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Corruption Risks in Mining Approvals Australian Snapshot: Mining for Sustainable Development

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Corruption Risks in Mining Approvals Australian Snapshot: Mining for Sustainable Development CORRUPTION RISKS IN MINING APPROVALS AUSTRALIAN SNAPSHOT: MINING FOR SUSTAINABLE DEVELOPMENT October 2017 2 - Corruption Risks in Mining Approvals: Australian Snapshot ABOUT THIS REPORT This Report Acknowledgments Disclaimer Transparency International’s Mining for The BHP Billiton Foundation supports The research, language, views, Sustainable Development Programme the participation of Transparency conclusions and strategies outlined in (M4SD) seeks to enhance transparency International Australia in Phase I of this document have been created by and accountability in the awarding of the M4SD Programme. Globally, the the Transparency International National mining-related permits, licences and M4SD Programme is also funded by the Chapter in Australia and are not contracts. Australian Department of Foreign Affairs [necessarily] endorsed by Transparency and Trade. International, Transparency International This summary report documents findings Australia or BHP Billiton Foundation. of research into the mining approvals The Australian M4SD research was process in Western Australia and undertaken by Helen Langley on behalf of The material set out in this publication Queensland. The report also outlines the Transparency International Australia. is intended for general information only. ways in which Transparency International The full report is available at: To the extent permitted by local laws, Australia is engaging with government, www.transparency.org.au Transparency International, Transparency industry and civil society to strengthen International Australia and BHP Billiton transparency and accountability in the This summary report was prepared by Foundation exclude liability for and are awarding of mining-related permits, Tim Grice on behalf of Transparency not liable to any person with respect to licences and contracts. International Australia. It is based on the the accuracy or completeness of the full report authored by Helen Langley. information set out in the publication. Desktop publishing of this summary report Get in contact is by Leapfrog International. For enquiries regarding the Australian Report Information: research into mining approvals or other Transparency International Australia Title: Corruption Risks in Mining Approvals: programs please contact: Australian Snapshot Publication date: October 2017 ISBN: 0 9752439 2 6 [email protected] Cover page: +61 3 9877 0369 www.transparency.org.au Geologist Prospecting for Iron Ore, Pilbara, Australia, Source: Adwo/Shutterstock Corruption Risks in Mining Approvals: Australian Snapshot - 3 FOREWORD Serena Lillywite, TIA CEO For the past 15 years, I have been Corruption risks are not just a developing and industry, would help reduce risks that working in corporate accountability, good country paradigm. This research confirms could enable corruption to occur. governance, and business and human even mature mining jurisdictions, such rights. This has included the mining sector, as Australia, have vulnerabilities in the While Australia has systems of with a focus on the policy and practice of mining approvals process that could result transparency and accountability in place, Australian mining companies operating in corruption and compromised decision- more needs to be done to address abroad – often in corruption and conflict- making. transparency of negotiation processes and prone countries. agreements, including native title parties. A key risk identified for large scale mining Understanding corruption risks in the and coordinated projects (associated This report is an essential resource for mining approvals process is vital to infrastructure), is inadequate due diligence government, industry, civil society, and the ensuring mining contributes to sustainable investigation into the character and public – those with an interest in ensuring development, and shared benefits. integrity of applicants for mining approvals. mining contributes to economic, social, This includes a lack of investigation of and environmental prosperity. If corruption risks are identified, and beneficial ownership. acted upon, before mining activities get It shines a light on the corruption underway, better outcomes for impacted Without adequate due diligence—even vulnerabilities in the mining approvals communities, the natural environment and basic research into the track record of process, and provides a roadmap for better all citizens, can be achieved. mining applicants—there is a risk that policy and practice. permits will be awarded to companies with This important research, Corruption Risks: a history of non-compliance or corruption, Mining Approvals in Australia, documents including in their operations in other the existing system of checks and countries. balances that require transparency and accountability in the exploration license, The risk assessment also identified a and mining lease, approvals regime in high potential for industry influence and Australia. state and policy capture in the awarding of mining approvals. Greater regulation The report identifies vulnerabilities in both of political donations, lobbyists and the the Western Australia and Queensland movement of staff between government approvals process that could enable corruption to occur. Chief Executive Officer Transparency International Australia 4 - Corruption Risks in Mining Approvals: Australian Snapshot MINING FOR SUSTAINABLE DEVELOPMENT Global M4SD Programme Combatting Corruption in Mining Approvals Transparency International’s (TI) Mining Mozambique, Niger, Peru, Papua New with key stakeholders as part of a global for Sustainable Development Programme Guinea, Sierra Leone, South Africa, strategy to enhance transparency and (M4SD) addresses where and how Zambia, and Zimbabwe. accountability in the mining approvals corruption can get a foothold in the mining process. The programme will advocate approvals process. The aim of the M4SD M4SD’s first phase, 2016-2017, assessed for the improvement of national and Programme is to identify the systemic, corruption risks in 20 resource-rich international policy and practice, and regulatory and institutional vulnerabilities countries using the Mining Awards the strengthening of existing mining to corruption in the awarding of mining Corruption Risk Assessment Tool (MACRA). transparency initiatives and standards. licences, leases and contracts. A soon-to-be-released global analysis report presents the global snapshot By combatting corruption before ground Led by Transparency International of the corruption risk factors found to is even broken, TI national chapters Australia, participating M4SD national be most common across participating from across the globe are helping to chapters are Armenia, Australia, Cambodia, countries in Africa, Latin America, Central build the foundations for accountable Canada, Chile, Colombia, Democratic Asia, Asia Pacific and North America. In and transparent mining that benefits Republic of the Congo, Guatemala, M4SD’s second phase, beginning 2018, communities, and supports social and Indonesia, Kenya, Liberia, Mongolia, participating TI national chapters will work economic development. The Problem: Corruption Risks in Mining Approvals The mining sector has the potential to contribute to inclusive development through shared infrastructure, the creation of economic opportunities and increased revenue to government. However, corruption at the start of the mining chain, in mining approvals, can have a domino effect by undermining good governance in the rest of the mining cycle. Transparency International defines corruption as the abuse of entrusted power for private gain. Types of corrupt conduct specifically in mining approvals include a senior official soliciting speed-money or facilitation payments for processing a licence application, a member of a tender bid review panel favouring a particular applicant because of personal interest in the company, a company committing to licence conditions that it has no intention or ability to fulfil, and community leaders using land access negotiations for Super pit,Kalgoorlie, Western Australia private benefit. Source: Taras Vyshnya/Shutterstock Australian M4SD Research: Mining Approvals in WA and Qld The Australian research for Transparency research focussed on mining leases and integrity frameworks; Hansard, court International’s M4SD Programme environmental approvals for large mines cases, journal articles, books and other investigated mining approvals in Western and infrastructure projects under State and published research to understand Australia and Queensland. Commonwealth law. the context of mining approvals, and to analyse risk; and news articles for The research involved an investigation Forty-seven interviews were conducted evidence of risk. into the context of mining in Australia and with experts from government, industry, the process for approving the granting of civil society, academics, Indigenous A number of risks that could create an mining leases or licences and associated traditional owners, and consultants in enabling environment for corruption approvals required before mining activities Perth, regional Western Australia and to occur were identified and ranked. can commence. In Western Australia, the Brisbane. Desktop research involved Representatives of civil society, industry research focussed on the investigation the collection of data from relevant Acts and academia validated the risks of exploration licences, mining leases, and regulations, published government assessments. Government
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