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Corruption in the Mining Sector: Preliminary Overview 391
In the survey, 9 out of 15 respondents thought that corruption in the mining
sector in Ethiopia was much less frequent than in other countries in
Africa, 4 out of 15 thought it was less frequent, and 2 out of 15 thought
it was the same. No one believed that it was more frequent.
In relation to issuing of licenses, the main corruption risks surround
officials who either extort or accept bribes from mining companies to
(a) issue licenses, (b) issue licenses more quickly, or (c) impose lessonerous
license conditions. There is also a risk that officials may secretly
have ownership stakes in companies to which licenses are granted;
acquire land for which a license application has been made; demand a
share in mining companies or in their profits; and manipulate license
registration to give themselves or their associates prior registration. This
latter type of corruption was seen as facilitated by the territorial overlap
between licensing authorities. In the survey, 32 percent of respondents
were aware of corruption in this area—with 32 percent aware of
it at the regional level, 26 percent at the federal level, and 11 percent
at the city level.
In relation to compliance with license conditions, there is a major risk
that nonethical companies might operate without a valid license or deliberately
fail to comply with license conditions and thereafter conceal those
breaches and bribe officials to overlook them. There is also a risk of
inspectors demanding bribes to not report breaches and of officials
requiring mining companies to take actions that will personally benefit
the officials. In the survey, 37 percent of respondents were aware of corruption
in this area—with 37 percent aware of it at the regional level,
32 percent at the federal level, and 11 percent at the city level.
In relation to mining revenues, the main revenue-related corruption
risks concern mining companies that make false declarations about cost,
output, and profits to reduce the royalties and taxes payable to the government
or that bribe government auditors and inspectors to approve the
false declarations. There is also the risk of illegal sale of mining products.
In the survey, 24 percent of respondents were aware of corruption in this
area—with 18 percent aware of it at the federal and city levels, and
12 percent at the regional level.
In relation to compensation and obligations to local inhabitants, officials or
community leaders may steal compensation that should have gone to local
inhabitants; mining companies may bribe officials to set compensation
below a proper rate; and local inhabitants may, to claim compensation,
falsely claim that they occupy land subject to a license application. In the