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408 Diagnosing Corruption in Ethiopia
• A local committee including residents, local officials, and religious leaders
should oversee the administration of compensation to reduce the
risk of the money being stolen.
• Some mining companies reported difficulties with local inhabitants
who, when they hear about a license being issued, plant crops on areas
over which a license has been granted. The compensation arrangements
could be changed to account for the length of time a farmer has occupied
the land. This would help prevent this type of speculative
planting.
• The inhabitants should know how they can complain if the mining
company breaches its mining conditions or compensation obligations.
• Greater collaboration between the mining company and local inhabitants
should be encouraged. If the local inhabitants are aware of the
benefits the mine can bring to the community as well as the importance
of ensuring that the company complies with its mining conditions, the
inhabitants could both support and monitor the mining operation.
• Some mining companies complained of confusion and overlap in
some cases between the different responsibilities of (a) the federal,
regional, and city governments; and (b) the administrations of the
zones, woredas, and kebeles. Confusion and uncertainty can increase
the risk of corruption because the power and discretion of officials
increase under such conditions. These responsibilities should be clarified
and published.
Risk 5: Contracts with contractors and suppliers
Potential risks in sector
In the fifth key area of risk—contracts with contractors and suppliers—
the potential corruption risks identified in the Ethiopian mining sector
include the following:
• Tenderers pay bribes to win contracts.
° The contractor could pay a bribe to the procurement manager of the
mining company in exchange for the contractor being appointed.
° The procurement manager of the mining company may be required
to purchase mining equipment from overseas. Several different suppliers
may be able to provide the equipment. In return for a bribe
paid by one of the suppliers, the procurement manager may write the
specification for the equipment in such a way that only the supplier
that paid the bribe could win the tender.