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Corruption risks across the extractive value chain: Recommendations for home governments
Corruption risks across the extractive value chain: Recommendations for home governments
August 2016

A number of corruption risks account for increased vulnerability to corruption across the extractive value chain. First, weaknesses in the anti-corruption legal and judicial system may undermine host governments’ capacity to effectively detect, prevent and sanction corruption. Regarding the extractive sector more specifically, high politicisation and discretionary power in decision-making processes, as well as inadequate governance arrangements leave room for favouritism, clientelism, political capture and interference, conflicts of interest, bribery and other corrupt practices. On the company’s side, gaps and discrepancies in internal corporate anti-corruption compliance and due diligence procedures contribute to weakening detection and prevention efforts. Finally, shortcomings in corporate integrity measures, both in host and home governments and in particular with regards to the disclosure of beneficial ownership arrangements, provide opportunities for corruption to thrive.

Identified risks include weak legal and institutional frameworks for anti-corruption, in either or both home and host governments. Legislative gaps may include failure to define corruption in all its forms as a criminal offence, including cross-border bribery, which is a particular risk in the extractives sector. Legislation may also lack or provide insufficient coverage for specific anti-corruption measures such as guaranteeing the protection of whistle-blowers or making bribe payment expressly non-tax deductible.