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Source: http://www.doksinet Mauritania: Secretariat Review Draft EITI International Secretariat 6 January 2012 Source: http://www.doksinet 2 MAURITANIA: SECRETARIAT REVIEW 1 Introduction Mauritania was accepted as an EITI Candidate Country in September 2005. Mauritania released its first EITI report in March 2007 and its second report in July 2007. The third EITI report covering 2007-2008 was published in July 2011 and the 2009 EITI Report in October 2011 1. Preparations for the 2010 and 2011 EITI reports have commenced with the MSG recently agreeing terms of reference for the 2010 report. Mauritania’s initial deadline for completing validation was 9 March 2010. Following a request from the Mauritanian government and after consideration by the EITI Board, the country’s deadline for completing Validation was extended to 9 September 2010. Mauritania submitted its final Validation report to the EITI Board on 9 September 2010. The Board subsequently agreed that Mauritania is a

Candidate country, ‘close to compliant’, as of 13 December 2010 2. Based on the Validator’s findings, the Board set out a deadline of 12 June 2011 for Mauritania to complete four remedial actions for achieving compliance and request a Secretariat review. The four remedial actions were: 1. Publication of the EITI reports covering 2007-2008. 2. The National EITI Committee sends a letter to the Board outlining an agreed timeline for ensuring timely and regular reporting, including a schedule for the publication of the 2009 report. 3. The National EITI Committee should: (a) agree a clear definition of “material payments and revenues”, (b) take steps to ensure that all entities that make or receive material payments are included in the reporting process. It is recommended that the National EITI Committee agrees a specific threshold that defines a material payment, so that it is clear which companies and government entities are required to participate in the reporting process.

4. The government and National EITI Committee should take steps to ensure that government disclosures to the reconciler are based on audited accounts to international standards in accordance with the requirements as specified in Validation IAT 13. 2 Mauritania’s response to the Board decision The Comité national ITIE undertook a number of activities to address the four corrective measures agreed by the Board and comply with the unmet requirements (including Indicators 11, 13, 14, and 15). The Comité national has submitted evidence that three out of the four corrective measures were completed by 12 June 2011. The corrective measure concerning the publication of the EITI reports covering 2007-2008 was not completed until late July 2011. On 11 June 2011, the Chair of the Comité national submitted a memo detailing the corrective measures endorsed by the MSG, including: • A clear agreement from the Comité national on a definition of materiality for revenue streams and company

1 The reports are available at http://www.cnitiemr/ 2 The Board’s decision is available athttp://eiti.org/files/Minutes 14th Board Meeting ENGpdf Source: http://www.doksinet 3 coverage. The agreement stipulates that all extractive companies operating in Mauritania will be included in the reporting process. The Comité also agreed to take action to ensure timely reporting from all companies • A schedule for the publication of the 2009 EITI report and an agreed timeline for the publication of the 2010 and 2011 EITI reports. • A technical note dated 23 May 2011 from the Chair of the Cour des Comptes (Court of Audit). The note stipulates that the Cour is committed to include a specific audit of extractive revenues in its annual work programme and that it will propose legislation to extend the Cour’s mandate accordingly. • The 2007-2008 EITI reports were published on 11 July and available on EITI Mauritania website on 28 July. Following a request from the

multi-stakeholder group (MSG), the EITI Board granted Mauritania’s request for a secretariat review on 25 October 2011. The EITI International Secretariat conducted a desk review in November – January 2012. In addition, the Chair and the International Secretariat travelled to Mauritania on 1-3 October 2011 to take part in a dissemination event for the 2007-2008 EITI reports. During the review, members of the Comité national and other EITI stakeholders were consulted and given an opportunity to share their views. 3 Secretariat review of remedial actions and assessment of indicators The EITI Board agreed four remedial actions and tasked the Secretariat with reassessing compliance with Indicators 11, 13, 14 and 15, and regular and timely reporting. 4. 1 Remedial action 1 Publication of the EITI reports covering 2007-2008 Validator’s findings The validator remarked that the 2007 and 2008 EITI reports had not yet been published at the time of Validation but that an independent

