<strong>Corruption</strong> <strong><strong>an</strong>d</strong> <strong>large</strong>-<strong>scale</strong> l<strong><strong>an</strong>d</strong> <strong>acquisitions</strong>: <strong>an</strong> <strong>an</strong>alysis <strong>of</strong> <strong>the</strong> <strong>role</strong> high level corruption plays inenabling elite capture <strong>of</strong> l<strong><strong>an</strong>d</strong>Global Witness, October 2012AbstractThe global surge in <strong>large</strong>-<strong>scale</strong> l<strong><strong>an</strong>d</strong> investments is increasingly linked to signific<strong>an</strong>t risks <strong>of</strong> negative impactson access to <strong><strong>an</strong>d</strong> control over natural resources, food security, hum<strong>an</strong> rights, <strong><strong>an</strong>d</strong> <strong>the</strong> environment. Theseinvestments have been plagued by secrecy, with associated deals <strong>of</strong>ten made without <strong>the</strong> knowledge orconsent <strong>of</strong> affected communities, who are thus unable to hold governments or investors to account. Thisfosters <strong>an</strong> environment where corruption <strong><strong>an</strong>d</strong> state capture becomes <strong>the</strong> norm, especially in countrieswhere rule <strong>of</strong> law is weak, <strong><strong>an</strong>d</strong> <strong>the</strong> m<strong>an</strong>ifestation <strong>of</strong> deteriorating govern<strong>an</strong>ce previously experienced as <strong>the</strong>resource curse in oil, gas <strong><strong>an</strong>d</strong> mining sectors. However, international responses have yet to adequatelyunderst<strong><strong>an</strong>d</strong> such processes or develop adequate policy <strong><strong>an</strong>d</strong> regulatory responses.This paper presents research on <strong>the</strong> <strong>role</strong> high level corruption between business <strong><strong>an</strong>d</strong> political elites <strong><strong>an</strong>d</strong>subsequent govern<strong>an</strong>ce failures, plays in <strong>the</strong> most damaging investment projects. It provides case studieswhich fur<strong>the</strong>r underst<strong><strong>an</strong>d</strong>ing <strong>of</strong> how corruption undermines tr<strong>an</strong>sparency <strong><strong>an</strong>d</strong> accountability during <strong>the</strong>allocation <strong>of</strong> l<strong><strong>an</strong>d</strong> <strong><strong>an</strong>d</strong> natural resources for investment purposes, particularly <strong>the</strong> <strong>role</strong> <strong>of</strong> local elites. It<strong>an</strong>alyses how griev<strong>an</strong>ce <strong><strong>an</strong>d</strong> accountability mech<strong>an</strong>isms are being corrupted by local elites, fur<strong>the</strong>rpreventing victims <strong>of</strong> l<strong><strong>an</strong>d</strong> grabbing from gaining redress. Finally, it concludes with recommendations forhow this corruption <strong><strong>an</strong>d</strong> its consequences c<strong>an</strong> be tackled.1) Defining “corruption” in “<strong>large</strong> <strong>scale</strong> l<strong><strong>an</strong>d</strong> grabbing”<strong>Corruption</strong> is defined as “<strong>the</strong> abuse <strong>of</strong> entrusted power for private gain”. 1 This me<strong>an</strong>s that <strong>the</strong> subject <strong>of</strong>corruption being a problem in <strong>large</strong>-<strong>scale</strong> <strong>acquisitions</strong> <strong>of</strong> l<strong><strong>an</strong>d</strong> for investment purposes is not just relating tobribery (giving or receiving something <strong>of</strong> value to influence a tr<strong>an</strong>saction). It also includes a broader r<strong>an</strong>ge<strong>of</strong> misuses <strong>of</strong> power, including: fraud; extortion; money laundering; embezzlement; collusion; conflicts <strong>of</strong>interest; revolving doors (when <strong>an</strong> individual exploits <strong>the</strong>ir repeated ch<strong>an</strong>ges in jobs between public <strong>of</strong>fice<strong><strong>an</strong>d</strong> private comp<strong>an</strong>ies), violence <strong><strong>an</strong>d</strong> o<strong>the</strong>r forms <strong>of</strong> intimidation. 