activism corporate responsibility energy poverty

Unearthing the truth about mining rights

After yesterday’s post on corruption at the micro level, I thought it might be interesting to look at it at the macro level. (Thanks to Ben for the suggestion.)

Ipaidabribe works by getting lots of ordinary citizens to record the small bribes they have had to pay in the course of their everyday business. That’s great for identifying corrupt individuals or departments. What it can’t do is deal with corruption at the opposite end of the scale, that of businesses and corporations. That needs a completely different approach, and Tearfund’s ‘unearth the truth’ campaign is a useful lens on the issue.

Unearth the Truth focuses on the extractive industries and how much they pay developing countries for the rights to exploit their oil, gas, and mineral reserves. These deals are often undeclared, negotiated between corporations and government ministers, with neither party disclosing any details. It is all too easy for the official in charge to enrich themselves and impoverish the country, giving away those precious resources for less than their value in return for a personal fortune. See Madagascar’s recent oil deal, now thankfully stalled.

This kind of corruption has multiple effects. The resources are effectively stolen, leaving the country with pollution and displacement, with little or no compensation for those losing their lands. What money does come in for the resources extracted goes to local elites, driving up inequality. That thriving new industry often unbalances the economy too. The government enjoys the revenues with no thought to the sustainability of the income stream, and fails to invest in other sectors of the economy.

One key way to prevent this sort of scandal, which is depressingly common, is to require companies to declare their deals. This is the aim of the Publish What You Pay campaign, which Tearfund’s initiative is part of. The campaign calls for mining and oil companies to publish how much they pay developing world governments for the resources they extract, so that local people can tell whether their governments are treating them fairly.

Several major companies have adopted these transparency measures, but it’s a risky stand for them to take. The governments involved may not want their citizens to know the details, or they might start asking where there share is. What’s been missing has been developed world governments adding their weight to the plans and making those standards a legal requirement, rather than a voluntary commitment. The US put that right last year in its Wall Street reforms, and now requires companies to declare those figures in their reporting.

The UK doesn’t have such a law, which is a shame, since we have 86 major extractive corporations registered in Britain. A British transparency act would put an end to secretive and corrupt deals for resources, requiring companies to declare their payments, country by country. As the EU also considers a transparency directive, this is a good time to clamp down on secretive oil and mining deals that rip off poor countries.

You can find out more about the Unearth the Truth campaign here.

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