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Corruption in the Extractive Value Chain

Typology of Risks, Mitigation Measures and Incentives

One case of transnational corruption out of five occurs in the extractive sector according to the 2014 OECD Foreign Bribery Report. In this area, corruption has become increasingly complex and sophisticated affecting each stage of the extractive value chain with potential huge revenue losses for the public coffers. This report is intended to help policy makers, law enforcement officials and stakeholders strengthen prevention efforts at both the public and private levels, through improved understanding and enhanced awareness of corruption risk and mechanisms. It will help better tailoring responses to evolving corruption patterns and effectively countering adaptive strategies. The report also offers options to put a cost on corruption to make it less attractive at both the public and private levels.

Published on August 18, 2016Also available in: Korean

In series:OECD Development Policy Toolsview more titles

TABLE OF CONTENTS

Foreword
Executive summary
Overview
Corruption risks, mitigation measures and incentives of cross-cutting relevance across the extractive value chain
Corruption risks in the decision to extract
Corruption risks in the award of mineral, oil and gas rights
Corruption risks in the regulation and management of operations
Corruption risks in revenue collection
Corruption risks in revenue management
Corruption risks in revenue spending and social investment projects
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Key recommendations

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Taking a one-dimensional approach to combatting corruption in extractives is unlikely to achieve results. Both the supply and demand for corruption need to be tackled, domestically and internationally, with granularity and differentiation across the broad range of private and public actors.
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Recommended mitigation measures and incentives addressed to home and host governments and extractive companies will incentivise a voluntary change in behaviour, by making corruption more costly and helping to make it less attractive for public and private actors alike.
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Closing the gap between theory and practice calls for building an alliance of home and host governments using the typology as a standard diagnostic framework to assess risk and implementing recommended mitigation measures and incentives across the value chain, and through a peer review process.