Mining industry, a repository of corrupt practices

More than 31 percent of mining companies reported at least one request for bribe

Research: Various forms of corruption exits in the mining industry, a research initiated by the Anti-Corruption Commission (ACC) says.

The research team including an Audencia Nantes School of Management, France, Professor Bertrand Venard, officials from ACC, Royal Institute of Management, and Department of Geology and Mines presented their findings at a national conference on enhancing good governance yesterday.

Researchers found corruption is the top constraint for the mining industry along with electricity and access to finance.

Of the 22 mining companies, more than 31 percent said they have experienced at least on bribe payment request. There are also incidences of manipulation of bills.

From 20 corruption complaints lodged with the ACC between 2006 and 2015, seven were on abuse of power, four on deceptive practices, three on collusion, two on official misconduct and one on bribery, among others.

Four of the complaints were against talc, three against limestone, two against stone quarry, and one each on coal, dolomite, marble and quartzite. However, the trend is decreasing.

The mining sector contributed 2.8 percent to the gross domestic product last year and revenue of more than Nu 4 billion in 2013, earning Nu 199.6 million in royalty and mineral rent. The sector has the second highest growth rate and today employs 1,386.

Researchers’ calculation based on the Royal Audit Authority report 2014 show the country lost Nu 670.81 million between 2008 and 2012 as a result of wrong doings in the sector including non-revision of royalty, with an average loss of Nu 134.16 million a year.

Having to route through multiple stakeholders for processing the mine application, inconsistency in rules and regulations, and no clear service delivery standard or turn around time by the agencies involved were the main causes of corruption.

“When there are many stakeholders involved the process becomes lengthy and complex, and longer the process higher the corruption and ultimately the monitoring becomes weak,” the research presenter  and RIM lecturer Sonam Choiden said.

“That’s the reality in Bhutan…doing business is nothing to do with business; it’s to do with how you can manage government and government system. How you get your paper passed through the system,” she quoted a mining company representative.

The National Environment Commission appears to strongly influencing the decisions of the Department of Geology and Mines having higher standard requirements and penalties, among others, the research showed.

There are no clear processes, procedures and timing, which makes the processes longer, complex begetting in more wrongdoing.

The research team recommended having simple and clear roles and responsibilities of the agencies involved besides a service delivery standard for the DGM.

Lacking a strategic development plan, insufficient budget, limited staff capacity, and shortage of available mining engineers, DGM has been weak in monitoring.

Only one third of the required engineers are available, of which two thirds end up being abroad or doing other works, the research found.

The department is constrained on monitoring with officials having no computers, Internet connection, training, insufficient financial means including travel and daily allowances, and their suggestions are hardly heeded, Sonam Choiden said.

The study pointed out that the inspectors left on their own run the risk of colluding with mine owners, and resulted in some cases of threats as well.

It recommended financial disclosure programme by inspectors, mine owners, board members and mining managers and engineers, and establishing online annual report by mines and a mining report by DGM.

Unclear dzongkhag land leasing committee (DLLC) procedures have led to unclear public consultation processes which could develop potential unethical behaviours by the mine owners to win the heart of community or potential corrupt relations with local authorities.

“Community clearance is the most difficult primarily because different government rules think of it in a totally different way,” the research quoted a mine chief executive officer.

While the research asked to review the guidelines of DLLC and public consultation, it also called for formulating corporate social responsibility in absence of which mine proponents could make false promises, result in minimum community development, and risk conflict within the communities.

The 10-year lease period of mines was found too short, where the mining companies tried to cut corners to make profit. A longer lease could also lead to investments on infrastructure building and protection of environment, the research showed.

Raising royalty based on the sales value of the minerals and economic development of the country was another recommendation.

While the daily allowance has increased, the budget for in-country travel has not changed.

The moderator, DGM director general Phuntsho Tobgay acknowledged the findings of the research team and said the department will undergo a major overhaul soon.

“While the Constitution says that every citizen is a trustee of the natural resources, we have 38 individuals owning the 48 mines in the country,” he said.

He said the rules would also be reviewed and amended. “Most of these findings would validate what I am going to do,” he said.

“From my 31 years of supervising and being at the mining and quarrying site, I feel they are doing their job,” Dungsam Cement Corporation  managing director Dorji Norbu said.

ACC officials said the research was to ascertain root causes, costs and risks of corruption, promote research competency and facilitate evidence-based decision-making which are vital for promotion of good governance.

Prime Minister Tshering Tobgay attending the closing of the conference said the government would take note of the findings and discuss implementing the recommendations.

“We would give the time and consideration it deserves,” he said.

Tshering Palden

1 reply
  1. chopel
    chopel says:

    “Mining is the most corrupt sector”, same old story for almost a decade now with same findings and recommendations, but nothing changed it seems. With RAA and ACC taking turn in investigating mining industry each year, sometime I wonder if these agencies care to ensure their findings and recommendations are implemented (which i fell will improve this sector), if not why waste resources and time for nothing but a report booklet. Hope ACC will ensure that changes are brought to curb the corruption and take necessary action against those corrupt officials. If you do not, then when you research or investigate this sector after a year or two, nothing would had changed.

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