nd if they chse t define "de minimis" s "nt mteril", they shuld be llwed t pply the Cmmissin's existing guidnce n mterility (Stff Accunting Bulletin 99 ("SAB 99")). If cmpnies chse t define "de minimis" t lwer level, then they shuld ls be llwed t d s, s lng s the methdlgy is disclsed. Plese refer t ur respnse t Questin 33 fr further cmments n this mtter. 5

6 ~ d 33. If percentge threshld shuld be used t define "nt de minimis," shuld the percentge be 1%, 2%, 3%, 4%, 5%, r higher percentge? Shuld the definitin use percentge lwer thn 1%, such s 0.1%, 0.2%, 0.3%, 0.4%, r 0.5%? If the Cmmissin decides t define the term "de minimis", we recmmend percentge threshld fr the quntittive ssessment, t be determined nd disclsed by the issuer, bsed n n ssessment f its wn specific risks - fr exmple, five per cent f the issuer's ttl pyments t gvernments fr the yer. This shuld be subject t n pprprite minimum threshld, ls t be determined nd disclsed by the issuer. The quntittive ssessment shuld be supplemented with qulittive ssessment, cnsistent with the principles cntined in the Cmmissin's guidnce in SAB 99. Plese refer t the NMA's respnse t Questin 32, fr n illustrtin f why we believe hving different threshlds fr different prjects r cuntries is nt pprprite, s it might led stkehlders t incrrectly ssume tht the disclsures hd been prepred t the sme level f precisin, ptentilly cusing cnfusin fr investrs. 03 The "Prject" Requirement 41. Shuld we define "prject" t men prject s tht term is used by resurce extrctin issuer in the rdinry curse f business? Wht re the dvntges nd disdvntges fsuch n pprch? If the finl rules were t use such n pprch, shuld n issuer be required t disclse the bsis nd methdlgy it used in defining wht cnstitutes prject? We d nt believe tht the term "prject" shuld, s the Cmmissin suggested in the prpsing relese, be defined t be " prject s tht term is used by resurce extrctin issuer in the rdinry curse f business", becuse the term prject cn hve mny different menings t different levels within grup, nd in different prts f the grup. This might require n issuer t identify / rellcte / ssign pyments rbitrrily t higher level f grnulrity thn tht t which it mnges its pyments t gvernments, which is typiclly t the cuntry level. Therefre, we recmmend defining "prject" s reprting unit, similr t the definitin used fr segmentl reprting under IFRS. Issuers cn then chse t prvide disclsures t lwer level, if they hve the dditinl cpcity t d s. 44. Shuld we permit issuers t tret pertins in cuntry s "prject?" Wuld ding s be cnsistent with the sttute~1 T the extent pyments tht relte t mre thn ne pertin re mde centrlly nd cnnt be llcted t individul pertins, we believe it is pprprite t ggregte thse centrl pyments nd tret them s centrl (r single) "prject" t the cuntry level. 04 Pyments by " Subsidiry...r n Entity under the Cntrl f the Resurce Extrctin Issuer" 51. Under the prpsed rules, resurce extrctin issuer wuld be required t prvide disclsure fr n entity if it is cnslidted in the finncil sttements f the resurce extrctin issuer presented under U.S. GAAP (r therjurisdictinl GAAP tht requires U.S. GAAP recncilitin) nd IFRS s issued by the lass 6

