The American Petroleum Institute (API), the powerhouse lobbying group for the oil industry, is pushing hard for actions that are not only explicitly against the interests of investors, but that bolster corrupt regimes in many foreign countries, such as in Nigeria and Angola and Venezuela.

If ever there was a brilliant example of an industry shooting itself in both feet at the same time then this is it. The eventual costs to the oil industry of its folly will be formidable in terms of regulatory compliance expenses, alienation of actual and potential shareholders, and reputational damage.

At issue is one of the few bipartisan agreements to emerge from the U.S. Congress in recent years that called on the U.S. Securities and Exchange Commission (SEC) to introduce rules that mandate all oil, gas and mining companies in the U.S. to disclose the payments they make to foreign authorities in relation to their natural resources contracts.

The SEC set rules in 2012, but the API challenged them in court and a judge asked the SEC to go back to the drawing board and issue new rules by March 2015. This delay may mean that European governments move ahead of the U.S. and set their own rules mandating full disclosure of foreign payments by firms in the extractive industries.

Europeans move ahead of the U.S.

If this is the case -- and the Europeans are well on the way to setting rules that will come into force no later than in 2017 -- then what could have been a single global standard based on U.S. SEC rules may instead become a global system of more complex multiple transparency standards.

In the interests of clarity and law enforcement, a broad coalition of civil society organizations is now writing to the SEC in support of fast action on establishing new rules. The coalition includes the Publish What You Pay coalition, The Natural Resource Governance Institute, Global Witness, and Transparency International USA. This campaign is supported by a number of investment firms, as well as by Senator Ben Carden, a Democratic Party senator from Maryland.

It was Carden, together with Richard Lugar, the former Republican senator from Indiana, that led the charge in Congress that secured bipartisan support for the extractive industries' transparency law (Section 1504 of the 2010 Dodd-Frank Financial Reform), which API opposes. Its prime challenge is to the disclosure of company payments to foreign authorities on a project-by-project basis. It would prefer a much vaguer aggregated form of disclosure where no company names are revealed. Not only have European governments rejected this approach and will set rules for full corporate disclosure, but a number of major oil companies, such as Tullow Oil and Statoil, and global gold mining giant Newmont, have also stated they can live with such rules.

Senators Carden and Lugar

Senator Carden argues that the API's argument has a hollow ring to it as people in the industry are well aware of the terms and conditions under which many foreign contracts are made. Bennett Freeman, a senior executive with the large Calvert mutual fund group, which has substantial investments in Africa, stresses that it is profoundly important for investors to know the level of payments on large projects that resources' firms are making to foreign governments. Freeman states that investment firms with more than 6 trillion dollars under management share this view and support fast rule-making decisions by the SEC.

API executive Stephen Comstock, who is the architect of the oil industry's strategy admits that not all of his organization's member companies support the API's stand. He also says that the industry is not really opposed to all aspects of the transparency law, but that competitive issues are serious ones.

However, at a seminar at the Brookings Institution in Washington D.C., Heather Lowe of the anti-money laundering group Global Financial Integrity, challenged Comstock. She noted that in API's court papers it had also raised the issue that the new law might be unconstitutional because it violated the First Amendment by compelling firms to disclose information.

Stephen Comstock agreed that API may indeed eventually challenge the new law on these grounds. Freeman, almost apoplectic, jumped into the discussion to argue that if API really mounted such a challenge then it would be challenging decades of established laws that assured investors of rights to information from publicly listed companies.

The API's efforts will in time do serious reputational damage to many oil, gas and mining companies. Many of them already are seen in the foreign countries where they operate as being too close to highly corrupt governments.

Fighting rules that will shed light on the deals and that place information in the public domain leaves the firms still more vulnerable to challenges that they are hiding bad things. We are in an age of transparency where thanks to social media, investigative journalism and civil society activism it is increasingly more difficult for corporations and governments to keep their transactions secret.

The API is doing its members a disservice by fighting what will be a losing battle. The SEC, for its part, needs to restore U.S. leadership in this area and move rapidly to announce new disclosure rules and a timetable that forces the industry to comply soon.