ich <strong><strong>an</strong>d</strong> poor, <strong>the</strong> powerful <strong><strong>an</strong>d</strong> <strong>the</strong> powerless has increased as a result; fur<strong>the</strong>r cementing interests withinthis elite to maintain <strong>the</strong> status quo <strong><strong>an</strong>d</strong> fur<strong>the</strong>r disabling ordinary citizens from dem<strong><strong>an</strong>d</strong>ing ch<strong>an</strong>ges <strong>of</strong>policy <strong><strong>an</strong>d</strong> practice. 11Traditionally, this cycle <strong>of</strong> corrupt resource extraction deals facilitating increased capture <strong>of</strong> <strong>the</strong> state by abusiness <strong><strong>an</strong>d</strong> political elite, which consequently streng<strong>the</strong>ns <strong>the</strong> vested interests against govern<strong>an</strong>cereforms, has primarily occurred within <strong>the</strong> extractive industries: oil, gas <strong><strong>an</strong>d</strong> minerals. Although allocation<strong>of</strong> <strong>the</strong>se extraction rights did lead to local l<strong><strong>an</strong>d</strong> rights being ignored in some cases, govern<strong>an</strong>ce reformsnone<strong>the</strong>less focused on <strong>the</strong> m<strong>an</strong>agement <strong>of</strong> sub-surface resources.Since 2008 however, commercial pressure on <strong>the</strong> l<strong><strong>an</strong>d</strong> itself has increased to <strong>the</strong> point that similar risks arenow associated with <strong>large</strong>-<strong>scale</strong> l<strong><strong>an</strong>d</strong> <strong>acquisitions</strong> <strong><strong>an</strong>d</strong> tr<strong>an</strong>sfers. Again, this is particularly a problem in“frontier markets” where political <strong><strong>an</strong>d</strong> regulatory institutions are fragile, where dubious investors rush in<strong><strong>an</strong>d</strong> where governments appear to be prioritizing investor interests over legislative safeguards. Of <strong>the</strong> total203m ha <strong>of</strong> l<strong><strong>an</strong>d</strong> reported to have been given to investors since 2000, 66% <strong>of</strong> <strong>the</strong> l<strong><strong>an</strong>d</strong> was in Africa, 21% inAsia <strong><strong>an</strong>d</strong> <strong>the</strong> remainder was mainly in Latin America. 12 More th<strong>an</strong> twenty percent <strong>of</strong> all deals were given inforests 13 ; frequently areas on which local livelihoods depend <strong><strong>an</strong>d</strong> which are under special protection forenvironmental purposes (on paper). Globally, countries most affected by <strong>the</strong>se deals are signific<strong>an</strong>tlypoorer th<strong>an</strong> average, struggle with signific<strong>an</strong>t agricultural yield gaps, 14 <strong><strong>an</strong>d</strong> most concerning is that lowerrecognition <strong>of</strong> l<strong><strong>an</strong>d</strong> rights appears to increase a country’s attractiveness for acquisition from investors. 15d) Worsening corruption as <strong>an</strong> outcome <strong>of</strong> l<strong><strong>an</strong>d</strong> grabsAccording to <strong>the</strong> World B<strong>an</strong>k, <strong>large</strong>-<strong>scale</strong> tr<strong>an</strong>sfers <strong>of</strong> l<strong><strong>an</strong>d</strong> for commercial investment <strong>the</strong>oretically have <strong>an</strong>umber <strong>of</strong> potential macro <strong><strong>an</strong>d</strong> micro economic benefits; including generating employment <strong><strong>an</strong>d</strong> revenuestreams, improving food security, <strong><strong>an</strong>d</strong> fostering technological tr<strong>an</strong>sfer. 16 However, <strong>the</strong> reality on <strong>the</strong> groundin m<strong>an</strong>y countries is that <strong>the</strong> types <strong>of</strong> investments defined as l<strong><strong>an</strong>d</strong> grabs are fundamentally failing to meet<strong>the</strong>se economic targets <strong><strong>an</strong>d</strong> are in fact increasing poverty, partly because <strong>of</strong> corruption.Payments by comp<strong>an</strong>ies for acquiring concession or property rights may be considered by local <strong>of</strong>ficials asbribes <strong><strong>an</strong>d</strong> as a result only a small percentage <strong>of</strong> such payments (if <strong>an</strong>y) enter <strong>the</strong> national budget. L<strong><strong>an</strong>d</strong>concessions c<strong>an</strong> generate corruption at local levels, where it didn’t previously exist, which c<strong>an</strong> subsequentlyerode local government structures <strong><strong>an</strong>d</strong> processes.National budgets c<strong>an</strong> miss out on revenues