CIP newsletter CENTER FOR PUBLIC INTEGRITY Mozambique June 2010 Good Governance, Transparency, Integrity Nº 6 In this issue Mining & oil transparency Mining and oil & gas transparency EITI implementation Mozambique moves to Government & World Bank delays implement EITI EITI is only the start All payments and receipts in the mining and oil and gas sectors starting Civil society action from 2008 will be published in detail, the Extractive Industries Elite moves into mining Transparency Initiative (EITI) Coordinating Committee decided in a workshop in Maputo 19-20 May 2010. Mozambique was admitted as a candidate member of EITI in May 2009 and must submit its first report to the EITI Secretariat in Oslo by 14 May 2001. EITI is based on comparing payments made by mining companies with receipts reported by government, and the committee decided that its first report should be for 2008, which is the most recent year for which data is available. Results will be reported on a reconciliation basis, with each side reporting by company and type of payment, for example: Company: Sasol; Payment type: Company tax; Amount: X. Director: Marcelo Mosse All companies in the sector are covered, including those doing investigation Research Director: Adriano Nuvunga and prospecting, and both state and private companies are included. All Editor: Joseph Hanlon payments and receipts are to be reported, including taxes, contract signing bonuses, contributions by companies to training and capacity building, Publisher: community funds, and social responsibility payments. Centro de Integridade Pública - Registo Legal nº020/Gabinfo/2007 Any discrepancies between company and government reports will be Rua Frente de Libertação de investigated by an independent auditor (so long as the cost of the Moçambique (ex-Pereira do Lago), investigation is not more than the amount in question). Under rules set out by 354, r/c. Tel: 00 258 21 492335 - Fax: 00 258 the EITI Secretariat in Oslo, the reconciliation and audit must be done by a 21 492340 - Caixa Postal:3266 recognised international audit firm, chosen by public tender. The Maputo [email protected] workshop instructed the Committee Secretariat to draft terms of reference for www.cip.org.mz selecting the audit firm. Maputo-MOZAMBIQUE The Coordinating Committee is headed by the Vice Minister of Mineral Resources, Abdul Razak, and has four representatives each chosen by government, civil society, and the mining companies. It has a five person CIP NEWSLETTER 6 – June 2010 1 secretariat, who were hired by open competition and the posts were advertised Coordination Committee in the daily Notícias. Candidates were Abdul Razak – Committee President interviewed and chosen by three members of the Committee. The Executive Secretary is an auditor by Government Representatives profession and before joining EITI was Minerals (MIREM) – Benjamim Chilenge internal auditor of the Nampula roads and Planning & Development (MPD) – Fausto bridges company (ECMEP - Empresa de Mafambissa Construção e Manutenção de Estradas e Environment (MICOA) – Paula Panguene Pontes). One member of the staff is a driver, Finance (MFin) – Isabel Sumar although the Committee has no car. The participants in the Maputo workshop Civil Society came from various places in Mozambique IESE – Carlos Castel-Branco and included representatives from mining CIP – Tomás Selemane and oil and gas companies, ministries, SNJ – Ângelo Chipanga national directorates, universities and civil UEM – Daud Jamal society organisations. Guests came from East Timor and Liberia, and included the EITI Private Sector director for English and Lusophone Africa, KENMARE – Gareth Clifton Eddie Rich. Tomás Selemane STATOIL – Paulino Gomes ARTUMAS – Francisco Vieira VALE – Amado Mabasso Hold-ups in implementing EITI The Committee normally meets twice a First government month. was slow; now Secretariate it’s the World Bank Executive Secretary – Milagre Langa Public Relations – Hélder Sindique Driver – Sérgio Madede The process of implementing EITI now faces Accountant– Alice Tibana delays because of the failure of the World Auxiliar – Lério Langa Bank to establish the Trust Fund intended to channel donor funds to the Minerals Ministry (Ministério dos Recursos Minerais, up. Plans for the secretariat were drafted MIREM) to run the secretariat. and approved by the Committee and the Last year, the process was delayed by the team was recruited. Then the 19-20 May government. From May to December 2009, workshop was organised. nothing was done to recruit a secretariat or But the process cannot advance any define what Mozambique had to do to further until money is available from the satisfy EITI, so it was impossible to hire the Trust Fund. The Secretariat has been external auditor. Everyone in government operating for two months, but without a was occupied with the election campaign budget or salaries. The World Bank is not and then forming the new government. commenting officially, but informally puts Once the new government was formed most of the blame on the government for and it was clear