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Corruption in the Mining Sector: Preliminary Overview 409
• Procurement officials give contracts to contractors in which they have an
interest.
° The procurement manager of the mining company may appoint a
contractor that he or his family secretly owns.
• Contractors claim payment for work that was not done or materials that
were not delivered.
° The earthworks contractor may claim payment from the mining
company for more loads of excavation than it actually carried.
° The contractor appointed to construct the mine buildings may have
an obligation to excavate down to minus 2 meters for the foundations
of the mine buildings. However, it may only dig down to minus 1
meter, and therefore save all related excavation, steel, and concrete
costs. It may pay a bribe to the construction supervisor so that the
supervisor falsely certifies that the foundations were excavated to
minus 2 meters.
• Contractors conceal defective works.
• Contractors pay bribes to have fraudulent claims and defective works
approved.
• Officials require mining companies to give work to a company owned by
the official or in which he has an interest.
• Mining companies fraudulently refuse to pay contractors.
° The mining company could corruptly refuse to pay the contractor for
the work properly undertaken by the contractor and raise a false
counterclaim against the contractor alleging defects in its work as
justification for nonpayment.
Existing procedures for contracts with contractors and suppliers
This risk of corruption does not appear to be controlled in any way by the
federal, regional, or city licensing authorities. It would be difficult for the
authorities to control this risk because these activities are normally
between private sector mining companies and private sector contractors
and suppliers. MOM does not itself have powers to ensure enforcement
of contract conditions between mining companies and contractors and
suppliers. Many mining companies are international companies and likely
have procedures to help control these risks.
The interviews and workshop revealed no personal knowledge of these
types of corruption.
Two out of the five people to respond to this section of the survey
indicated experience of this type of corruption.