7 becuse entities meeting the cnslidtin requirement generlly ls meet the ~ definitin f cntrl. Are there circumstnces under U.S. GAAP nd IFRS tht = wuld render different cnslidtin results, such s prprtinte cnslidtin, tht we shuld cnsider? If s, plese describe the circumstnces nd indicte hw the different circumstnces shuld be ddressed in the new rules. We understnd tht entities nd pertins tht re prprtintely cnslidted re viewed s cnslidted entities r pertins f n extrctive issuer, while investments presented n the equity methd re nt viewed s cnslidted entities r pertins. Shuld ur rules specificlly include these cncepts? Fr instnce, shuld ur rules tret equity investees differently even if they re cntrlled by the resurce extrctin issuer? Shuld ur rules, s prpsed, include equity investees tht the issuer cntrls but des nt cnslidte? Under IFRS, entities under the full cntrl f the issuer re fully cnslidted, regrdless f the ecnmic wnership percentge. On the ther hnd, entities nt under the full cntrl f the issuer re nt fully cnslidted, even thugh the ecnmic wnership my exceed 50%. Such entities re either prprtinlly cnslidted Uintly cntrlled unincrprted ssets), r equity ccunted fr Uintly cntrlled entities, sscites). Defining cntrl by reference t n issuer's level f cntrl ver n sset r entity fr ccunting purpses culd result in the disclsures, relting t sscites nd jintly cntrlled entities, exceeding 100 per cent f the issuer's ctul pyments t the gvernment. Fr exmple, if n entity is 60 per cent, fully cnslidted, subsidiry f issuer A, nd issuer B equity ccunts fr its 40 per cent minrity interest in the sme entity, issuer A will disclse 100 per cent f the entity's pyments t gvernments, nd issuer B will disclse 40 per cent f the entity's pyments t gvernments, resulting in ttl disclsure f 140 per cent f the ctul munts pid t gvernments. If the Cmmissin wnts t lign the prpsed rules s clsely with EITI s pssible, which ultimtely seeks t recncile munts pid by cmpnies with munts received by gvernments, this wuld require disclsures by issuers relting nly t the subsidiries under their full cntrl fr ccunting purpses nd prprtinlly cnslidted entities, which wuld exclude equity-ccunted units. Nt requiring issuers t reprt pyments mde by entities tht re equity-ccunted fr, fr ccunting purpses, wuld reduce the ptentil fr investr cnfusin, due t the duble-cunting f pyments mde by the issuer's sscites nd jintly cntrlled entities. Otherwise, there might be reprting tht is ptentilly misleding r cnfusing, which culd led t incrrect ccustins f embezzlement, bribery nd crruptin, when in fct the dublecunting is purely ttributble t the ccunting principles f cnslidtin. 52. Are there instnces, ther thn cntrl in which resurce extrctin issuer shuld hve t disclse pyments mde by subsidiry r ther entity? If s, shuld we revise ur prpsl t mndte disclsure in thse circumstnces?88 Wuld resurce extrctin issuers hve ccess t pyment infrmtin in thse circumstnces? Shuld ur rules specify tht n issuer wuld hve t disclse pyments mde by nn-cntrlled entity nly if the issuer is the pertr f the jint venture r ther prject~9 Wuld it be pprprite t require n issuer t disclse pyments tht crrespnd t its prprtinl interest in the jint venture rther thn ll fthe pyments mde by r fr the jint venture~o We gree tht n issuer shuld nt be required t prvide the prpsed disclsures, if it des nt hve ccess t the necessry infrmtin (plese refer t ur respnse t Questin 51 bve). 7

8 05 Other Mtters = 54. Wuld the disclsure requirement in Sectin 13(q) nd the prpsed rules ptentilly cuse resurce extrctin issuer t vilte ny hst cuntry's lws? Are there lws tht currently prhibit such disclsure? Wuld the nswer depend n the type f pyment r the level f ggregtin f the pyment infrmtin required t be disclsed? If there re lws tht currently prhibit the type f disclsure required by Sectin 13{q) nd the prpsed rules, plese identify the specific lw nd the crrespnding cuntry. We believe tht there shuld be n exemptin, if such reprting wuld vilte, r my resnbly be deemed t vilte, hst cuntry lws. The prpsed disclsures, fr instnce, my well cnstitute stte secrets fr prject in specific cuntry. The issuer shuld nt be frced t chse between which lw it will vilte - the U.S. r the hst cuntry lws. If n issuer receives dvice frm cunsel tht the reprting f such infrmtin wuld ptentilly vilte such hst cuntry lws, the Cmmissin shuld exempt the issuer frm mking the disclsure. Alterntively, the Cmmissin shuld crete sfe hrbur, llwing issuers t reprt the pyments n cnslidted bsis t the Grup level, withut specificlly identifying the prticulr cuntry, whse lws might be vilted. 