MINING & METALS TRANSPARENCY AND ETHICS DIALOGUE. Cape Town, South Africa 9 June 2009 SUMMARY

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1 MINING & METALS TRANSPARENCY AND ETHICS DIALOGUE Cape Town, South Africa 9 June 2009 SUMMARY

2 Contents Introduction 2 Discussion Themes 3 Recommendations 4 List of Participants 5 Introduction The opening remarks set the tone for the discussion, namely that, without a clear business case, a company cannot be serious about transparency and ethics. It was argued that, building on the experience of working with companies in this area and the World Economic Forum s Partnership Against Corruption Initiative (PACI), the business case does clearly exist. Several companies have processes to embed the principles of transparency and ethics in their business operations. The next step is for the business response on transparency and ethics to be taken to scale, to create a level playing field. This requires champions who are prepared to take the first steps and provide leadership in the mining and metals sector. In terms of level of ambition, participants were challenged to think not just about what is possible in this area, but what is desirable. Put in context, it was emphasized that if corruption is rife, no country has made sustained gains in fighting poverty. The institutional framework is lacking to deal with corruption and, yet, participants agreed it is a global phenomenon, with different manifestations across government, business and NGOs. The Partnering Against Corruption Initiative (PACI) is established as a platform for the business voice against corruption. In addition to providing a transparency and ethics framework for companies, the PACI has tackled these issues on the global scale, including a joint initiative with Transparency International, the UN Global Compact and the International Chamber of Commerce to send an open letter, calling on the United Nations to push forward this agenda, to Secretary-General Ban Ki Moon, signed by 30 CEOs. 2

3 Discussion Themes Understanding corruption models One participant raised the proposition that, while there is a business model to fight corruption, there is also a business model of corruption. To fight corruption, it should be better understood and defined more tightly. From another perspective, it is important to look at the cause of the disease rather than the symptoms. In general, the inclination is to assume that corruption equals bribery. Participants recommended that to better understand corruption and seek solutions, there is a need to define how corruption manifests itself in each region and each sector. Participants were reminded to think about the sharp end of corruption, viewed through the eyes of affected communities and to think of how corruption is actually affecting the quality of life, such as provision of healthcare and other social services. They were asked to reflect on the question: What is the face of corruption in your country? Economic link Participants highlighted the complex interplay of the economic, governance and social aspects of corruption. For the mining and metals sector, one participant made the link to global economic cycles, giving as an example, a country where there is a correlation between high levels of corruption and high commodity prices. In this example on the issuing of mineral licenses, good practice has been developed with the introduction of a system to track the status of mining rights and licenses. In addition, it was observed that within the mining and metals sector in a specific country, corruption is not uniform for example, the difference in the level of corruption activities between junior mining companies and major international companies. Capacity building In many cases, regulatory frameworks and institutions to fight corruption may be in place, but the implementation of regulations is a challenge to tackling corruption. For example, in countries where the government may not be able to pay its officials, a culture of pragmatic facilitation payments can develop as the necessary modus operandi. Participants agreed that this lack of capacity, whether due to shortage of staff or the inability of governments to pay an adequate salary, should be addressed. On this topic, a challenge was made to the multilateral institutions to focus on strengthening institutional monitoring, both on the level of ensuring appropriate legislation to tackle corruption and on the implementation and monitoring of legislation. Partnership solutions The relevance of the World Economic Forum to bring together global business and government was highlighted, stressing the need to move together and build partnerships to reduce levels of corruption. It was also highlighted that corruption involves a giver and a receiver therefore, it is critical to engage both companies and government officials in seeking solutions. However, there is a need to evolve a common understanding of the roles of government and business, and agree common objectives with other stakeholders including labour organizations. While clear solutions exist, such as the Extractives Industries Transparency Initiative (EITI) in the public sector and the PACI working with the private sector, linking them is key to making progress on a broad scale. 3