2The relationship between corruption <strong><strong>an</strong>d</strong> mism<strong>an</strong>agement <strong>of</strong> oil, gas <strong><strong>an</strong>d</strong> mineral resources has been welldescribed within <strong>the</strong> broad literature on <strong>the</strong> “resource curse”. 3 The relationship between corruption <strong><strong>an</strong>d</strong><strong>the</strong> phenomenon <strong>of</strong> “l<strong><strong>an</strong>d</strong> grabbing” however, is less well understood <strong><strong>an</strong>d</strong> it its secretive nature limitsestimations <strong>of</strong> corruption’s extension <strong><strong>an</strong>d</strong> characteristics. 41 For fur<strong>the</strong>r information see: http://www.tr<strong>an</strong>sparency.org/cpi2011/in_detail (last accessed 3rd October 2012).2 For more in-depth descriptions <strong>of</strong> corruption definitions, see: http://www.tr<strong>an</strong>sparency.org/cpi2011/in_detail (lastaccessed 3rd October 2012) <strong><strong>an</strong>d</strong> http://www.sfo.gov.uk/bribery--corruption/bribery--corruption.aspx (last accessed 3rdOctober 2012).3 For definitions <strong><strong>an</strong>d</strong> expl<strong>an</strong>ation <strong>of</strong> <strong>the</strong> “resource curse” phenomena, see: Ross, M. (1999) The Political Economy <strong>of</strong> <strong>the</strong>Resource Curse. World Politics, 51 (297-322), available for download at:http://academics.eckerd.edu/moodle_support/ecUser/EPFiles.php/moodle_20101/653/Ross__The_Political_Economy_<strong>of</strong>_<strong>the</strong>_Resource_Curse.pdf (last accessed 8th October 2012); William Ascher (1999), Why Governments Waste Natural Resources:Policy Failures in Developing Countries, John Hopkins University Press, Baltimore; <strong><strong>an</strong>d</strong> Le Billon, P. (2012) Wars <strong>of</strong> Plunder.London: Hurst & Co.4 Tr<strong>an</strong>sparency International’s 2011 Working Paper #4 entitled “<strong>Corruption</strong> in <strong>the</strong> L<strong><strong>an</strong>d</strong> Sector” contains a good <strong>an</strong>alysis <strong>of</strong><strong>the</strong> <strong>role</strong> corruption plays in inequitable l<strong><strong>an</strong>d</strong> distribution, available for download here:http://www.fao.org/docrep/014/am943e/am943e00.pdf (last accessed 8th October 2012). However, as this paper__________________________________Global Witness <strong>Corruption</strong> <strong><strong>an</strong>d</strong> Large-Scale L<strong><strong>an</strong>d</strong> Acquisitions, Global Witness, October 2012 Page 1 <strong>of</strong> 10
This paper provides a typology <strong>of</strong> this relationship, using two case studies as examples <strong>of</strong> how corruptionc<strong>an</strong> be both a cause, <strong><strong>an</strong>d</strong> <strong>an</strong> effect, <strong>of</strong> bad decisions being made about l<strong><strong>an</strong>d</strong>. Because <strong>of</strong> <strong>the</strong> need to protect<strong>the</strong>se communities, who are still fighting to have <strong>the</strong>ir l<strong><strong>an</strong>d</strong> returned, all identifiable information has beenremoved; which is indicative <strong>of</strong> <strong>the</strong> severity <strong>of</strong> threats <strong><strong>an</strong>d</strong> violence that victims <strong>of</strong> l<strong><strong>an</strong>d</strong> grabbing face on adaily basis.Before we begin, <strong>the</strong> term l<strong><strong>an</strong>d</strong> grabbing also needs to be defined. This paper follows <strong>the</strong> Tir<strong>an</strong>aDeclaration’s 