because comp<strong>an</strong>ies use <strong>the</strong>ir influence to negotiate favourabletax <strong><strong>an</strong>d</strong> royalty terms. <strong>Corruption</strong> also prevents corporate taxes <strong><strong>an</strong>d</strong> royalties which are generated from<strong>the</strong>se deals from trickling down to local levels. When l<strong><strong>an</strong>d</strong> leases are speculative, if <strong>the</strong> comp<strong>an</strong>y does nothave <strong>the</strong> technical experience, or if <strong>the</strong>ir fin<strong>an</strong>cial backing is not secured, <strong>the</strong>n local employmentopportunities <strong><strong>an</strong>d</strong> o<strong>the</strong>r expected economic benefits do not occur. In some cases, even when <strong>the</strong> l<strong><strong>an</strong>d</strong> isused productively, m<strong>an</strong>y local communities (<strong>of</strong>ten those who have lost signific<strong>an</strong>t areas <strong>of</strong> l<strong><strong>an</strong>d</strong> to <strong>the</strong>comp<strong>an</strong>y) are not <strong>of</strong>fered employment opportunities as <strong>the</strong> comp<strong>an</strong>y has brought in labour from o<strong>the</strong>rareas. In some cases, locally affected communities refuse to have <strong>an</strong>ything to do with <strong>the</strong> comp<strong>an</strong>y (such asaccept work <strong><strong>an</strong>d</strong> salaries) because <strong>of</strong> <strong>the</strong>ir <strong>an</strong>ger at losing <strong>the</strong>ir l<strong><strong>an</strong>d</strong>. As a result, not only are such l<strong><strong>an</strong>d</strong>11 For Cambodia’s increasing inequality see: http://www.unescap.org/stat/data/syb2011/I-People/Income-poverty-<strong><strong>an</strong>d</strong>inequality.asp(last accessed 8th October 2012), <strong><strong>an</strong>d</strong> for Angola, see: http://www.irinnews.org/Report/61395/ANGOLA-Poor-marks-for-progress-on-MDG (last accessed 8th October 2012).12 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> 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 athttp://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).13 Ibid.14 Ibid.15 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 Sustainable Rresults. Washington, DC:World B<strong>an</strong>k, pages 96 <strong><strong>an</strong>d</strong> 102. Available for download at:http://siteresources.worldb<strong>an</strong>k.org/INTARD/Resources/ESW_Sept7_final_final.pdf (last accessed 8th October 2012).16 Ibid, page xliii.__________________________________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 5 <strong>of</strong> 10
grabs devastating to local livelihoods, food security, cultural well-being <strong><strong>an</strong>d</strong> <strong>the</strong> environment, <strong>the</strong>y are als<strong>of</strong>requently not achieving <strong>the</strong>ir most fundamental <strong>the</strong>oretical economic objectives.This situation c<strong>an</strong> <strong>the</strong>n fur<strong>the</strong>r compound corruption <strong><strong>an</strong>d</strong> undermine govern<strong>an</strong>ce reforms in a number <strong>of</strong>ways. If a government fails to generate taxes <strong><strong>an</strong>d</strong> o<strong>the</strong>r revenues from, for example l<strong><strong>an</strong>d</strong> leases, a deficit iscreated in <strong>the</strong> national budget which me<strong>an</strong>s it c<strong>an</strong>not afford to pay civil serv<strong>an</strong>ts adequate salaries,fostering a dem<strong><strong>an</strong>d</strong> for alternative incomes; namely bribes. If <strong>the</strong> benefits <strong><strong>an</strong>d</strong> vested interests resultingfrom corruption become institutionalised, this creates a “Shadow State”. 17 Shadow State rulers aredescribed as “m<strong>an</strong>ipulate[ing] external actors’ access to both formal <strong><strong>an</strong>d</strong> cl<strong><strong>an</strong>d</strong>estine markets, by relying on<strong>the</strong> global recognition <strong>of</strong> sovereignty, <strong><strong>an</strong>d</strong> are <strong>the</strong>reby able to undermine formal government institutions.”Such rulers undermine formal government institutions by weakening bureaucratic structures <strong><strong>an</strong>d</strong>m<strong>an</strong>ipulating markets in order to “enrich <strong>the</strong>mselves <strong><strong>an</strong>d</strong> control o<strong>the</strong>rs”; political power <strong><strong>an</strong>d</strong> privatecommercial operations <strong>the</strong>refore become indistinguishable.Such Shadow States me<strong>an</strong>while isolate, threaten, detain <strong><strong>an</strong>d</strong> even kill whistleblowers <strong><strong>an</strong>d</strong> activists whocriticise government policies <strong><strong>an</strong>d</strong> decision-making. In 2012 Global Witness research showed that l<strong><strong>an</strong>d</strong> <strong><strong>an</strong>d</strong>forest activists are facing increasingly deadly responses from governments, comp<strong>an</strong>ies <strong><strong>an</strong>d</strong> <strong>the</strong> armedforces; in <strong>the</strong> last decade <strong>the</strong> rate <strong>of</strong> killings has been more th<strong>an</strong> one a week <strong><strong>an</strong>d</strong> this has doubled since2009. 