Officials and mining companies using corruption around licenses and contracts to deny citizens a fair share

Feb 02, 2025 News

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…companies paying bribes to shortcut environmental studies – NRGI

 By: Davina Bagot

Kaieteur News-The Natural Resource Governance Institute (NRGI), in its latest report on the red flags for corruption, has outlined the areas often used to fester corrupt acts in mineral licensing and contracting.

According to the report, “Some government officials and mining company executives are already using corruption around licenses and contracts to deny citizens and communities a fair share of the benefits of mining transition minerals. Through corruption that starts in the licensing and contracting phase, companies are neglecting and harming vulnerable populations and ecosystems with impunity. And corruption is delaying mineral production, sometimes for years.”

NRGI pointed out that corruption in transition mineral supply chains is a global problem, with its study identifying a whopping 53 cases of corruption in 30 countries across five continents, involving a diverse range of minerals. Corruption cases have been documented in eight out of the 10 countries with the highest levels of transition mineral reserves.

The Institute said, “Over and over, our dataset shows mining firms and officials conspiring to block competition for mining rights and capture windfall profits they did very little to earn. This can involve officials taking hidden interests in companies; allowing middlemen to buy minerals or licenses at depressed prices and then resell to more experienced firms; using contracts to siphon off royalties that could have gone to the state; or convincing captured state-owned firms to borrow money for their essentially private business ventures.”

Meanwhile, the resource watchdog found that other companies are paying bribes to have lower tax and royalty payments written into their licenses and contracts. They are also using their favored status, along with familiar tricks of tax avoidance and evasion, to pay far less than they owe. In other cases, the country and its people receive no benefits from mining licenses at all because the companies that won them through graft lack the expertise, capital, or will to do the hard work of extraction.

The Natural Resource Governance Institute said it has not attempted to estimate the total costs of losses nonetheless, the available estimates of lost public revenue in many of the individual cases are huge—often hundreds of millions or even billions of dollars.

Data, however, shows that corruption paved the way for and papered over, many destructive, unjust business practices. “Mining firms paid bribes during licensing and contracting processes to cut short consultations with communities, skip environmental and social impact assessments and environmental audits, and convince traditional and local leaders to betray their constituencies. Companies behaved with similar impunity when they started developing their corruptly acquired assets,” the Institute explained.

It added that there were cases where firms illegally took possession of and destroyed land, including ancestral farms, archaeological sites, and religious shrines, without legally required negotiations or paying adequate compensation. Communities endured forced relocations.

“The water that people used for cooking, drinking and washing was diverted into extraction projects or polluted. Community development projects promised during license or contract negotiations never took place.

Working conditions in some mines were terrible, with reports of child labor, dangerously long shifts, lack of sanitary facilities or safe ventilation, explosions and collapses,” according to the report.

The Institute said that many companies that won their rights through corruption, likewise ignored rules and standards meant to constrain their behaviour, with disastrous results.

“They violated air and water quality regulations, sometimes repeatedly and often with no punishment from the government. Over time, toxic dust from mines stunted crops and entered nearby homes; leaks and waste dumps killed marine life, sickened communities, and introduced harmful levels of lead and other poisons into people’s food and bodies. Once some companies were caught harming people and ecosystems, they seemingly used their politically protected status to escape accountability,” NRGI pointed out.

Further to that, there were cases where companies blatantly refused to cooperate with environmental investigations, intimidated and harmed protesters, and avoided cleanup and remediation even when required by law. When those affected protested— sometimes violently—or went on strike, conditions did not always improve.

NRGI said findings like these echo other research into the socioenvironmental costs of transition minerals—the Business & Human Rights Resource Centre, for instance, found over 500 allegations of human rights abuses in key supply chains over 12 years.

(Officials and mining companies using corruption around licenses and contracts to deny citizens a fair share)

(Officials and mining companies)

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• bribes, contracts, corruption, ENVIRONMENT, licensing, NRGI

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