Companies and practitioners alike can keep the mining, drilling and extractive industry on the hot list for bribery and corruption enforcement. Earlier this week, Houston-based Parker Drilling Company entered into a deferred prosecution agreement with the U.S. Department of Justice and the U.S. Securities and Exchange Commission to settle allegations that the company violated the antibribery provision of the Foreign Corrupt Practices Act (FCPA). According to the criminal information filed in federal court in the Eastern District of Virginia, Parker Drilling, among other things, hired a Nigerian agent to assist the company with customs matters related to the importation of oil-drilling rigs into Nigeria. The agent, with the knowledge of Parker Drilling executives, used company funds to entertain Nigerian officials to receive influence in resolving customs disputes. The settlement — which remains subject to partial court approval — requires the company to implement an enhanced anticorruption and compliance program and pay nearly $16 million to the DOJ and SEC.

While the FCPA has long been a tool to combat corruption, governments both here and abroad have added another arrow to their quiver to target corruption in the natural resources sector. In August 2012, the SEC released final regulations implementing Section 1504 of the Dodd-Frank Act, which requires “resource extraction issuers” to disclose annual payments made to governments for access to specified natural resources. Companies qualify as “resource extraction issuers” and are subject to the rule if (1) the issuer is required to file an annual report with the SEC and (2) the issuer engages in the commercial development of oil, natural gas or minerals. Section 1504 reporting requirements apply to both domestic and foreign issuers and any payments made by a subsidiary or other entity controlled by the issuer. Subject to disclosure are payments to governments in furtherance of the commercial development of oil, natural gas or minerals that equal or exceed $100,000 per “project” during the fiscal year.

Although Section 1504 has provoked substantial domestic controversy — American Petroleum Institute’s challenge of the law is currently on appeal to the D.C. Circuit Court — it has found favor across the pond. Last week, the European Union reached an agreement to implement analogous reporting standards for payments made by European public and private companies to foreign governments for the right to extract natural resources. This legislation, addressed in more detail in the McGuireWoods Alert, “Recent EU Mining Developments” dated April 18, 2013, has been under intense negotiation since 2011. The EU rule, once enacted, will require companies to disclose payments over €100,000 on a “country-by-country” and “project-by-project” basis. Notably, the EU’s proposed rule is broader than Section 1504. It applies not only to oil, natural gas and minerals, but also to logging. And, unlike its U.S. counterpart, the EU act’s reporting requirements are not limited to public companies.

Supporters of both Section 1504 and the EU’s proposed equivalent claim that disclosure promotes transparency, prevents corruption and protects resource-rich, developing countries from exploitation. Needless to say, resource extraction companies must be mindful of these enhanced reporting requirements to avoid sanction domestically or abroad. How aggressively these standards will be enforced remains to be seen.