Diagnosing Corruption in Ethiopia - Ethiomedia

Corruption in the Mining Sector: Preliminary Overview 393
Bribes are paid or extorted to speed up license issuance.
° An official may require the mining company to make a large donation
to a charity if it wants the license to be issued more quickly. Although
the charity may appear to be genuine, it may in fact be a front for a
political party or for the official’s personal or family gain.
Bribes are paid or extorted to impose less-onerous license conditions.
° The mining company may submit a health and safety plan for a mining
license in accordance with good practice, but an official may tell
the company that unless it pays a bribe, he or she will impose additional
and unnecessarily onerous health and safety conditions.
° The mining company may submit an environmental management
plan for a mining license that will inadequately control the leaching
of poisonous chemicals into the water supply. Proper controls would,
for example, cost US$50,000 per year more than the mining company’s
proposed controls, so inadequate controls could save the mining
company US$1 million over the 20-year mine operation. The
mining company may pay the official responsible for approving the
license a bribe of US$20,000 to approve the deficient conditions.
Officials demand a share in the profits of a mining company.
° A mining company may agree to give an official’s relative a free share
in the profits of the mining project if it receives a license on beneficial
terms.
Officials grant licenses to companies secretly owned by them.
Officials secretly acquire land that is subject to a license application.
° An official who is aware that mining may take place on an area of
land may lease the land in advance of the mine licensing. Once the
license is granted, the value of the land may materially increase. The
official thereby profits from his or her inside knowledge by selling or
licensing his or her rights to the land to the mining company.
Companies illegally on-sell licenses granted to them.
Officials manipulate license registration.
° An official in the department that issues mining licenses may hear
that a mining company wishes to apply for a license. The official may
alert a business person with whom he or she has connections, and the
business person may quickly apply for a license over the same area.
The official grants the license to the business person. The mining
company then has to purchase the license from the business person,
and the business person shares the profit with the official.
° A prospector may discover minerals, mark the area, and contact the
relevant licensing authority to receive a discovery certificate. A corrupt