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404 Diagnosing Corruption in Ethiopia
premiums (in the form of signature bonuses) on the award of some petroleum
concessions, so these could be introduced in the future in the mining
sector, with the resultant corruption risk.
The interviews and workshop revealed a perceived high risk of the
following:
• Mining companies not correctly declaring their output or profit, thereby
denying royalty and income tax to the licensing authority
• Artisanal miners mining gold and selling it to illegal intermediaries who
smuggle it out of the country
• Artisanal miners illegally digging in a seam that a major mining company
has been exploring or excavating.
The survey revealed the following perceptions in relation to corruption
in mining revenues:
• Out of the 17 people who completed this section of the survey, four
(24 percent) were aware of bribery or fraud in relation to mining
revenue.
• Two were aware of bribery or fraud from their organizations’ experiences
and four from rumor.
• Three believed that such bribery or fraud took place at the federal level,
two at the regional level, and three at the city level.
These results suggest that current preventive mechanisms are not
adequate.
Risk rating: High
The actual risk in Ethiopia of mining companies falsifying mining revenue
at the federal license level is considered to be high.
Recommendations to mitigate risks
• The number of trained inspectors and auditors should be materially
increased.
• At large mines that have a very high-value output, an official could be
permanently stationed at the mine to monitor output.
• At smaller mines, officials could make periodic but frequent visits to
monitor average output.
• These officials could be periodically rotated to decrease the risk of
corruption.