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If nothing else, the Sino-Forest Corp. scandal demonstrates that it matters what Canadian companies do in the darkest corners of the world.

Canada's stock market has become a global ATM – the source of tens of billions of dollars of cash for resource extraction.

Where that money goes, and for what, matters.

It matters to the investors who put their money on the line.

It also matters to Canada, whose good name is being leveraged, and in some cases exploited, in some of the poorest and most corrupt countries on the planet.

Canadian regulators and policy makers should demand the same high standards of disclosure and transparency, wherever companies operate.

That's why it's perplexing Canada has shown zero interest in implementing the 2002 Extractive Industries Transparency Initiative. The voluntary international code is based on a simple premise: convince countries to disclose the revenue they collect from oil, gas and mining assets, and then get resource companies to report those royalties.

Meticulously documenting who pays what to whom is a key step in rooting out rampant corruption in the resource extraction business.

On the surface, at least, Canada is all for EITI. Prime Minister Stephen Harper has publicly endorsed the initiative, Canadian tax payers have sunk millions of dollars into the process and a top Canadian government bureaucrat sits on the organization's international board of directors.

Five major Canadian companies are also EITI signatories: Barrick Gold Corp., Goldcorp, Talisman Energy, Dundee Precious Metals and Kinross Gold.

And yet Ottawa refuses to embrace EITI at home. On its website, Natural Resources Canada offers a lengthy explanation why implementing the agreement is a bad idea. The department says its royalty disclosure standards are already higher and the initiative is really about helping developing countries out of poverty. The department concludes that implementation would be "detrimental to the vitality of EITI."

Strange, then, that on a visit to Ottawa last week, the former British Labour MP who now heads the EITI practically begged Ottawa to implement the agreement. Clare Short said Canada has a chance to once again become a "beacon" for the rest of the world on development issues.

"Canada has something special, the knowledge and expertise to bring to this," she said during a panel discussion at the University of Ottawa. "It could be very beneficial."

Not implementing has consequences too. Countries, such as Brazil, conveniently point to Canada and other wealthy non-signatories for declining to join.

Canada also risks falling out of step. Several wealthy countries are moving toward imposing much stricter disclosure rules about what their companies do in foreign markets.

Norway, an oil and gas powerhouse, has already implemented the deal. Australia and the Netherlands have indicated they will follow soon. And the European Parliament recommends that member countries force disclosure of payments to governments by "extractive" companies.

Even the United States is poised to leap ahead of Canada. As part of the Dodd-Frank financial overhaul, the U.S. Securities and Exchange Commission will soon require companies listed on U.S. stock exchanges to disclose all payments made to foreign governments. That would include many Canadian companies with dual U.S. and Canadian listings, such as Talisman and Barrick.

And while Canada insists it has higher standards of resource revenue transparency, those rules only apply to companies operating in Canada. And unlike the EITI agreement, there's no requirement for individual companies to show what they actually pay in taxes and royalties on a quarterly or annual basis.

Ottawa's failure to comply with EITI risks giving the country an international black eye. It's already run afoul of the Organization for Economic Co-operation and Development as well as Transparency International for lagging the G7 in combatting corruption.

Canadian authorities have recently stepped up enforcement, fining one company (Niko Resources) and raiding another (Montreal engineering giant SNC-Lavalin Group Inc.) over corruption allegations in Bangladesh.

Those are good steps toward putting Canada's house in order.

But Ottawa can do more, starting with full implementation of EITI.

It wouldn't be easy, of course. EITI would involve the always-tricky intersection of federal and provincial jurisdiction – in resources and securities regulation. There may also be sensitivities among native groups about disclosing payments from resource companies. And the mining industry will surely balk at more regulation.

But a little more regulation and some federal-provincial stress could prove a lot more palatable than a reputation for spawning companies that run amok in the world.

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