Secrecy Fuels Suspicion About Mining Contracts: Letter to the Editor
In today's Financial Times, Revenue Watch Director Karin Lissakers and Columbia University Law Professor Peter Rosenblum respond to a recent editorial about poorly-negotiated mining contracts in the Democratic Republic of Congo, Guinea and other countries in Africa. In their response, Lissakers and Rosenblum explain that contract secrecy is a key reason for many bad deals.
From Karin Lissakers and Peter Rosenblum
Sir, As your editorial notes ("Hazards of mining," October 13), past mining deals have not brought tangible benefits to most African states.
One foundational cause is the destructive culture of secrecy surrounding industry contracts with resource-rich governments.
A recent study from Columbia University and the Revenue Watch Institute on contract transparency in the extractive sector concludes that, despite industry claims about competition and trade secrets, there are few legitimate reasons to conceal contract details (unless one considers bribes or incompetence to be commercially sensitive). Competitors almost always learn the contents of contracts, and companies compelled by local law to disclose agreements usually do so with little or no text blacked out.
Upon review, natural resource contracts in Liberia and the Democratic Republic of Congo, for example, suggest that the worst problem sheltered by secret contracts is often shoddy contracting itself. Companies may hope to gain the upper hand in one-sided deals with less experienced partners.
But secrecy frequently fuels public suspicion and reaps its own costs as local communities clamour for sector accountability, or the government seeks scapegoats in industry. By contrast, contract transparency can help all parties to benefit from resource wealth, by securing a better deal for governments, bolstering public trust and fostering a more stable investment climate.
Systematic disclosure alone cannot magically dispel the evils of corruption or the asymmetries of local and international competence, but without transparency there is little chance of overcoming either.
Karin Lissakers,
Revenue Watch Institute,
New York, NY, US
Peter Rosenblum,
Columbia University Law School,
New York, NY, US
LEARN MORE
- Response to Editorial on "Hazards of Mining" (Financial Times)
- Hazards of Doing Business in Africa (Financial Times)
- Contracts Confidential: Ending Secret Deals in the Extractive Industries
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Contracts Confidential: Ending Secret Deals in the Extractive Industries
Contract transparency is sorely needed to improve the management of natural resource wealth. In a new report from RWI, authors Peter Rosenblum and Susan Maples delve into government and private sector objections to contract disclosure and make conclusions about what information may legitimately and reasonably be kept confidential, and how civil society institutions can better confront the challenge of secret deals.
Learn more about the report ...
NEW TRANSLATION: Revenue Redistribution at the Local Level
Many resource-rich countries are attempting to compensate their producing regions through shares of resource revenues to be spent at the local level. In "Extractive Industries Revenues Distribution at the Sub-National Level," development economics consultant Matteo Morgandi presents a comparative analysis of international legislation for distribution of extractive revenues from across all levels of government. Prepared at the request of the Peruvian National Congress, the report studies the legislative practices of seven resource-rich countries to identify potential and address challenges. Please note that this report is now also available in Vietnamese.
Learn more ...