reconciler had just been appointed for producing reports covering those years. The Chair of the Comité national advised the International Secretariat that the EITI reports covering 2007-2008 would be published in the last quarter of 2010. The EITI Criteria require regular reporting The Board agreed that publication of the EITI reports covering 2007-2008 was necessary to achieve compliance. Progress since Validation Mauritania published its 2007-2008 EITI reports on 11 July 2011. The reports were approved by the Comité national and subsequently translated into Arabic and published on EITI Mauritania website in late July. Secretariat’s assessment The Secretariat is satisfied that the EITI reports covering 2007-2008 have been published in Arabic and French and are available online. The reports have addressed recommendations from the previous reporting exercise including expanding the scope to all extractive companies operating in Mauritania and including material revenue streams

such as the oil training fund. In his report, the reconciler notes that benefit streams agreed by the Comité national are consistent with the EITI Source Book and the 2011 EITI Rules and with the generally accepted definitions in the oil and mining industry. The Secretariat notes that discrepancies highlighted in the report are immaterial and have been investigated except a positive discrepancy of 10% between payments reported by the national mining company (SNIM) and the government. The Secretariat takes note of the reconciler’s comment that company and payment coverage could have been more comprehensive if all companies in the exploration phase had reported. Materiality of undisclosed payments is discussed under Remedial action 3. Source: http://www.doksinet 4 The EITI International Secretariat is satisfied that the remedial action requested by the Board has been completed. 4.2 Remedial action 2 The National EITI Committee sends a letter to the Board outlining an agreed

timeline for ensuring timely and regular reporting, including a schedule for the publication of the 2009 report. Validator’s findings Mauritania published two reports in July 2007, covering financial data from 2005 and 2006 respectively. The 2007 and 2008 EITI Reports had not been published when validation commenced. The EITI Criteria require regular reporting The Board decided that the Comité national should agree a timeline for ensuring timely and regular reporting, including a schedule for the publication of the 2009 report. Progress since Validation A timetable for the 2009 and 2010-2011 reports was agreed by the Comité national on 11 June 2011. The 2009 report was effectively published on 22 October 2011. Publication of the 2010 and 2011 reports are foreseen by mid-2012 (ref minutes from the MSG meeting dated 11 June 2011 and letter from the Chair of the Comité national dated 12 June 2011). Secretariat’s assessment The Secretariat is satisfied that the Comité national

has agreed a timetable for the publication of the 2009 and 20102011 EITI reports. Mauritania has made considerable progress towards regular and timely reporting with the publication of the 2007-2008 and 2009 reports respectively in July and October 2011. The EITI International Secretariat is satisfied that the remedial action requested by the Board has been completed. 4.3 Remedial action 3 The National EITI Committee should: (a) agree a clear definition of “material payments and revenues”, (b) take steps to ensure that all entities that make or receive material payments are included in the reporting process. It is recommended that the National EITI Committee agrees a specific threshold that defines a material payment, so that it is clear which companies and government entities are required to participate in the reporting process. Validator’s findings The validator noted that the scope of EITI reporting agreed by the Comité national is that “all the companies included in the

mining register and oil register were included with the exception of companies engaged in the exploitation of plaster and cement quarries. As such, the scope of the benefit streams and companies clearly complied with the Sourcebook criteria”, but found that several companies failed to return their reporting templates to the independent reconciler (60% in 2005 and 30% in 2006), observing that their lack of response did not affect the quality of the reports. The Board agreed that the Comité national should: (a) agree a clear definition of “material payments and revenues”, (b) take steps to ensure that all entities that make or receive material payments are included in the reporting process. In addition the Board recommended that the Comité national agrees a specific threshold that defines a material payment, so that it is clear which companies and government entities are required to participate in the reporting process. Progress since Validation At a meeting held in the presence

