Tag Archives: EITI

The Trip to Ulaanbaatar: An Unforgettable Journey

Justin Kwan, MAAPPS // May 13, 2015

After 19,308km of traveling from Canada to Mongolia, the Asia Pacific Policy Project team has finally returned back to the University of British Columbia. The journey to Ulaanbaatar has been an amazing experience, to say the very least. Nine days in Mongolia’s capital city has created a fresh viewpoint not only on the way I view policy making, but the real struggles that occur between different interest groups in the negotiation process.

The beginning of the trip started with the participation in the Freedom Online Coalition (FOC) Conference, with a keynote opening speech by Tsakhiagiin Elbegdorj, the President of Mongolia. While freedom online and the EITI subnational reporting project may appear to be completely unrelated, President Elbedgdorj acknowledged that beyond mining, he wanted his country to expand its investments and businesses into the IT and software industry. Perhaps a subtle, but clear sign that that Mongolia is looking to diversify its investments, and perhaps has too heavily relied on the extractive industry to support its economy.

A reoccurring theme throughout the trip however has been the frequent discussion of the mismatch between our “words and deeds.” A FOC panel discussing future internet trends noted the question of double speak and the distance between practice and implementation in policy making. After team discussions and reflections upon our trip, we agreed that the coined term could most appropriately be used in our meetings with government and civil society organizations.

Throughout the trip, three perspectives about the future of subnational reporting emerged from out meetings. On one hand, I can see great optimism about Mongolia’s future and EITI subnational reporting. In our meeting with Mongolia’s EITI secretariat office, it was indicated that already, 19 out of 21 Aimags are reporting at the subnational level through electronic online surveys. This is something that we were pleasantly surprised to learn about and that future training workshops will be providing this upcoming year to help facilitate the transition.

On the other hand however, there is another perspective from other civil society groups that the EITI project has failed to reach out and properly inform citizens about transparency in the mining sector. According to them, there is no desire to make this information accessible to ordinary citizens, and the project has wasted millions of dollars. With the fact that EITI Mongolia is still in the process of securing donor funds for the next year, it would appear that the initiative may be in limbo for the upcoming months.

A third and final perspective from EITI civil society stakeholders reveals the passion and desire to create a robust civil society that will protect the country’s interests. There is a legitimate desire amongst these groups to encourage the population to become more involved, and there is a legitimate sense of frustration and debate as to how these ideas can be fully implemented. While many ideas were exchanged, it was surprising to note that a rather important voice remained silent throughout these discussions, perhaps one of the most important voices for inciting real change in Mongolia.

From this trip, we have realized that although our desires to encourage EITI policy recommendations have somewhat fallen on deaf ears, there is still hope. Indeed, there is a complete disconnect between policy theory and policy implementation, and the actors who can make the most difference prefer to keep the status quo. However, trips like this showed us some of the most real-time up-to-date information about subnational reporting that no literature was able to provide. The Ministry of Mining of Mongolia also revealed that the extractive industries transparency legislation has been drafted and is seeking approval from parliament. Although frequent election cycles have created a lack of continuity in policy making in Mongolia and perhaps a somewhat unstable political environment, I still look at this situation with a great sense of optimism because the hopes and aspirations of the people in Mongolia are strong. While I myself may be aspirational in my outlook, I look at the desire for change as one of the greatest motivators for continuing to strive for success.

Reading about Mongolia is one experience, living it and experiencing it first hand is completely different – something I truly believe everyone should try at least once in their lifetime.

The EITI Journey in Indonesia – Part 1: Resource Extraction in the Jokowi Era

Justin Kwan, MAAPPS // Feb 20, 2015

On October 15, 2014, Indonesia completed a landmark achievement and became the first country within ASEAN to become an EITI compliant country. A mere five days later another landmark achievement was made when President Jokowi was sworn into office, one of the first leaders to originate from neither a military or political elite background. As part of his platform, Jokowi promised tomaximize the benefits that natural resource extraction has for Indonesian citizens, hoping to reduce some of the negative aspects associated with the oil and mining sectors. While these are extremely important milestones in the country’s journey to openness and transparency, the process of reform however has not been nearly as simple.

