Bribery and corruption

Bribery and corruption are major problems for many countries across the globe – but particularly for low-income countries, where such crimes only help to perpetuate a cycle of poverty and, ultimately, hinder development.

According to statistics, corruption, bribery, theft and tax evasion cost developing countries some US$1.26 trillion per year – a figure equivalent to the economies of Switzerland, South Africa and Belgium combined. Such a significant amount could lift the world’s 1.4 billion people who are living on less than $1.25 a day above this threshold for at least six years.

For governments of such countries, including those which rely heavily on the extractive industries, it is crucial that they receive all the proceeds of mining that are owed to them, and that nothing is lost due to irresponsible corporate behaviour or unscrupulous officials. And the poorer the country, the more important it is that revenues are accounted for.

In this context, mining with principles means the extractive sector complying with – or exceeding – host-country laws and regulations, and working together with governments to combat bribery and corruption.

Preventing bribery and corruption
ICMM member companies are required to implement policies and practices which seek to prevent bribery and corruption. The first of ICMM’s 10 Principles calls for ethical business practices and sound systems of corporate governance. By having an open, unambiguous and transparent approach in this area, a company will make itself less susceptible to dishonest business dealings wherever it operates.

Our efforts to eradicate bribery and corruption in the extractive industries align with the United Nations’ Sustainable Development Goal (SDG) 16, which seeks to promote peaceful and inclusive societies for sustainable development. According to the UN’s latest report on SDG16, in order to combat corruption, the rule of law also needs to be tightened in a number of countries.

We believe that good governance, transparent tax regimes and tackling corruption enhance the social and economic opportunities in mining countries – as well as being good for business.

Additionally, there is undoubtedly a clear link between transparency and combatting bribery and corruption. The UN believes that one positive trend in global efforts to combat such crime is the fact that more countries are adopting freedom of information policies and rules. While there is still a lack of enforcement in this area, this increased emphasis on transparency and on access to information helps citizens to hold their own governments to account.

To this end, ICMM has championed and actively participated in the Extractive Industries Transparency Initiative (EITI) since its launch in 2003. This global gold standard for progress – which works by promoting an open, honest partnership between governments, companies and civil society – now underpins good governance in the extractives sector.

ICMM members lead by example
ICMM believes that good governance, transparent tax regimes and tackling corruption enhance the social and economic opportunities in mining countries – as well as being good for business.

According to the UN in 2015, over 18 per cent of firms worldwide reported receiving at least one bribery request – a figure that rose to 25 per cent when only low and lower middle income countries were considered. Given the number of ICMM members and other mining companies operating in these low-income nations, it’s clear just how important it is that the industry has the right policies and procedures in place. Weaknesses in the rule of law in many low-income, mining-dependent countries only make this even more essential.

To this end, BHP’s Operating with Integrity commitments apply wherever it operates in the world. The company’s anti-corruption standards prohibit employees from making facilitation payments to government officials to obtain routine services for which BHP should be legally entitled. The senior management is also required to incorporate anti-corruption compliance into the key performance indicators for the business – which, ultimately, determine employee remuneration.

Anglo American’s Business Integrity Policy, meanwhile, states that corruption undermines its own commitment to sustainable development, adding that “it erodes trust, drives away investment, undermines the rule of law upon which our investment security depends, and increases the costs and unpredictably of doing business.”

In 2014, Anglo American partnered with the Development Bank of South Africa (DBSA) and the Investment Climate Facility for Africa (ICF) in an important project to promote capacity building in 11 municipalities. The project started by measuring each municipality’s capacity, including in such areas as financial management and governance, before helping to address shortfalls. In addition to capacity building, the project helped tackle financial irregularities and corruption, while also attracting inward investment – which itself helps to pay for services that further combat corruption.

ICMM believes that projects such as these can help bring sustainable development into the mainstream, by supporting national policies and government regulations that address key issues such as corruption, human rights abuses, bribery, tax evasion, and conflict.