18A country with a bad r<strong>an</strong>king on international corruption indices may be decreasingly attractive to foreigninvestors from jurisdictions where being involved in corruption risks signific<strong>an</strong>t s<strong>an</strong>ctions (eg. <strong>the</strong> US <strong><strong>an</strong>d</strong>UK) or for whom reputational risks are high. As a result, only foreign investors who do not consider beingassociated with corruption to be a risk will be able to continue investing.3) Case studies <strong>of</strong> <strong>the</strong> relationship between corruption <strong><strong>an</strong>d</strong> l<strong><strong>an</strong>d</strong> grabbing 19Case A – Benefiting from friends in high placesCase A is a dispute between “Comp<strong>an</strong>y A” <strong><strong>an</strong>d</strong> approximately 100,000 people who have been negativelyaffected by <strong>the</strong> comp<strong>an</strong>y’s long-term lease <strong>of</strong> several hundred thous<strong><strong>an</strong>d</strong> hectares <strong>of</strong> agricultural <strong><strong>an</strong>d</strong>forested l<strong><strong>an</strong>d</strong>. Comp<strong>an</strong>y A is said to be one <strong>of</strong> <strong>the</strong> country’s most powerful; its owner has very close political<strong><strong>an</strong>d</strong> personal relationships with government <strong>of</strong>ficials at <strong>the</strong> highest level, as well as <strong>the</strong> armed forces, whoare routinely hired as guards to protect its commercial assets. Additionally, it has a track record <strong>of</strong> serioushum<strong>an</strong> rights <strong><strong>an</strong>d</strong> environmental abuses stretching back nearly two decades. The lease in question is one <strong>of</strong>a number <strong>of</strong> holdings it owns which toge<strong>the</strong>r are equivalent to almost 10% <strong>of</strong> <strong>the</strong> country’s arable l<strong><strong>an</strong>d</strong>, <strong><strong>an</strong>d</strong>in total are 30 times more th<strong>an</strong> <strong>the</strong> maximum legal limit for commercial l<strong><strong>an</strong>d</strong> leases.According to <strong>the</strong> affected communities, <strong>the</strong>y first discovered that Comp<strong>an</strong>y A had been given lease rightsover l<strong><strong>an</strong>d</strong> <strong>the</strong>y had lived on for generations when <strong>the</strong> clearing started, a few months after <strong>the</strong> governmentsigned <strong>the</strong> contract. There were no local consultations or evidence <strong>of</strong> environmental, social or hum<strong>an</strong> rightsimpact assessments being undertaken prior to <strong>the</strong> clearing. The boundaries <strong>of</strong> <strong>the</strong> lease area have neverbeen demarcated <strong><strong>an</strong>d</strong> to this day, no documentation relating to <strong>the</strong> lease has been given to <strong>the</strong> affectedhouseholds.17 For fur<strong>the</strong>r details <strong>of</strong> Shadow States <strong><strong>an</strong>d</strong> <strong>the</strong>ir operations, see Reno, W. (1999) Warlord Politics <strong><strong>an</strong>d</strong> Afric<strong>an</strong> States. LynneRienner Publishers, Colorado, London <strong><strong>an</strong>d</strong> Funke N. <strong><strong>an</strong>d</strong> H. Solomon (2002) The Shadow State in Africa: A Discussion.Development M<strong>an</strong>agement Policy Forum Occasional Paper No. 5, Addis Ababa, October 2002.18 Global Witness (2012) “Hidden Crisis: increase in killings as tensions rise over l<strong><strong>an</strong>d</strong> <strong><strong>an</strong>d</strong> forests”, available for download:http://www.globalwitness.org/sites/default/files/images/A_hidden_crisis-FINAL%20190612%20v2.pdf (last accessed on3 rd October 2012).19 The location <strong><strong>an</strong>d</strong> individuals involved in <strong>the</strong>se cases have been removed, in order to protect <strong>the</strong> communities involved. Forfur<strong>the</strong>r information, please contact: mail@globalwitness.org__________________________________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 6 <strong>of</strong> 10