Prior to its EITI compliant status, the country nearly risked being delisted as an EITI candidate country for its inability to resolve many problems in its reporting which included: “accounting standards, access [to] corporate tax information, or in some cases document[ing] financial transactions” (Tantri and Bria, 2014). In the country’s second report, “40 percent of reporting companies (more than 100) missed the [reporting] deadline, delaying the coal and mineral section of the report and again calling into question the level of commitment from government and stakeholders” (Ibid). However, in October 2013, the EITI Board had granted the country an extension to reach compliance after stating it had made “meaningful progress.”

In the year 2015, Indonesia has much to accomplish now that it has become an EITI compliant country. The Natural Resource Governance Institute has called for stricter mechanisms to ensure that Indonesia maintains its EITI standard. They, along with other critics have cited the need for more transparency in the mining sector, especially in the licence approval process as well as in the way national and subnational governments coordinate resource management.

Despite this, the country has made great strides in transparency and open communication, especially after the dictatorship era of President Suharto from 1967 to 1998. Accordingly, the country has made an important transformation from a nation, which used to limit the free flow of information into a new era of reform and openness. This means that “a large amount of information on how Indonesia is benefitting from, and managing its resources is now in the public domain” (Bria and Heller, 2014). Slowly but surely, improvements are being made.

Resource management is a serious problem in Indonesia, and the country has put its hopes into its newest President. Many believe that Jokowi’s pragmatic style of governance will bring about reform in Indonesia, by “bringing change to a stagnating industry and breath[ing] fresh life into stalled negotiations with foreign mining companies” (Warburton, 2014). His message is simple: Reduce corruption! Raise up the people! Repair the economy! Since taking office nearly four months ago, Jokowi’s government has implemented a “One Map Policy”, a central map of Indonesia, which will be used by government agencies across the country to help track duplicate licences, resolve land disputes and unify the local government systems. Although it is too soon to tell whether or not this policy will be effective, or whether it will be subverted by the same local authorities and businesses that are making subnational tracking more difficult, the clear willingness towards reform by Jokowi represents a positive direction for the country.

Implementation of EITI in Mauritania

Jonathan Brasnett, MAAPPS // Feb 9, 2015

The Extractive Industry Transparency Initiative (EITI) has been implemented in the Islamic Republic of Mauritania since 2007 when it became a candidate country. It was officially named an EITI compliant country in 2012 and, despite a brief suspension in 2013 for failing to provide its 2010 report on time, it remains a compliant state today. What impact has this had on the mining industries of Mauritania? Furthermore, what impact has this initiative had on civil society and the government provision of social services to its citizens? These are the most important questions, but those that are most difficult to answer without flying to Nouakchott and seeing for ourselves.

Mauritania is a semi-presidential republic under the leadership of President Mohamed Ould Abdel Aziz, who first took power in the summer of 2008 through a military coup d’état. Although he was democratically elected in the summer of 2009 and is meant to work hand-in-hand with the Mauritanian government (Senate, National Assembly and Supreme Courts), the country is nevertheless ranked 172nd out of 187 countries on the United Nations Human Development Index, as well as ranked 124th out of 175 countries on Transparency International’s Corruption Perceptions Index. Therefore, the democratic nature of the country’s governance can legitimately be questioned. Furthermore, many social problems persist: unemployment, though much reduced in recent years, is still high (10.1% in 2012), per capita GDP is still among the lowest in the world ($1,224) and slavery still exists in large numbers (10-20% of the population).

A country that is still rife with problems is most definitely in need of greater transparency and greater civil society participation. Thus, the EITI initiative is undoubtedly a beneficial endeavour for Mauritania. As a country whose mining and petroleum extraction industries make up more than one third of its GDP (38% in 2011), it is important that the revenue from these industries finds its way into the provision of social services, not the pockets of corrupt government officials. In observing the EITI reports of the eight years for which they have been issued in Mauritania, one notes the strange phenomenon of greater sums declared by the government than was paid by extraction companies. This occurred from 2005-2008, then this trend reversed from 2009-2012. With the exception of 2011 when the discrepancy between the money paid by extraction companies and that received by the government was more than $23 Million USD, all other years featured much smaller discrepancies of just a few million USD.