60. Are there ny ther circumstnces in which n exceptin t the disclsure requirement wuld be pprprite? Fr instnce, wuld it be pprprite t prvide n exceptin fr cmmercilly r cmpetitively sensitive infrmtin,100 r when disclsure wuld cuse resurce extrctin issuer t brech cntrctul bligtin? Whilst the pyment f txes t gvernments is nt necessrily cmmercilly r cmpetitively sensitive infrmtin, we re cncerned tht the requirements culd be extended t include infrmtin tht culd be cmmercilly r cmpetitively sensitive, e.g. cst r prductin infrmtin, fr which sme dvctes hve been cmpigning. Therefre, we believe n exceptin shuld be prvided, if there is genuine cmmercil cncern relting t the disclsure f such infrmtin. The issuer wuld still hve t disclse the fct tht it ws genuinely unble t prvide the disclsures, due t the cmmercilly r cmpetitively sensitive sttus f the infrmtin. Plese see ur respnse t Questin 54 fr further detils. We believe the key issue is the risk f perting in cuntry, nd if n issuer hd genuine cmmercil cncerns relting t the prvisin f the prpsed disclsures, nd it mde sttement t tht effect, then this, in itself, wuld be n indictr f the incresed risk f perting in tht cuntry, which shuld be sufficient fr stkehlders. We ls nte tht cnsistent with ther disclsure lws, such s the Freedm f Infrmtin Act, we believe cnfidentil tretment f highly sensitive nd/r cnfidentil infrmtin shuld be vilble t the issuers. F F2 Disclsure Required nd Frm f Disclsure Exhibits nd Interctive Dt Frmt Requirement 80. Sectin 13(q) nd ur prpsed rules require resurce extrctin issuer t include n electrnic tg tht identifies the currency used t mke the pyments. If the currency in which the pyment ws mde differs frm the issuer's reprting currency, shuld the rules require issuers t cnvert the pyments t the issuer's 8

9 d reprting currency t the pplicble rte? If the rules shuld, s prpsed, require disclsure f in kind pyments, shuld the rules require in kind pyments t be cnverted t the hst cuntry currency? Shuld the rules require in kind pyments t be cnverted t the issuer's reprting currency t the pplicble rte? Shuld the rules require disclsure f the in kind pyments in the frm in which the pyments were mde nd ls require the pyments t be cnverted t the issuer's reprting currency? Shuld we require issuers t prvide cnversin t U.S. dllrs fr pyments mde in csh nd in kind, nd t electrniclly tg tht infrmtin? We believe cmpnies shuld be given the chice, t either disclse pyments in the lcl currency, r t trnslte the pyments int the reprting currency (becuse this is wht mst cmpnies currently d, fr their sustinble develpment disclsures), s lng s the methdlgy fr trnsltin, nd the exchnge rtes used fr trnsltin, re disclsed. We believe this is cnsistent with the legisltin, becuse the requirement ws fr currency tgs t be pplied, nd nt necessrily tht the disclsures shuld be prepred in the lcl r reprting currency. H Generl Request fr Cmment We request nd encurge ny interested persn t submit cmments regrding: the prpsed mendments tht re the subject f this relese; dditinl r different chnges; r ther mtters tht my hve n effect n the prpsls cntined in this relese. We request cmment frm the pint f view f cmpnies, investrs nd ther mrket prticipnts. With regrd t ny cmments, we nte tht such cmments re f gret ssistnce t ur rulemking inititive if ccmpnied by supprting dt nd nlysis f the issues ddressed in thse cmments. Cmpetitive disdvntge (US$ billins) N. Sles Prfits Assets Mkt Vlue Glbl ,000 29,965 1, ,025 31,409 Extrctive: ttl 249 4, ,210 5,682 Extrctive: US % 60% 64% 67% Extrctive: nn-us % 40% 36% 33% 1 Surce: Frbes Glbl tp 2,000 publicly listed cmpnies glblly (April 2010). 