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398 Diagnosing Corruption in Ethiopia
Recommendations to mitigate risks
• Increase staff to levels adequate to handle the increasing number of
license applications and the complex issues that arise.
• Increase training of staff to deal with the complex issues.
• Ensure that comprehensive guidelines exist to help officials and mining
companies know which conditions to apply to a license—particularly
detailed environmental and health and safety guidelines that comply
with international best practice.
• Increase local community involvement in determining the applicable
license conditions.
Risk 2: Compliance with license conditions
Potential risks in sector
In the second key area of risk—compliance with license conditions—
the potential corruption risks in the Ethiopian mining sector include the
following:
• Mining companies deliberately breach license conditions (which constitutes
fraud).
° The environmental management plan for a mining license requires
the mining company to treat wastewater before releasing it into the
water course. The mining company may deliberately not do so,
thereby saving considerable cost. Although the mining company
might not have paid a bribe to any official, a deliberate breach of a
license condition to make an additional profit is likely to defraud the
government.
° A condition of the mining company’s social development plan
requires the company to build an access road to the mine site to a
minimum specification designed to also benefit the local inhabitants.
To save cost, the mining company may build the road to a
cheaper specification. The road breaks up, depriving the area of the
good transport link it had expected, resulting in loss to the local
community.
° A license condition requires the mining company to ensure that the
conditions for the mine workers are safe. To save cost, the mining
company may deliberately not comply, the result of which may be
that a worker is killed.
° A license condition requires the mining company to use a specified
amount of equipment to maximize the mine output. The company
may not wish to mine the product but may obtain the license