Contract disclosure is key to tackling the corruption marring the extractive industries
It is clear that no country or sector is immune to corruption. However, according to the OECD, one in five cases of transnational bribery occur in the extractive sector. This is particularly concerning as we move to a low carbon world, requiring an equitable phase out of fossil fuels and accelerating the rush for minerals that are crucial to the energy transition. Looking closer at 276 allegations of human rights abuses perpetrated by companies extracting transition minerals, Business & Human Rights Resource Centre found that a quarter of the cases related to governance and transparency – corruption being the main issue for half of them.
At first glance, the two-day Summit for Democracy US President Joe Biden is hosting this week, might not appear to bear much relevance to corruption in the extractive industries.
Yet transparency, accountability, citizen participation and access to information in the extractive industries are bedrocks of democracy. How successfully the world can decarbonise will be determined partly by how accountable and open the extractive sector is: by how much it empowers citizens by giving them access to information about the risks and rewards of extracting their countries’ natural resources. Yet, this information is contained in the contracts governments and extractives industries sign, which are often kept secret. In response to this opacity, Publish What You Pay (PWYP) campaigns to ensure that all extractive contracts are being disclosed.
Rooting out corruption
Acknowledging the threat that corruption poses to democracy, today, the US elevates the fight against this scourge as one of the central pillars of its Summit for Democracy. This is a good thing. But extractive industries must be at the centre of any plan made by a resource-producing country that is serious about fighting corruption.
Examples of the extractive sector giving rise to some of the world’s biggest corruption schemes can be found across the globe, from Brazil to Iraq to Angola. In the realm of today’s Summit, PWYP, along with several civil society organisations, are calling governments to implement basic elements of extractive sector transparency. Among other things, producing countries must disclose the unredacted versions of all extractive sector contracts and licenses, including annexes and amendments; disclose payments received from the extractive sector; and enshrine the standard of free prior and informed consent (FPIC) for indigenous peoples.
Opening extractive contracts to public scrutiny builds trust between citizens, governments and companies.
Today, in numerous corners of the globe, people want to know what is happening in their territories, and how it will affect them. If they do not have access to all the relevant information, that task can be monumental.
When states and companies bury or withhold information on oil, gas and mining projects, ordinary citizens, journalists and civil society members are effectively blindfolded when they try to discover who benefits from them, or if corruption has occurred. Conversely, where disclosure is the norm, citizens are empowered.
This message – especially resonant today, on the United Nations’ International Anti-Corruption Day – is one that the world leaders, civil society and private sector members, should urgently heed.
There are signs that some, at least, are starting to acknowledge that in order to end the devastating impact of corruption on people’s lives, they need to put the spotlight on the extractive sector. This week the US government published its Strategy on Countering Corruption, which contains a specific reference to corrupt elites enriching themselves through the illicit trade of high-value commodities, including petroleum and other natural resources.
But such expressions of intent must be backed up with strong action, taken in concert with civil society organisations who have been working on these issues for decades, and have the expertise to help tackle them.