5 definition <strong>of</strong> <strong>large</strong>-<strong>scale</strong> l<strong><strong>an</strong>d</strong> grabbing as “<strong>acquisitions</strong> or concessions that are one or more <strong>of</strong><strong>the</strong> following:i. in violation <strong>of</strong> hum<strong>an</strong> rights, particularly <strong>the</strong> equal rights <strong>of</strong> women;ii. not based on free, prior <strong><strong>an</strong>d</strong> informed consent <strong>of</strong> <strong>the</strong> affected l<strong><strong>an</strong>d</strong>-users;iii. not based on a thorough assessment, or are in disregard <strong>of</strong> social, economic <strong><strong>an</strong>d</strong> environmentalimpacts, including <strong>the</strong> way <strong>the</strong>y are gendered;iv. not based on tr<strong>an</strong>sparent contracts that specify clear <strong><strong>an</strong>d</strong> binding commitments about activities,employment <strong><strong>an</strong>d</strong> benefits sharing, <strong><strong>an</strong>d</strong>;v. not based on effective democratic pl<strong>an</strong>ning, independent oversight <strong><strong>an</strong>d</strong> me<strong>an</strong>ingful participation.”The increasing commercial pressure on l<strong><strong>an</strong>d</strong> since 2008 has been well documented by national <strong><strong>an</strong>d</strong>international policy makers <strong><strong>an</strong>d</strong> <strong>the</strong> media. 6 Between 2000 <strong><strong>an</strong>d</strong> 2010, deals totalling 203 million hectares <strong>of</strong>l<strong><strong>an</strong>d</strong> were reported as under consideration or approved; <strong>an</strong> area equivalent to eight times <strong>the</strong> size <strong>of</strong> <strong>the</strong>UK. 7 Key drivers include: increasing dem<strong><strong>an</strong>d</strong> for food, fuel (bi<strong>of</strong>uels), fibre <strong><strong>an</strong>d</strong> o<strong>the</strong>r raw materials; as wellas speculation <strong><strong>an</strong>d</strong> international investors diversifying shareholdings away from stock markets since <strong>the</strong>2008 economic crisis. As competition increases to control <strong><strong>an</strong>d</strong> exploit l<strong><strong>an</strong>d</strong>, <strong><strong>an</strong>d</strong> <strong>the</strong> natural resources on<strong><strong>an</strong>d</strong> below it, <strong>the</strong> potential for corruption also increases. The way in which such dem<strong><strong>an</strong>d</strong> for l<strong><strong>an</strong>d</strong> ism<strong>an</strong>ifesting in <strong>acquisitions</strong> or concessions which include one or more <strong>of</strong> <strong>the</strong> risks above, <strong><strong>an</strong>d</strong> <strong>the</strong>reforefuelling “l<strong><strong>an</strong>d</strong> grabs”, has been thoroughly <strong>an</strong>alysed through <strong>the</strong> lens <strong>of</strong> rights violations, food security, l<strong><strong>an</strong>d</strong>reform processes, environmental risks <strong><strong>an</strong>d</strong> tr<strong>an</strong>sparency. However, in <strong>the</strong> newest <strong>of</strong> frontier markets inAfrica, Asia <strong><strong>an</strong>d</strong> Latin America, failures <strong>of</strong> govern<strong>an</strong>ce as a facilitator <strong>of</strong> bad l<strong><strong>an</strong>d</strong> deals is not wellunderstood.Of <strong>the</strong>se govern<strong>an</strong>ce failures, corruption (in its broadest definition) is both a critical cause <strong><strong>an</strong>d</strong> <strong>an</strong> impact.Government <strong>of</strong>ficials <strong><strong>an</strong>d</strong> comp<strong>an</strong>ies acting corruptly enable l<strong><strong>an</strong>d</strong> grabbing when <strong>the</strong>y ignore legal <strong><strong>an</strong>d</strong>regulatory safeguards, collude to capture <strong>the</strong> state <strong><strong>an</strong>d</strong> its natural resource wealth os act with impunity.Once l<strong><strong>an</strong>d</strong> is grabbed, however, it provides revenues to <strong>the</strong> business <strong><strong>an</strong>d</strong> political elite (this c<strong>an</strong> be onbudget,but is frequently illicit) which streng<strong>the</strong>ns <strong>the</strong>ir hold on influence <strong><strong>an</strong>d</strong> power, subsequentlyincreasing <strong>the</strong> likelihood <strong>of</strong> future corruption. Whilst <strong>the</strong> corrupt behaviours <strong><strong>an</strong>d</strong> actors <strong>the</strong>mselves may besimilar for both processes, <strong>the</strong> dimensions, impacts <strong><strong>an</strong>d</strong> potential solutions differ, <strong>the</strong>refore both are<strong>an</strong>alysed separately in <strong>the</strong> next section.discusses, <strong>the</strong> inter-play between corruption <strong><strong>an</strong>d</strong> l<strong><strong>an</strong>d</strong> grabbing is considerably more complex <strong><strong>an</strong>d</strong> needs fur<strong>the</strong>r research <strong><strong>an</strong>d</strong><strong>an</strong>alysis.5 For <strong>the</strong> full text <strong>of</strong> <strong>the</strong> Tir<strong>an</strong>a Declaration <strong><strong>an</strong>d</strong> its background, please see: http://www.l<strong><strong>an</strong>d</strong>coalition.org/aboutus/aom2011/tir<strong>an</strong>a-declaration(last accessed 3rd October 2012)6 Including W., L. Alden Wily, L. Cotula, <strong><strong>an</strong>d</strong> M. Taylor (2012) L<strong><strong>an</strong>d</strong> Rights <strong><strong>an</strong>d</strong> <strong>the</strong> Rush to L<strong><strong>an</strong>d</strong>: Findings <strong>of</strong> <strong>the</strong> GlobalCommercial Pressures on L<strong><strong>an</strong>d</strong> Research Project. International L<strong><strong>an</strong>d</strong> Coalition, Rome, available for download at:http://www.l<strong><strong>an</strong>d</strong>coalition.org/sites/default/files/publication/1205/ILC%20GSR%20report_ENG.pdf (last accessed 8 thOctober 2012); Global Witness (2012) Dealing with Disclosure: improving tr<strong>an</strong>sparency in decision-making over <strong>large</strong>-<strong>scale</strong>l<strong><strong>an</strong>d</strong> <strong>acquisitions</strong> <strong><strong>an</strong>d</strong> investments. Available for download at: http://www.globalwitness.org/library/dealing-disclosure (lastaccessed 8th October 2012); Deininger, K. <strong><strong>an</strong>d</strong> D. Byerlee (2011) Rising Global Interest in Farml<strong><strong>an</strong>d</strong>: C<strong>an</strong> it Yield SustainableRresults. Washington, DC: World B<strong>an</strong>k. Available for download at:http://siteresources.worldb<strong>an</strong>k.org/INTARD/Resources/ESW_Sept7_final_final.pdf (last accessed 8th October 2012).7 For fur<strong>the</strong>r details see Anseeuw, W., L. Alden Wily, L. Cotula, <strong><strong>an</strong>d</strong> M. Taylor (2012) L<strong><strong>an</strong>d</strong> Rights <strong><strong>an</strong>d</strong> <strong>the</strong> Rush to L<strong><strong>an</strong>d</strong>:Findings <strong>of</strong> <strong>the</strong> Global Commercial Pressures on L<strong><strong>an</strong>d</strong> Research Project. International L<strong><strong>an</strong>d</strong> Coalition, Rome. Available fordownload at http://www.l<strong><strong>an</strong>d</strong>coalition.org/sites/default/files/publication/1205/ILC%20GSR%20report_ENG.pdf (lastaccessed 8 th October 2012).__________________________________Global Witness <strong>Corruption</strong> <strong><strong>an</strong>d</strong> Large-Scale L<strong><strong>an</strong>d</strong> Acquisitions, Global Witness, October 2012 Page 2 <strong>of</strong> 10
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