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392 Diagnosing Corruption in Ethiopia
survey, 25 percent of respondents were aware of corruption in this area—
with 6 percent aware of it at the federal level, 25 percent at the regional
level, and 13 percent at the city level.
In relation to contracts with contractors and suppliers (contracts for the
supply of work, services, and materials for the excavation and operation
of mines and the construction of mine buildings and related infrastructure
such as roads, power, and water supplies), the major risks are in
tendering, submission of claims, and concealment or approval of defective
works. Eleven percent of respondents had witnessed or heard of corruption
in this area.
In relation to falsification of quality, mining companies may commit
fraud by making false declarations about the identity and quality of
minerals or by bribing certifiers to approve false declarations. A major,
ongoing investigation into corruption of this type is under way in
Ethiopia. Twenty-four percent of respondents were aware of corruption
in this area.
In relation to theft of mineral product and mining equipment, workers, local
inhabitants, or gangs may steal mineral products or mining equipment, and
19 percent of respondents were aware of corruption in this area.
Detailed Overview of Risk Areas
To diagnose corruption in the Ethiopian mining sector, the mining cycle
has been divided into the seven areas of risk identified above. In relation to
each area, the analyses summarize the key corruption risks, present hypothetical
examples of corruption, consider the respondents’ perceptions of
corruption, assess current anticorruption controls, rate the degree of risk,
and, where appropriate, recommend further anticorruption measures.
Risk 1: Issuing of licenses
Potential risks in sector
The key potential corruption risks concerning issuing of licenses in the
Ethiopian mining sector include the following:
• Bribes are paid or extorted to issue licenses.
° A mining company could be required to pay a large premium in
return for a mining license. Senior officials and the mining company
could keep this premium secret, and the officials could receive
payment in offshore bank accounts. (This example is not currently an
issue in Ethiopia because payment of premiums is not required.)