Foreign corruption in the mining industry

(by Kimberly Fraser)

According to Transparency International, a non-profit organization that monitors and combats corruption worldwide, the mining and extractive sectors are among the most corruption prone sectors. This is largely due to the volume of revenue involved and the need to interact with foreign governments in order to secure mining contracts and licences and fulfill regulations. As a result, foreign companies are often tempted to pay bribes in order to avoid red tape and speed up the approval process.

There are more than 150 Australian-listed mining companies operating across 33 countries in Africa. While many of these companies have clean records, it is important to understand the scale of their influence. Together, they employ thousands of people, control tens of thousands of square kilometres of land and pour in millions dollars. This creates a huge disparity of power between mining companies and the local communities where they operate. It is local laws and regulations, enforced by government officials, which are meant to balance out this disparity of power and ensure the protection of community members. When bribery and other forms of corruption are introduced, it is the local communities who get the raw end of the deal.

An Australian company, Sundance Resources, is currently being investigated for allegedly bribing the leader of the Republic of the Congo, Denis Sassou Nguesso, with a share deal worth millions of dollars in order to gain his backing for their project. They are not the only Australian company that has faced allegations of foreign bribery. Others, such as Leighton Holdings, Tabcorp and BHP Billiton have also faced investigations into foreign bribery. However, due to Australia’s ambiguous foreign bribery laws and limited whistleblower protections, many companies accused of corruption are never prosecuted. Australia’s anti-corruption framework falls short of the more rigorous legislation found in the United Kingdom, prompting calls for reform.

Corruption in the mining sector in developing countries, such as the Congo, has far-reaching economic, social and environmental impacts. Development, human rights and environmental protection are replaced by the priorities of the bribe payer, causing significant consequences for the wellbeing of current and future generations.

 

(photo credit: Sundance Resources)

 

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