LILONGWE-(MaraviPost)-Properly verifying environmental and social impact assessments (ESIAs) ensures that the potential impacts of mining developments are identified before work starts. This enables government authorities to impose effective licence conditions to manage these impacts by requiring mining enterprises to develop and implement effective mitigation plans. Thorough verification of ESIAs makes it more likely that a licence applicant will provide a robust and effective ESIA that does not contain misleading or fraudulent statements or that omits critical information.
Corruption is more likely to arise when:
ESIA reports are not publicly available and there are no clear and transparent criteria for environmental approval > creating space for environmental approvals to be given or denied for political or personal reasons
The relevant government authority doesn’t have the skills or resources to verify the contents of ESIAs > enabling applicants to knowingly provide incorrect information about the potential impacts of their project
The relevant government authority is unable to monitor compliance > opening the door for applicants to commit to conditions that they have no intention of fulfilling.
One important cause of this risk is lack of institutional capacity – insufficient geo-spatial information and financial, human and technical resources.
When the relevant government authority doesn’t have the capacity to verify the contents of ESIAs, licence applicants can produce assessments that contain misleading or fraudulent statements or omissions about their potential impacts. In turn, it is less likely that their mitigation plans will be adequate, making it harder to hold them accountable for any negative environmental or social impacts.
The absence of truthful information about potential environmental and social impacts means community members cannot participate meaningfully in consultation processes.
The risk of no or inadequate verification of the veracity and accuracy
of ESIAs is one of the most common and serious risks.
Measures to ensure mining companies are accountable for their environmental and social impacts: includes
Adequate institutional capacity for effective verification of ESIAs• Clear and transparent criteria for environmental approvals
Effective public access to information including to ESIA reports and related documents, impact management plans and compliance performance to enable public scrutiny of the approvals process and government performance of its duty to monitor and enforce compliance
Institutional capacity and will to monitor and enforce compliance
Transparent and accountable mining can contribute to sustainable development. This begins with corruption-free approvals – the very first link in the mining value chain.
These are the key questions to ask before corruption gets a foothold in mining approvals processes.
POLITICAL & ADMINISTRATIVE CONTEXT
Who benefits from mining approval decisions?
LICENCING
How fair and transparent is the licencing process?
LICENCING
Who gets the right to mine?
ENVIRONMENTAL AND SOCIAL IMPACT ASSESSMENT
How accountable are companies for their environmental and social impacts?
COMMUNITY CONSULTATION
How meaningful is community consultation?
HOW FAIR AND TRANSPARENT IS THE LICENCING PROCESS?
WEAKNESSES IN THE LICENCING PROCESS
A fair and transparent licencing process has clear rules and an effective licencing authority with a complete and accurate register of licences. This avoids conflicts between competing licence applicants and existing licence holders and reduces the possibility that investors will resort to corrupt conduct to have conflicts resolved in their favour.
Corruption is more likely to arise when:
Steps in the application and evaluation process are not clear or transparent > opening doors for investors to offer and licencing staff to solicit bribes or other inducements to speed up the licencing process or to get a favourable outcome
Decisions of licencing staff are not regulated by clear evaluation criteria or are vulnerable to ministerial interference > allowing for approval to be given for political or personal reasons.
The licencing authority is inadequately funded and has low human and technical capacity > increasing the likelihood of bottlenecks and delays in processing, creating an incentive for applicants to offer bribes or facilitation payments
The mining licence register has information gaps and is not transparent > enabling manipulation of applications, breach of the “first come first served” principle, and reducing scrutiny
As is common practice in mining, all countries grant licences on a “first come, first served” basis, although many also have provisions for competitive tender when geological potential is known. A complete, accurate and public register of licences and the areas to which they apply is important to ensure that the “first come, first served” rule is respected.
In Most cases, the duration and timing of each step of the licencing process is at the discretion of licencing staff, enabling them to manipulate the timing of applications received to preference certain applicants.
Capacity gaps and lack of effective processes for handling licence information create a high risk that corruption will undermine the fair and transparent processing of licence applications
Measures to ensure mining licence applications are handled fairly and transparently:
Clear and transparent licencing rules and evaluation criteria
A well-resourced, competent and independent licencing authority
An effective system for managing cadastral and licence application data
Publication of licences and licence details
Transparency in the negotiation process, where agreements or contracts are used
WHO BENEFITS FROM MINING APPROVAL DECISIONS?
Decisions about whether to approve mining projects must put the public interest first, and conflicts of interest need to be acknowledged and addressed. Undisclosed and unmanaged conflicts of interest can distort decision-making and result in poorly executed mining projects
Corruption is more likely to arise when:
The real owners or beneficiaries of mining companies applying for licences are not disclosed > making it difficult to determine whether the government decision-makers have conflicts of interest and could personally benefit from their own decisions
The regulation of political donations and lobbying is weak and lacks transparency > allowing industry players to have undue influence over the design of laws and approvals decisions
Controls on the movement of staff between industry and government (“revolving doors”) are inadequate > creating conflicts of interest and risking disclosure of privileged information and prioritising personal considerations over the public interest
“Revolving doors” is the movement of people between legislative and regulatory positions in government to industry and vice versa. It can bring technical expertise into government and regulatory expertise into industry. Yet significant controls are required to prevent government officials from making decisions that favour industry at the expense of the public interest due to their past or potential future industry employment. Controls must also ensure that privileged information is not disclosed. Addressing poor working conditions – short-term contracts, insecure employment and low wages – that may drive public servants to seek secondary employment in the private sector is also essential.
