Oversight actors can detect and prevent corruption in the oil, gas and mining sectors if they ask the right questions. Corruption schemes can be complex and opaque, yet clear patterns and similar signs of problematic behavior do exist across resource-rich countries.
To find these, we examined over 100 real-world cases of license or contract awards in the oil, gas and mining sectors in which accusations of corruption arose. The cases come from 49 resource-producing countries.
Based on this work, we developed a list of 12 red flags of corruption in extractive sector license and contract awards, with real-world illustrations for each. This list can provide a concrete, practical tool for many types of actors, not least:
- Government officials who design award processes. The rules and procedures that govern award processes can help guard against the kinds of problematic behavior described in this report.
- Government officials who oversee and approve awards. These officials, who could represent regulators, ministries, national oil or mining companies or cadasters, could use the red flags list to detect certain behaviors as the award process unfolds, and avoid controversial, inefficient decisions.
- Parliamentarians and government oversight actors. Some parliaments have a formal role in approving license awards, while others they can call on the executive to answer questions about an award. Members of anticorruption commissions, national Extractive Industries Transparency Initiative (EITI) chapters, supreme audit institutions and other government bodies could also use the list in their work.
- Law enforcement officers. Domestic or foreign law enforcement officers could use the list to help organize their investigations into a suspect award process, or as a source of leads and lines of useful inquiry.
- Extractive company officials. As company executives evaluate whether to participate in an award process or whether to partner with a certain company, our red flags list can help them assess corruption risks—for example, as part of their anticorruption due diligence, risk management or compliance functions.
- Financial institution staff. Investors, including companies, banks, IFIs, and private equity firms, also need to gauge the risks of corruption from an award, and decide how and whether to finance a project.
- Civil society actors and journalists. NGO staff, campaigners, activists and reporters can use the list to probe the integrity and legality of ongoing or past award processes or individual awards. In particular, the list can help them to identify important lines of inquiry and to prioritize their scarce resources.