that the minister and vice- delays because of the elections. Abdul Razak minster of mineral resources had kept their only sent the formal request for money posts, the process could finally start. Abdul from the Trust Fund in March of this year. Razak, vice minister and committee Apparently the request was agreed quickly, president, dynamic as always, raced to catch but the Bank’s legal department has also CIP NEWSLETTER 6 – June 2010 2 been moving very slowly in setting up the where they work – but this, too, appears to Trust Fund, and no money is available. be outside EITI. Implementation of EITI is considered by And there has been little discussion the International Monetary Fund (IMF) to be about the conflicts between mining and one the “benchmarks” for Mozambique, prospecting on one side and farming, and this is set out in the November 2009 fishing, hunting and tourism. Liberia, which Letter of Intent. The first report must go to also had a representative at the May the EITI secretariat by 14 May 2011, if workshop, has extended EITI to include the Mozambique is to be considered timber industry as well as mining. “compliant”; large amounts of data must be Mozambique needs further debate on collected and audited in less than a year. So these issues. For example, some say that Abdul Razak and the Committee are running secrecy is at the very heart of negotiations to meet very tight deadlines, without and business deals. But when the secrecy money. TS covers public goods and services, then the heart of the negotiations too often turns to favouritism, diversion of money, theft and EITI is only the first step misconduct. The government says that contracts have anti-corruption clauses, but EITI in its initial conception is only this is meaningless if there is no verification. comparing two sets of data – what To avoid misconduct, contracts need to be companies say they give to governments fully public. and what governments say they receive. It EITI is only a start. This Committee, and seems a simple mechanical process. But it is the public in general, must look for much a major step forward and politically very broader transparency. Tomás Selemane important because it makes transparent key information which was previously hidden. Nevertheless, EITI is only a start, because EITI and how it works the extractive industries are very complex, The Extractive Industries Transparency and much more information remains hidden Initiative (EITI, www.eiti.org) establishes – about the awarding and then trade in land global norms for transparent manage- use titles and prospecting licences, and ment of revenue from natural resources, about the mining contracts themselves. All through publication of payments and of this is outside the ambit of EITI. receipts and then comparing the two. Secret contracts are a particular issue, EITI was launched by the then British and it is hoped that discussions on new Prime Minister Tony Blair at the world legislation on mega-projects and public- conference on sustainable development private partnerships (PPPs) will bring a in Johannesburg in September 2002, and breath of fresh air into the debate. EITI does followed up by an inaugural conference not say anything about contracts. East Timor in London in June 2003. The initiative has (which had a representative at the May support from the international workshop) has made all contracts public. community, notably the IMF and World As we note in the article below, there are Bank. huge conflicts of interest, with legislators, Membership in EITI is voluntary. Two ministers, ex-ministers and the families countries, Liberia and Azerbaijan, are full actively involved in the mining sector. This members (called “compliant”) and 28 are should be open to public debate. candidates, including Mozambique and Regulations approved in 2007 establish that two of its neighbours, Zambia and the mining and oil and gas industries pay a Tanzania. part of their profits to the local communities CIP NEWSLETTER 6 – June 2010 3 Branco of IESE and Tomás Selemane of CIP. Civil society working But the coalition has a second, broader, aim on extractive industries of investigation, monitoring, and advocacy to turn the extractive industries into an Six Mozambican civil society organisations instrument for dynamic sustainable (CSOs) have formed a coalition to work development for the country, and which more broadly on the extractive industries, benefits the people. Therefore, although its including forestry and fishing. It is linked to initial focus is on EITI, the coalition will not the global Publish What You Pay movement. be restricted to EITI. They are the Associação de Sanidade Each of the member organisations has its Ambiental (ASA; Environmental Health own experiences and role. CIP is hosting and Association) and the Associação de Apoio e coordinating the coalition, and will stress Assistência Jurídica às Comunidades (AAAJC; networking and publicity, including a report Community Legal Assistance Association), on civil society and EITI and an EITI both in Tete; Associação para o newsletter.