24 May 2022 –
Resolution 16/1 of the Commission on Crime Prevention and Criminal Justice, inter alia, encourages Member States to “prevent, combat and eradicate [the] illicit international trafficking in forest products including timber, wildlife and other forest biological resources…through the use of international legal instruments such as the United Nations Convention against Transnational Organised Crime, and the United Nations Convention against Corruption.”
Large-scale corruption involving high-level public officials is observed in the awarding of mining of oil and gas, and fishing rights, procurement of goods and services, commodity trading, revenue management through natural resource funds, and public spending. Lower ranking officials (tax officials, customs or immigration agents, and inspectors) are usually involved in corruption in connection with violations of customs clearance, immigration rules and tax collection. Corruption risks exist across all business sectors, but some are more prone to corruption than others, and the extractive industries are among the highest risk areas of business, according to the OECD.
The 6th Sub-Saharan Africa regional meeting sought to share experiences and initiatives on the role civil society can play in countering such risks. The meeting aimed to discuss: what role has a lack of accountability and transparency played in corruption scandals in the extractive industries, including fisheries? What needs to be done to counter corruption and achieve more transparency and accountability in the extractive industries?
A Regional Perspective on Transparency and Accountability in the Extractive Industries
Graham Hopwood, Executive Director at Institute for Public Policy Research (IPPR)
The cost of the corruption in the fisheries industry, with losses to Namibia estimated at around $20-60 million.
Mr. Hopwood spoke about the fisheries industry in Namibia and highlighted that it is closely connected to environmental degradation, however, is often overlooked. The “Fishrot” scandal in Namibia involving high ranked politicians, including two ministers and an Icelandic company, Samherji, was the case in point. The Ministers of Justice and Fisheries and top business people, among others, were bribed by the Icelandic company to make sure that most of the quotas for offshore fishing in Namibia went to the Icelandic company over a period of 6 years. This was only uncovered when whistleblower Johannes Stefansson, former Director of Operations at Samherji, came out and told the authorities in 2018. He sent documentation over to WikiLeaks and contacted Al Jazeera, with a coordinated media reveal taking place in November 2019. The level of public exposure of this scandal meant the authorities were pressured to act. Within 10 days, all parties involved were jailed on serious corruption and bribery charges. Unfortunately, given the lengthy process of court cases in Namibia, a trial phase has still not been reached. However, the main suspects have not been granted bail.
The corruption rot in the fisheries industry demonstrates that:
- It is very dangerous to have laws that allow large amounts of discretion in the allocation of quotas and licenses by high-ranking officials.
- The whole scandal was enabled by secrecy: the Ministry would not publish the list of companies that had rights or quotas and would not even be revealed through requests for information. Namibia has an open and free press, and yet, has not uncovered the quota schemes and how the legislation was manipulated in this case.
- Ministries need to start publishing details of fishing quotas that were allocated and to which companies, online.
- Open contracting needs to be applied to the fishing industry as well, including the details of payments made.
- IPPR would like to see a registry of beneficial ownership in the area of fishing and extractive industries. The opaque nature of joint ventures needs to be opened up for scrutiny.
Ms. Faralala Andriamparany, TI Initiative Madagascar
Rosewood is the most trafficked form of flora or fauna in the world, measured by value or volume, according to the United Nations Office on Drugs and Crime.
Ms. Andriamparany spoke to the trafficking and corruption of precious rosewood in Madagascar. In 2009, an estimated 500,000 tons of precious wood was reported to have been illegally exported, and in 2011, rosewood of a value of $50,000,000 was illegally trafficked. The government had issued brief exemptions, most notably during two periods in 2009. This muddied the legal waters for years after the fact, allowing traffickers to claim that their wood was harvested during an exemption period and was therefore legal. In 2013, the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) listed all types of Madagascar rosewood as Appendix II, prohibiting their trade except in the rare cases in which a local CITES authority has issued sustainability permits.
The corruption led to the prohibition of the exportation of rosewood in 2013. However in 2014, two cases of exportation were reported, resulting in seizures of rosewood in Kenya and Singapore. 30,000 logs of rosewood were illegally exported to Singapore and seized – the controversy surrounded the legality of this exportation and its permits. In 2017, the importer was condemned by a Singaporean court, and in 2019, two Environment Ministry staff members were incarcerated. However, the Minister remains free. It was decided that the stock of rosewood would be used domestically (in Madagascar). During the reconstruction of the queen’s palace in 2019, 360 cubic meters were moved from “a controlled stockpile”. Yet some of it was lost, revealing obscurity in the contracting of the company provided to move the rosewood.
To address trafficking and corruption in the precious woods sector in Madagascar, various initiatives and agreements were entered into, such as projects with the Anti-Corruption and Combating Wildlife trafficking activity – Madagascar (CCWT), USAid, WWF, TI Madagascar and other consortium members. The main takeaways from this case study were:
- Fighting corruption is crucial in combating the trafficking and illegal exportation of rosewood that costs Malagasy people 2.3 million USD annually.
- Technical support is needed in the governance of national resources.
- There is a need to strengthen cooperation between government agencies, civil society stakeholders and anti-corruption stakeholders to combat traffickers and corruption.
Mr. James Muhindo Public-Private Dialogue and Tax Specialist at USAID Domestic Revenue Project for Development
Accountability and Transparency are about the social contract: knowing and reminding those who govern who they account to.
Mr. Muhindo spoke about the role of transparency and accountability in the extractive industries in Uganda with at least ten years of experience in the sector. He stated that the extractive industries are value chains or processes that involve different activities that lead to the extraction of raw materials from the earth, as well as processing and utilization by consumers.
This means extractives aren’t just a resource, but a whole value chain. They range from oil, gas and minerals to forestry and fish, and so forth. He reminded participants that the nexus between governance and extractives stems from a social contract between those who are governed and those who govern them, the governed having ceded their power to those who govern. This is where the public trust doctrine comes into play. The issue of transparency and accountability is important in the extractive industry because it is part of a colonial legacy, where resources are believed to belong to the government and not the people. Transparency is crucial in informing the people how much of the resources are left, and in keeping track of how long they will last. In Uganda, oil resources will run out in a mere 30 years.
The extractive industry is also susceptible to corruption because the resources are of real value and are easily abused. Since the Africa World Refinery was set up in Uganda in 2016, the country has been exporting more gold, to the extent that in the 2020 financial year, gold overtook coffee as the main export earner. The authorities levied more taxes on gold exports and gold exports dropped to zero. This is a result of corrupt dealings where companies that end up exporting proceed without government approval. Lastly, illicit financial flows are facilitated by the existence of multinational companies, with operations in more than country. The use of various jurisdictions as transit countries means that some countries are losing their resources without benefit to the people, such as the DRC. Transparency and accountability are crucial principles to hold rulers accountable.
In sum, accountability and transparency are reminders of the social contract. It was noted that Ministers are the common denominators in corruption cases in the extractive industries. Consequently, awareness of open, public procurement, beneficial ownership transparency and open contracting are key factors in the fight corruption and illegal trafficking of extractives. This calls for the digitalization and digitization of data in contracting and public procurement, including awarding of quota rights in fisheries and the extraction of wood. Members of Parliament need to be educated on these issues and topics, as they contribute in the making of laws, reflecting on the Namibia case where the corrupt even worked on changing laws to legalize their corrupt dealings. Mutual legal assistance is another tool for developing countries with limited resources, since most banks involved in these cases are American or European.
Cooperation between civil society organizations goes a long way in fighting corruption, creating greater public awareness that can put pressure on those in positions of power to seriously pursue investigations and prosecutions.