2 Includes freign privte issuers. The tble bve shws the Frbes Glbl 2000 list f the tp 2,000 publicly listed cmpnies in the wrld (issued April 2010). This reltes t publicly listed cmpnies nly, nd des nt include either privtely held cmpnies, r stte-wned enterprises. Apprximtely 60% f the lrgest cmpnies within the Extrctive industry, bsed n the tble bve, re U.S. listed cmpnies (including FPls). A sizeble prprtin f the 9

10 Extrctive d industry will, therefre, be unffected by the prpsed disclsures, nd cmpnies tht list in the US re, by cntrst, cmpetitively disdvntged. U.S. listed cmpnies (including FPls) pper t cmprise pprximtely 60% f the lrgest cmpnies within the Extrctive industry. We re, hwever, cmmitted t trnsprency, nd we urge the Cmmissin nd the U.S. gvernment t wrk with ther regultrs nd gvernments rund the wrld t issue regultins tht re cnsistent with the EITI principles, t ensure tht pprprite disclsures re mde crss ll cmpnies in the extrctive industry. This will help t ensure tht investrs re ble t bse their investment-mking decisins n the sme type nd level f infrmtin, nd will ensure tht the bjectives f trnsprency re mre fully relised. If nn U.S.-listed issuers re ble t prvide limited r n disclsures, cmpred t U.S.-listed issuers, investrs my end up mking investment decisins bsed n incmplete infrmtin (which we believe is nt the intent f the prpsed disclsure requirements). As result, the prpsed rules my fil t chieve their disclsure nd trnsprency gls Avilbility f infrmtin There my be misunderstnding tht cmpnies must lredy recrd mst r ll f the infrmtin n which these disclsures wuld be bsed, fr their wn reprting purpses, nd tht, brring smll initil set-up cst, the dditinl csts t prvide the prpsed disclsures wuld nt be significnt. Bsed n ur estimtes, Ri Tint wuld hve t cllect infrmtin frm ver 100 individul pertins in ver 40 cuntries (which pertins themselves hve t cnslidte dt frm individul sites), deling with different ccunting systems, multiple chrts f ccunts, freign currencies, specific lyuts (different jint venture prtners hve different requirements). Dt hs t be extrcted frm the underlying ledgers, frmtted int the required lyut, nd then uplded nt centrl system, which is then reviewed centrlly, befre it is then cnslidted nd prepred fr publictin. This tkes time, nd the infrmtin is nt "redily vilble t the push f buttn", cntrry t wht sme prties my think. In dditin t the time required t cllect nd prepre the infrmtin, nther min cncern reltes t the cmpleteness f the munts disclsed. Fr exmple, if we ssumed n issuer hd sles revenues f US$10 billin fr 2009, nd csh tx pyments f US$3 billin, verifying the disclsures wuld invlve checking nt nly the ccurcy f the US$3 billin, but ls the remining US$7 billin, t ensure tht ll the items within the reminder hve been crrectly excluded frm the prpsed definitin f pyments t gvernments. There my be misunderstnding tht the infrmtin required by the prpsed rules is lredy vilble, becuse cmpnies use it t submit tx returns. This is simplistic view, nd the prblem is tht tx pyments fr specific yer re nt necessrily bsed n the ctul ccunting results fr tht yer. They re ls nt necessrily bsed n the tx returns submitted fr tht yer, becuse tx returns re submitted up t 12 mnths fter the end f the ccunting perid, wheres pyments cn be spred ut ver perid f up t 24 mnths. In the UK, the dedline fr sttutry ccunts is 9 mnths fter the end f the ccunting perid, the dedline fr tx instlment pyments is ls 9 mnths nd the dedline fr crprtin tx returns is 12 mnths fter the end f the ccunting perid. Additinlly, tx pyments re mde in instlments during the perid, bsed n cmpny's estimte / frecst f its prfits fr the yer, nd ny differences between the estimted munt nd the ctul munt re then trued-up the fllwing yer. 10