Significant controls are required to prevent government officials from making decisions that favour industry at the expense of the public interest due to their past or potential future industry employment.
With insecure employment, some staff face the temptation to maximise their opportunities to obtain work in industry when assessing the technical reports and operations of companies
Over time revolving doors involving individuals at higher levels of government can make it harder for lawmakers and decision-makers to clearly identify the public interest when performing their duties, losing sight of who they ultimately serve.
Measures to ensure mining approvals decisions benefit the public:
Obligation on politicians and senior officials to declare their assets and interests in mining, these are verified and there is an up-to-date and publicly available register of declarations
Beneficial ownership disclosure requirements to ensure licence applicants disclose who really owns and ultimately profits from their companies, for example through a publicly available register of beneficial owners of mining companies
Cooling off periods, an obligation to declare past employment, and government integrity systems to control the potential adverse impacts of personnel moving from the public service to industry and vice versa (revolving doors)
Improved working conditions for staff in the licencing authority to reduce their incentives to seek secondary employment in the mining industry
A register of lobbyists and effective regulations for mandatory disclosure of all lobbying activities and political donations.
WHO GETS THE RIGHT TO MINE?
Effective due diligence on licence applicants’ technical capacity and financial resources ensures that only qualified and experienced applicants are successful. This also requires effective investigation into applicants’ compliance history and past conduct to screen out undesirable applicants.
Corruption is more likely to arise when:
Due diligence on past conduct and compliance and verification of claims about beneficial owners, financial resources or technical capacity is weak > allowing dishonest applicants to lie or provide misinformation about their qualifications, or companies with a history of corruption to be granted mining rights
The regulation and disclosure of licence transfers is ineffective > enabling unscrupulous actors to bypass due diligence mechanisms and obtain mining licences.
Checks to verify applicants’ claims about their financial resources, technical capacity and beneficial owners reduces the risk that applicants will deliberately provide false information and that unqualified and under-resourced actors will be granted rights to mineral resources. If the licencing authority does not investigate the qualifications of licence applicants, unqualified, under-resourced and unethical players may be granted rights to mineral resources. Licences may be acquired and accumulated by individuals that are not genuine investors for the purposes of speculation, rather than conducting mining activities.
Measures to ensure that only genuine, qualified and compliant applicants get mineral rights:• Effective due diligence on financial resources, technical capacity, compliance history and corruption track record of licence applicants and their beneficial owners• Regulatory mechanisms to deter stockpiling to reduce the risk that speculators will seek to obtain mining licences• Effective regulation of licence transfers to ensure that the government’s due diligence mechanisms are not bypassed.
HOW ETHICAL AND FAIR IS THE PROCESS FOR OPENING LAND TO MINING?
Clear rules and criteria about which land is opened to mining and under what conditions means that these decisions can be made on sound land-use principles, not to personally benefit decision-makers. This strengthens the integrity of licencing decisions and other mining related approvals.
Corruption is more likely to arise when:
Land rights are poorly protected and not properly registered > increasing the chance that licence-holders will not compensate land owners for access to land or will abuse the licence area to conduct other activities
Rules and criteria for opening land to mining are not clear or transparent > enabling investors to take advantage of decision-makers’ discretion by pressuring them into opening areas in exchange for kickbacks
Where the discretion of government officials about which areas to open to mining is kept in check by clear rules and decision-making criteria, it is less likely that their decisions will be influenced by personal interests or will favour particular stakeholders in exchange for personal benefit.
Measures to ensure land is opened to mining in a transparent and ethical way:
Clear criteria and transparency in processes for opening land to mining
A clear and fair role for local authorities in land use planning and mining approvals• A complete and coordinated register of land uses and rights
Surface (land) rights are clear in law and protected in practice.
UNDERSTANDING CORRUPTION RISKS
WHO BENEFITS FROM MINING APPROVAL DECISIONS?
Decisions about whether to approve a particular mining project must put the public interest first, and conflicts of interest need to be declared and addressed.
Corruption is more likely to arise when:
Controls on revolving doors are inadequate
Regulations on political donations and lobbying are weak
The real owners or beneficiaries of licence applicants are not disclosed
Measures to address these risks are required to ensure that mining approval decisions benefit the public
HOW ETHICAL AND FAIR IS THE PROCESS FOR OPENING LAND TO MINING?
Decisions about which land is opened to mining and under what conditions have flow-on effects for the integrity of licencing decisions and other
Corruption is more likely to arise when:
Land rights are poorly protected and not properly registered
Rules and criteria for opening land to mining are not clear or transparent
Measures to address these risks are required to ensure that land is opened to mining in a transparent and ethical way.
