The oil, gas and mining sectors are prone to corruption, thanks largely to the high financial stakes and weak oversight. Of the 427 cases reviewed in the 2014 OECD Foreign Bribery Report, 19% came from the extractive sector; of the 176 cases prosecuted under the US Foreign Corrupt Practices Act, 23% were oil sector cases.
Delving into actual cases of extractive sector corruption can help generate smarter response strategies. However, relative to the scale of the problem, this kind of empirical analysis is in short supply, and is discouraged by several factors: the cases are technical and complex, they often do not end in straightforward verdicts, and they involve very powerful governments and companies.
Maryati Abdullah, National Coordinator of Publish What You Pay Indonesia be the panelist in the International Anti-Corruption Conference (IACC) in September 2-4, 2015 Held in Putrajaya Malaysia. She spoke with the theme “Break the Chain: To Curb Corruption in Oil, Gas and Mining Sectors. She shared the main modus of corruptions in Indonesia’s cases which occurred along the extractive industries value chain, from contract/licensing award, exploration and exploitation phase within supply chain and procurement process, production/commodity trade, until CSR implementation and the rehabilitation/post mining phase.
Maryati emphasized that the main modus of corruption such us bribery, kick back, mark-up and political corruptions can be curb by developing strong integrity and internal control along the extractive’s value chain system and strong law enforcement. Through high integrity system, it can break the chain of corruptions.
Other panelists are Alexandra Gillias from NRGI presented early findings from its analysis of 30 oil and mining corruption cases to identify common trends, such as the activities of middlemen or “fixers” often present in corrupt deals, or how local content provisions can be manipulated to benefit well-connected individuals; A representative of the Extractive Industries Transparency Initiative (EITI), Jonash Moberg provided an update on EITI activities in the Asia-Pacific region, and highlight specific kinds of EITI reporting (e.g. on state-owned company spending, license awards, etc.) that may reduce corruption risks; and the last speaker was civil society leader from Environment and Natural Resource Monitoring Network Afghanistan shared on how corruption had affected that country’s burgeoning mining sector, and the negative impacts it had brought.