4 Common value sets Participants shared examples of different cultural perspectives on what may be considered corruption or bribery in a Western culture, inter-regional or traditional tribal setting. There was debate over the extent to which the development of value-driven norms is helpful in tackling corruption and the opportunities for globalization of the values framework. Participants agreed that there is both a business case and a moral case for tackling corruption. Clearer articulation of a common values framework is helpful as value systems need to be coherent to be effective. Recommendations Define how corruption manifests itself in each region and sector At a country level, prioritize based on an understanding of how corruption is affecting the social fabric of the country Define the roles of government and business and their common objectives; develop government-business partnerships to tackle corruption Strengthen institutional monitoring Articulate what a globalized value framework looks like Include small and medium tier companies in any suggested solution 4

5 List of Participants Manana M. Bakane-Tuoane, Director, African Rainbow Minerals Ltd (ARM), South Africa Graham Butler, Executive, Mining Operations, African Rainbow Minerals Ltd (ARM), South Africa Fritz Neethling, Executive Head, Engineering and Projects, Anglo Platinum Limited, South Africa Xolani H. Mkhwanazi, Chairman, BHP Billiton SA Ltd, South Africa George Gachara, Expertise: Human Rights & Governance, Global changemakers British Council, United Kingdom Mosa Mabuza, Chief Director of Promotion, Department of Minerals and Energy, South Africa Charlotte Mosiane, Mineral Economist, Department of Minerals and Energy, South Africa Tseko Nell, Chief Director, Economic Analysis, Department of Minerals and Energy, South Africa Madileke Liks Ramushu, Director, West Africa, Department of Trade and Industry of South Africa, South Africa Stephanus J. Vermaak, Principal Investment Officer, International Finance Corporation, Oil, Gas, Mining and Chemicals Department, South Africa Lois M. Hooge, Senior Policy Advisor, Ministry of Natural Resources of Canada, South Africa Heinz Pley, Principal, McKinsey & Company, South Africa Christopher Anderson, Director, Corporate and External Affairs, Africa, Newmont Mining Corporation, USA Jean Chawapiwa-Pama, Vice-President, Communications and External Affairs, Africa, Rio Tinto, South Africa Guy Larin, Vice-President, New Business Development, Africa, Rio Tinto, South Africa Phil Monare, General Manager, Shared Ressources South Africa, Rio Tinto, South Africa Preston Chiaro, Chief Executive, Energy and Minerals, Africa, Rio Tinto Plc, United Kingdom Andrew Jackson, Director Stategic Investments, Royal Bafokeng Holdings, The Royal Bafokeng Nation, South Africa Zhang Suwei, Chief Executive Officer and Executive Director, South Africa, Sinosteel Corporation Limited, People s Republic of China Sean Cleary, Chairman, Strategic Concepts, South Africa Rick Menell, Chairman, The Carrick Foundation, South Africa Clive A. Armstrong, Lead Economist, The World Bank Group, USA Michael H. Solomon,, Chief Executive Officer, Wesizwe Platinum Ltd, South Africa Moderator Cobus de Swardt, Managing Director, Transparency International, Germany Special Guests Maxwell Mwale, Minister of Mines and Minerals, Ministry of Mines and Minerals of Zambia, Zambia From the World Economic Forum Jan Klawitter, Senior Community Manager, Head of Mining & Metals Industry Jennie Oldham, Community Manager, Mining & Metals Industry 5

6 For more information, please contact: Mining & Metals Industry Group Jan Klawitter Senior Community Manager Head of Mining & Metals Industry Tel: +41 (0) Jennie Oldham Community Manager Mining & Metals Industry Tel: +41 (0) Partnership Against Corruption Initiative (PACI) Jasmin Lamrani Project Associate Partnership Against Corruption Initiative (PACI) Tel: +41 (0) World Economic Forum route de la Capite CH-1223 Cologny/Geneva Switzerland Tel.: +41 (0) Fax: +41 (0) World Economic Forum. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, including photocopying and recording, or by any information storage and retrieval system.