of the reconciler in April 2011, the Comité national discussed and agreed a definition of materiality which clearly identifies the revenue streams to be included in the EITI Reports and requires that all extractive companies operating in Mauritania are included in the reporting process. In addition, the MSG took action to ensure that all companies report, including through sensitisation and regular contacts with their Source: http://www.doksinet 5 management (ref. notes from the 24 April MSG meeting, 2007-2008 EITI reports, and minutes from the 11 June 2011 MSG meeting). Secretariat’s Assessment As set out in the minutes of the meeting dated 11 June 2011, the Comité national expressed satisfaction over the definition of materiality and the agreed scope for the 2007-2008 and 2009 reports which requires that all extractive companies operating in Mauritania participate in the reporting process and identifies the revenue streams to be included in the reconciliation report. In

addition, the Comité explicitly agreed to take concrete action in the form of regular contacts and sensitisation to ensure timely reporting from all participating companies. The reconciler commented that the materiality and scope were determined in accordance with the EITI Rules, the national legislation and the cadastre. The International Secretariat is satisfied that the Comité has agreed a clear definition of materiality, including payment and company coverage, and notes that the list of benefit streams covered by the 2007-2008 reports are in line with the reporting requirements under the previous edition of the EITI Rules. All 45 registered companies (34 mining and 19 oil companies) were included in the reporting process. However, 17 companies (10 mining and 7oil) in the exploration phase failed to report3. According to Mauritania’s mining cadastre, these companies were all in the exploration phase in 2007 and 2008. The Ministry of Mines reported that these companies had ceased

activities because of their limited investment capacity in the context of the global financial crisis, and had left Mauritania at the time of data collection for the 2007 and 2008 reports 4. The MSG commented that payments made by these companies were likely to be immaterial since companies in the exploration phase are only required to pay a very limited amount of taxes. The MSG also reported that the Mauritanian government has unilaterally disclosed all revenues received in 2007 and 2008 and that the data is available on Mauritania’s Treasury website (http://www.tresormr/fr/publications/show) The Secretariat requested that EITI Mauritania provide detailed information regarding the size (materiality) of the payments and revenues from the non-reporting companies. The EITI Reports do not unilaterally disclose the government revenues from these companies. As a consequence, it is not possible to establish whether the omission of these payments has materially affected the quality of the

2007-2008 reports. Accordingly, it is not possible for the Secretariat to establish whether the corrective action has been adequately addressed. The EITI International Secretariat considers that there is insufficient evidence to demonstrate that the remedial action requested by the Board has been completed. 4.4 Remedial Action 4 The government and National EITI Committee should take steps to ensure that government disclosures to the reconciler are based on audited accounts to international standards in accordance with the requirements as specified in Validation IAT 13. Validator’s findings The validator pointed that the government accounts for 2007 have been certified by the Trésorier Payeur Général de la République (Accountant General of Mauritania), although in his mind this did not represent an audit. The validator concluded that “if all the company reporting templates returned to the independent Reconciler are certified by their auditors, and the discrepancies between the

declarations of the State and of companies are not considered material, it is consequently less important to obtain government declarations audited to international standards.” The Board 3 4 A detailed list of participating and non-participating companies is available in the 2007-2008 EITI Report. The exact same companies failed to disclose payments in the 2009 EITI Report which was published in October 2011. Source: http://www.doksinet 6 recommended that the Comité national should agree a more detailed and time-bound strategy for ensuring that government reports are based on audited accounts to international standards. Progress since Validation The Comité national has furnished detailed information on Mauritania’s strategy to comply with Indicator 13, including minutes from the MSG meeting of 11 June 2011 detailing steps to ensure that government accounts are audited to international standards. The Comité has also submitted a note from the Cour des Comptes (Court of