For the 2014-2015 reporting years, the National Committee of EITI (CNITIE) in Mauritania plans to initiate subnational reporting at the Walaya (regional) level. To do this, they intend to host workshops for local officials and civil society organizations, as well as establish the bureaucratic structure (likely EITI offices) in each Walaya for reporting at this level. Furthermore, the CNITIE intends to make greater efforts to involve civil society organizations more in the EITI implementation and ensure that they are informed of all changes made, and capable of acting on the reports issued by EITI offices, both regionally and nationally. It will be interesting to see what kinds of changes will be observed in the coming years in Mauritania with regards to its resource extraction industries and the transparency therein. For the citizens of Mauritania, I certainly hope that the wealth in revenue that comes for their country’s natural resources will be put to the provision of social services that can help increase their quality of life for years to come.

Opaque Transparency When Seeing through a Corruption Lens

Carlos da Costa, PhD Mining Engineering // Jan 29, 2015

The objective of the Extractive Industries Transparency Initiative (EITI) is to encourage the better use of natural resources (such as oil, gas, metals and minerals revenues) for economic growth and poverty relief through increased accountability and transparency. It encourages governments and companies to independently publish their payments and revenues and then present them to independent auditing.

But over twelve years after its launch it is evident that the EITI initiative continues to lack a real bite. Demanding transparency from governments and corporations in the resources industry is inadequate to guarantee good governance, economic progress and more equitable distribution of wealth. Governments and corporate entities still resort to creative ways of masking their bribes.

Energy and mining companies are linked infamously to numerous human rights violations, kidnappings, conflict, murder and environmental abuse. Uncovering corrupt practices (bribery, fraud, money laundering, tax cheating, etc.) can also be difficult. The EITI certifies compliance on a country-by-country basis. This allows companies with operations in various countries, through their subsidiaries, to hide bribery payments, which are usually masked as fees for consultancy services, in other countries that at times serve as tax havens.

Inflated expenses, questionable accounting practices, exaggeration of overheads, and highly inflated invoice billing to subsidiaries can all have adverse impact to a nation’s tax revenues. Unfortunately, tax authorities and other government agencies in some countries frequently lack the technical knowledge needed to tackle such illegal misdoings.

Many developing countries also lack the capacity to evaluate and qualify the costs involved in these resource-based industries and surrender the responsibility to experts provided by the United Nations, the International Monetary Fund and the World Bank. Unfortunately, these external experts rarely prioritize the interests of the local communities, particularly during contract negotiations. Once the contracts are signed, these countries may not possess the necessary expertise to evaluate the exact quantities of the resources extracted and have to accept whatever values a company declares.

So if the EITI provides only a questionable clean bill of health, should this initiative be maintained? The answer is YES since until just over a decade ago the resources industries in some countries were viewed as an exclusive elite club where governments entered into undisclosed contracts with mining, exploration and energy companies without any involvement of the local communities where such projects impact and the national well-being its respective nations. At least there now is limited publication of information in place, in some cases, where civil societies and its citizens are better informed and thus are better able to challenge their government’s questionable actions and to contest undesirable contracts which they enter into. Also in place countries such as the United States of America and the United Kingdom have implemented anti-corruption laws, such as the Dodd-Frank act and the Bribery Act (respectively).


One of the pillars is EITI

Bulgan Batdorj, MASc Mining Engineering // Jan 27, 2015

I am Mongolian. This may seem like a simple statement. However this simple sentence makes me the owner of a great history, beautiful land, unique tradition and culture. It also means that speaking up and critiquing is part of our culture and is to be encouraged and celebrated rather than resented. Being Mongolian is a privilege and a source of prestige. But in order to maintain and protect that privilege and prestige I have to take responsibility. This is why I am excited to be taking part in the EITI Mongolia project at the University of British Columbia.

As many people know Mongolia is rich in mineral resources and since the transition to a democratic regime, Mongolia has begin fighting to build good governance and develop immunity in the face of a rush of money, and the prospect of misuse and abuse.Mongolia is an EITI compliant country that has achieved a lot of progress since its affiliation with the Initiative in 2006. The EITI Mongolia project at UBC this term will focus on what the new EITI initiative on local reporting would mean for Mongolia and potentially to other EITI compliant countries. This is of great importance because it provides insights and more specifically a toolbox enabling the community and local civil society to push for government accountability to better their lives.

The Mongolian ger(yurt)has two pillars (багана)to stay tall and strong.Extractive industry needs the EITI as one pillar, but without good governance of the industry as the second pillar, there will be no strong nor beautiful white ger under the eternal blue sky.