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Corruption in the Extractive Value Chain

Typology of Risks, Mitigation Measures and Incentives

One case of transnational corruption out of five occurs in the extractive sector according to the 2014 OECD Foreign Bribery Report. In this area, corruption has become increasingly complex and sophisticated affecting each stage of the extractive value chain with potential huge revenue losses for the public coffers. This report is intended to help policy makers, law enforcement officials and stakeholders strengthen prevention efforts at both the public and private levels, through improved understanding and enhanced awareness of corruption risk and mechanisms. It will help better tailoring responses to evolving corruption patterns and effectively countering adaptive strategies. The report also offers options to put a cost on corruption to make it less attractive at both the public and private levels.

Published on August 18, 2016Also available in: Korean

In series:OECD Development Policy Toolsview more titles

TABLE OF CONTENTS

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Foreword	Read PDF
Executive summary	Read PDF
Overview	Read PDF
Corruption risks, mitigation measures and incentives of cross-cutting relevance across the extractive value chain	Read PDF
Corruption risks in the decision to extract	Read PDF
Corruption risks in the award of mineral, oil and gas rights	Read PDF
Corruption risks in the regulation and management of operations	Read PDF
Corruption risks in revenue collection	Read PDF
Corruption risks in revenue management	Read PDF
Corruption risks in revenue spending and social investment projects	Read PDF

Key recommendations

Taking a one-dimensional approach to combatting corruption in extractives is unlikely to achieve results. Both the supply and demand for corruption need to be tackled, domestically and internationally, with granularity and differentiation across the broad range of private and public actors.

Recommended mitigation measures and incentives addressed to home and host governments and extractive companies will incentivise a voluntary change in behaviour, by making corruption more costly and helping to make it less attractive for public and private actors alike.

Closing the gap between theory and practice calls for building an alliance of home and host governments using the typology as a standard diagnostic framework to assess risk and implementing recommended mitigation measures and incentives across the value chain, and through a peer review process.

Press Release

April 2016 - Release of the toolkit to tackle corruption in the extractive value chain at the 2016 OECD Integrity Forum.

Work Stream 4 – Detecting Corruption Risks in Extractives

Under Work Stream 4, to the Policy Dialogue led to the development of a the report Corruption in the Extractive Value Chain: Typology of Risks, Mitigation Measures and Incentives. The Typology was released in April 2016 to provide a toolkit for identifying, assessing and proactively managing corruption risks across the extractives value chain. This includes the process from deciding to extract and the awarding of rights down through revenue collection, management and spending. Not only are risks identified and mapped, but concrete, appropriate and complementary responses are also set out, which can be tailored to fit home and host country governments and extractive companies, raising the incentives to effectively tackle those risks. The complex and specific corruption challenges related to the extraction and trade of natural resources and the management of its associated revenue flows are a source of growing concern across developing, emerging and developed countries. The Typology covers a broad spectrum of inter-connected policy areas, including licencing, procurement, tax issues and public financial management.

The Typology will serve as a standard diagnostic framework for demand-driven assessment of corruption risk in resource-rich countries to provide practical recommendations on preventing and fighting corruption in such a high risk sector.

Adapt the Typology to be used as a benchmarking tool by stakeholders or integrated into existing methodological tools to carry out sector-specific integrity scans or peer-reviews, such as the African Peer Review Mechanisms.

This work is intended to contribute to the 2030 Agenda for Sustainable Development and other international processes, including on-going efforts by the G-20 Anti-Corruption Working Group to prevent and address corruption in high-risk areas.

Timeline for developing the Typology