Audit) regarding plans to include extractive revenues in the Cour’s annual programme in order for Mauritania to comply with the EITI requirements. Secretariat’s Assessment The Secretariat is satisfied that the Comité national has discussed and agreed an approach to ensure that government disclosures are based on audited accounts to international standards. The measures proposed by the MSG include an annual audit of extractive revenues by the Cour des Comptes and certification of EITI data from 2010 onwards. This approach is confirmed by the Cour des Comptes in a noted dated 23 May 2011 The note also stipulates that the Cour des Comptes will work with the MSG on a draft legislation that mandates specific audits of extractive revenues. The International Secretariat has been informed that GIZ has launched a training programme to strengthen the Cour’s capacity to carry out audits of oil and mining revenues. The EITI International Secretariat is satisfied that the remedial action

requested by the Board has been completed. 4 Conclusion The Board decision stipulated that four remedial actions should be completed in order to achieve Compliance. The Secretariat is satisfied that remedial actions 1, 2 and 4 have been completed. However, it has not been possible to establish that remedial action 3 requiring that all entities that make or receive material payments are included in the reporting process has been satisfactorily completed. Source: http://www.doksinet 7 Annex A - Board decision on Mauritania, Brussels, 13 December 2010 The Board designates Mauritania as Candidate Country as of 13 December 2010. Based on a thorough assessment of the specific circumstances, Mauritania is considered to be ‘close to compliant’. The Board congratulates the government, companies and civil society organisations in Mauritania for the progress made in implementing the EITI. The Board also wishes to congratulate the validator and all involved in the validation on an

impressive report. The validation report provides a comprehensive review of EITI implementation in Mauritania, and provides a sufficient basis for establishing Mauritania’s compliance with the validation indicators. The validator concludes that Mauritania has met all of the validation indicators. The Board welcomes progress in Mauritania but is not satisfied that the validation report conclusively demonstrates that indicators 11, 13, 14 and 15 have been met. Furthermore, implementation of the EITI must be consistent with the EITI Criteria, which require regular reporting. Mauritania’s first EITI report was published in 2007 covering financial data from 2005 and 2006 Accordingly, the Board agreed the following remedial action is necessary for achieving Compliance: Publication of the EITI reports covering 2007-2008. The National EITI Committee sends a letter to the Board outlining an agreed timeline for ensuring timely and regular reporting, including a schedule for the publication

of the 2009 report. The National EITI Committee should: (a) agree a clear definition of “material payments and revenues”, (b) take steps to ensure that all entities that make or receive material payments are included in the reporting process. It is recommended that the National EITI Committee agrees a specific threshold that defines a material payment, so that it is clear which companies and government entities are required to participate in the reporting process. The government and National EITI Committee should take steps to ensure that government disclosures to the reconciler are based on audited accounts to international standards in accordance with the requirements as specified in Validation IAT 13. Following notification by Mauritania’s National EITI Committee to the EITI International Secretariat that these remedial actions have been completed the EITI International Secretariat will reassess Mauritania’s compliance. The Secretariat review will reassess the “unmet”

indicators 11, 13, 14 and 15. The Secretariat will consult widely with stakeholders during the review. The National EITI Committee should be given an opportunity to comment on the Secretariat’s findings. The Secretariat’s review will be a public document - supplementing the Validation Report thereby ensuring that the basis for the Board’s decision regarding compliance is clear to all stakeholders The Secretariat should submit its report to the Board via the Validation Committee. If the Board is satisfied that the remaining requirements have been met, the country will be designated as EITI Compliant. In the interim, Mauritania will retain its Candidate status. The Board retains the right to require a new Validation if the remedial steps are not completed within six months (i.e, by 12 June 2011) The Board does not foresee granting any extensions beyond this deadline to complete remedial actions. The Board calls on the government and the National EITI Committee to ensure that the

validator’s recommendations are implemented in full, and tasks the EITI International Secretariat to provide regular progress reports to the EITI Board. Annex B – Minutes of the National EITI Committee Meeting, Nouakchott, 14 April 2011 Link Source: http://www.doksinet 8 Annex C – Minutes of the National EITI Committee Meeting, Nouakchott, 11 June 2011 Link Annex D – Letter from the Chair of the National EITI Committee, 12 June 2011 Link Annex E – Letter from the Chair of the National EITI Committee, 17 August 2011 Link Annex F Letter from the Chair of the National EITI Committee, 24 October 2011 Link