HOW FAIR AND TRANSPARENT IS THE LICENCING PROCESS?
A fair and transparent licencing process has clear rules and effective institutions, with a complete and accurate register of licences (mining cadastre). If information in the mining cadastre is incomplete, officials can manipulate applications and breach the “first come, first served” principle for granting licences.
Corruption is more likely to arise when:
Steps and decision-making criteria in the licencing process are unclear
Information in the licence register is missing or not publicly available
The licencing authority is under-resourced
Measures to address these risks are required to ensure that licence applications are handled fairly and transparently.
WHO GETS THE RIGHT TO MINE?
Governments need to conduct effective due diligence on the past conduct and compliance, financial resources, beneficial owners, and technical capacity of licence applicants and their principals. Otherwise, companies can deliberately provide misleading information, and mining rights can fall into the wrong hands.
Corruption is more likely to arise when:
Due diligence on licence applicants is inadequate
Controls on licence stockpiling are weak
Regulation and disclosure of licence transfers is ineffective
Measures to address these risks are required to ensure that only genuine, qualified and compliant applicants are awarded mineral rights.
HOW ACCOUNTABLE ARE COMPANIES FOR THEIR ENVIRONMENTAL AND SOCIAL IMPACTS?
Effective verification of environmental and social impact assessments (ESIAs) is needed to guard against the risk of licence applicants knowingly providing incorrect information about the potential impacts of their projects.
Corruption is more likely to arise when:
Verification of ESIAs is inadequate
Accountability of approval decisions is low
Enforcement of licence conditions is weak
Measures to address these risks are required to ensure that companies are accountable for their environmental and social impacts.
HOW MEANINGFUL IS COMMUNITY CONSULTATION?
Ensuring genuine consultation and negotiations with communities is critical to securing the legitimacy of mining approvals. If there are no clear or binding requirements for consultation, it is more likely that the duty to consult will be ignored or carried out superficially.
Corruption is more likely to arise when:
Rules for consultation are not clear
Consultation only occurs with local elites
Agreements are not publicly available
Measures to address these risks are required to ensure that consultation with communities is meaningful.
Measures to address these risks are required to ensure that consultation with communities is meaningful
ADDRESSING CORRUPTION RISKS
Measures to address corruption risks must be tailored to the relevant context – there are no one-size-fits-all solutions. All mining sector stakeholders have a clear role to play in enhancing transparency and accountability to combat corruption in mining approvals.
Measures to address corruption risks must be tailored to the relevant context – there are no one-size-fits-all solutions. All mining sector stakeholders have a clear role to play in enhancing transparency and accountability to combat corruption in mining approvals.
GOVERNMENT
Lawmakers, senior government officials, and licencing authority officials – have a critical role in:
Setting clear, transparent, and effective rules and criteria for mining approvals processes
Ensuring public access to information about mining approval processes and decisions
Establishing meaningful opportunities for affected communities and civil society to participate in the aspects of mining approvals that directly affect them
Making sure that agencies tasked with administering mining approvals have the necessary institutional capacity to effectively perform their functions
Conducting due diligence on licence applicants and their beneficial owners
Implementing effective mechanisms to identify, manage and reduce conflicts of interest
Lawmakers, senior government officials, and licencing authority officials – have a critical role in:
Setting clear, transparent, and effective rules and criteria for mining approvals processes
Ensuring public access to information about mining approval processes and decisions
Establishing meaningful opportunities for affected communities and civil society to participate in the aspects of mining approvals that directly affect them
Making sure that agencies tasked with administering mining approvals have the necessary institutional capacity to effectively perform their functions
Conducting due diligence on licence applicants and their beneficial owners
Implementing effective mechanisms to identify, manage and reduce conflicts of interest
MINING INDUSTRY
Companies and industry associations – have a significant role in ensuring cleaner practices in their own operations and championing good practice by:
Being transparent about their operations, including their subsidiaries, joint venture partners and where they operate
Disclosing their project rights and obligations, including contracts, licences, and environmental and social impact management plans
Committing to and conducting meaningful community consultation
Going “beyond compliance” where a country’s licencing standards or disclosure requirements are lax and below best practice
Understanding corruption risk in mining approvals in the countries where they operate and introducing internal integrity systems to prevent and detect corruption in their operations
THE PUBLIC
Civil society, the media, and mining-affected communities – have an important role as accountability actors by:
Observing the process to understand how the mining approval process is undertaken and where the process is vulnerable to corruption risk
Scrutinising approvals outcomes and decisions so they can hold government and the mining industry to account
Taking up meaningful opportunities to participate in aspects of mining approvals that directly affect them
Change must happen where mining approvals take place – at the national and local government levels – and with support from global and regional initiatives. CSOs should continue to work with key stakeholders to control corruption risks in different contexts. This will provide evidence about what works, what doesn’t work and why, and in doing so paint a more complete picture of what’s needed to make the mining approvals process corruption-free
Conclusion
Transparency and accountability are very critical to every extractive project that is meant for development of a country. It is in fact possible to implement extractive activities that sustainably develop communities and the country if proper measures to curb corruption are included in the whole extractive cycle.