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380 Diagnosing Corruption in Ethiopia
mining operations, monitor compliance with license conditions, and
ensure that mines are correctly declaring output and profit for royalties
and taxes. There are no detailed guidelines in relation to the environmental,
health and safety, and social conditions that should be attached to
licenses. The lack of guidelines causes uncertainty during both license
issuing and inspection, which can lead to corruption.
Chapter Structure
This chapter first provides an overview of corruption in the Ethiopian
mining sector, beginning with a look at the structure of the international
mining sector, whether the sector is perceived as corrupt, and, if so, why.
International factors affect the Ethiopian mining sector because many of
the mining companies operating in Ethiopia are international companies
and because the Ethiopian sector operates similarly to the mining sectors
of other countries in many ways.
Following the next section, “Corruption in the International Mining
Sector,” the analysis proceeds as follows:
• “Overview of the Ethiopian Mining Sector” examines the size and
nature of the Ethiopian sector in particular.
• “The Legislative and Institutional Framework for Mining in Ethiopia”
presents the legislative framework and institutional arrangements that
govern the Ethiopian sector.
• “Corruption Risk in the Ethiopian Mining Sector” is the heart of the
analysis—identifying the seven main corruption risk areas, examining
the levels of corruption in these areas, presenting hypothetical examples
of corruption in each area, and specifying recommendations to
improve anticorruption procedures in each area.
• The chapter concludes with a number of general anticorruption recommendations.
Corruption in the International Mining Sector
Any interface between two people that involves money or other advantage
creates a corruption risk—a risk that increases as the complexity of
transactions and the amounts at stake increase. The international mining
sector requires large sums to explore, develop, and operate mines, but the
potential returns on a successful mine are also extremely high.
Transparency International’s Bribe Payers’ Index 2008 listed mining as
the fifth most corrupt sector out of 19 international sectors surveyed