Jocelyn Fraser, PhD student in Mining Engineering // Jan 22, 2015
As representatives of international governments, business and civil society gather together this week at the World Economic Forum, delegates are grappling with issues similar to those faced by the EITI: securing economic growth and social inclusion, and enhancing environment and resource security. Making progress on these matters requires the participation of multi-stakeholder groups committed to transparency – of which there are many. It also requires trust – of which there is little.
According to the 2015 Edelman Trust Barometer, the past year brought a sharp decline in trust in public institutions and business as gains of recent years were swept away in a series of disasters and mismanagement ranging from data hacks to mysterious air crashes, from financial scandals to Ebola. The Trust Barometer findings are echoed in research by Globescan (Viewpoints for Business in 2015) that shows national governments, global companies, media, and even the United Nations, all scoring negative trust ratings. In both cases, the research suggests that citizens want stronger regulation of business yet have little confidence that policy makers can develop, implement and enforce the rules.
Transparency is a key driver of trust. And earning trust will be a critical requirement as the EITI seeks to implement stronger provisions for tracking transfers of resource revenues to sub-national tiers, and to address issues associated with shell companies (corporate entities that are little more than a mailing address in a foreign tax haven) and transfer pricing (the manipulation of costs and prices to reduce tax liability). These focus areas are in addition to the EITI’s ongoing effort to account for revenues lost to corruption and bribery, an amount the World Bank estimates at US$1T annually in the global oil and gas and mining sectors.
How will Mongolia, with its numerous opportunities for economic advancement through resource development, manage these issues? As an EITI member country, are there lessons to be learned from the experience of other members, or from initiatives such as Dodd Frank, the EU directive on transparency, or Britain’s legislation requiring companies to disclose their owners? Is Mongolia better positioned to succeed given its political stability and the relatively recent addition of mining to its economy? And, perhaps most importantly, can mining companies and communities in Mongolia work to identify points of intersection between the needs of the two so that co-benefits can be pursued and shared value created?