11 Additinlly, cmpnies within the sme grup cn shre grup relief, nd ffset ver nd under-pyments within the tx gruping Prfits Frecst tx fr the 30% Actul tx chrge Instlment - 30 June Instlment - 30 September Instlment - 31 December Instlment - 31 Mrch True-up - 30 September 6 (5) 4 Sttutry ccunts / instlments due by 31 Oct Oct Oct 12 Crprtin tx return due by 31 Dec Dec Dec 12 Tx pyments during the yer Bsed n the illustrtin bve, the tx pyments during the yer re nt clsely linked t the ctul tx chrge fr the finncil yer, becuse the pyments fr ech yer re bsed n cmbintin f instlments fr the prir yer, instlments fr the current yer, nd djustments (true-ups) fr differences relting t prir yers. If the prpsed disclsures re t be included in the Grup's nnul reprt, which, fr Ri Tint, is pprved internlly during the first week f Mrch, the disclsures will be bsed n infrmtin vilble s f Februry, befre the sttutry ccunts re prepred; befre the instlments cn be trued-up; nd befre the crprtin tx returns re submitted. Therefre, we recmmend tht the finl rules prvide clrity n the timing nd cut-ff dtes - Le., infrmtin nt redily vilble t the cut-ff dte fr the nnul reprt n Frm 20-F shuld nt be required t be included in the current yer, but included in the fllwing yer, t reduce the burden n FPls. Furthermre, the issuer shuld hve the ptin t prvide necessry supplementl explntin n the bsis fr the reprting, s well s t prvide crrectins bsed n further dt - such s where tx pyments hve been chllenged nd re lter determined t be incrrect nd/r chnged (this is currently shwn in the finncil sttements, s djustments relting t prir yers). We believe tht the issuer shuld nt be expsed t risks f ptentil securities lw viltins, fr gd-fith disputes with tx nd ther gvernmentl uthrities. Burden nlysis (time nd csts) We expect t spend pprximtely hurs centrlly t hed ffice, crss different functins (e.g. finncil reprting, sustinble develpment, tx, legl, etc), cmpiling nd reviewing the nnul reprting submissins frm ur business units, which then hve t be nlysed nd prepred fr disclsure. We expect t spend n dditinl hurs prviding supprt t business units, helping them t understnd the reprting requirements. This excludes the set-up time required t design nd implement the reprting prcess, nd t develp grup plicy/guidnce t ensure cnsistency mngst business units. 11

12 2 We expect ech business unit t spend pprximtely hurs ech yer, nlysing the dt in their lcl ledgers, nd prepring the infrmtin t be submitted fr cnslidtin centrlly. Bsed n pprximtely 120 perting entities within the grup, this is rund 4,800-9,600 hurs f effrt required. Assuming cst f US$400 ~ per hur, this trnsltes int pprximtely US$80,000 - US$160,OOO p.. in csts t be incurred centrlly, with US$1,920,000 - US$3,840,000 p.. t be incurred t the perting entities. This estimte currently excludes the csts f ny externl udit, nd we expect the estimted time nd csts t increse significntly, if the prpsed disclsures were t be udited. We wuld ls expect the time nd csts t increse, if dditinl detil ws required beynd the current prpsl, e.g. further disggregtin / sub-ctegristin beynd the six min ctegries f pyments; lw threshld is pplied t the prpsed disclsures; the definitin f prject is t lwer level thn "reprting unit" fr segmentl reprting; etc. 12