Transparency important in tackling corruption
Work to tackle corruption is, and will continue to be an issue for the Council on Ethics to pursue, because corruption undermines the legitimacy and sustainability of the economic system. The Council on Ethics conducts dialogues with a large number of companies and in principle, all proactive projects include the issue of anti-corruption.
The Extractive Industries Transparency Initiative, EITI, is an initiative in which governments, companies and voluntary organisations work together to create transparency in the resource extraction industry. During its ten years, EITI has played a key role in the transparency of transactions at country level, encouraging companies extracting natural resources to report what they pay to governments in the form of royalties and taxes, while governments report the income they receive, in the hope that the figures tally. The aim is to use transparency to help improve democratic management and reduce problems such as corruption, poverty and conflicts.
The extensive Dodd-Frank legislation14, which was drawn up in the United States as a response to the Lehman Brothers crash of 2008, contains a paragraph regarding income streams from resource extraction. It means that companies must report income streams on a project basis, that is for each individual mining project instead of purely on a national basis. The companies affected maintain that this will restrict competition, as companies from other countries will not be subject to the same legislation.
The EU is also reviewing its legislation in this area as a result of the Dodd-Frank Act and requirements for increased transparency from companies are likely to increase.
Why this initiative is important?
- Corruption is widespread in many countries and industries.
- Corruption undermines the legitimacy and sustainability of the economic system.
- Companies should work actively to reduce the risk of corruption in its operations.