In the global and local energy sector, there are many corruptions risks of which citizens, companies and Government should be aware and vigilant. These risks appear at different phases. They can emerge at the stage of licence and contract award to the company, the registration stage where beneficial ownership information of companies, the Government partners with, is disclosed. The risks and actors are varied. These include but are not limited to bribery, collusion, political capture, conflict of interest, use of shell companies and money laundering and terrorist financing. Mitigating all these risks can prove challenging. However, by democratising data and disclosing critical information countries can lessen these risks. The availability, accessibility and ability to use of data for citizens and anti-corruption agencies is key. The Extractive Industries Transparency Initiative (EITI) discloses data aimed at mitigating corruption.
T&T has implemented the EITI for over a decade and the initiative has listed tackling corruption as one of its strategic priorities over the next five years. The updated EITI Standard 2023 addresses anti-corruption measures taken by reporting companies, including their internal policies and how these policies impact beneficial ownership disclosure, supplier engagement and compliance. According to Standard Requirement 1.2 b, “Reporting companies are expected to publish an anti-corruption policy setting out how the company manages corruption risk, including their use of beneficial ownership data. In addition, companies on the multi-stakeholder group are expected to engage in rigorous due diligence processes.
Other reporting companies are also encouraged to engage in rigorous due diligence processes. Standard Requirement 1.4.b also states, “the multi-stakeholder group is required to consider issues linked to the governance of the extractive industries, including complementary activities related to anti-corruption; energy transition reforms; gender equity; and artisanal and small-scale mining (where applicable).”
The TTEITI Steering Committee reviewed the anti-corruption elements of the standard and held several meetings to discuss an approach to meeting the requirements of the standard. The Steering Committee agreed to disclose national anti-corruption legislation, capture the number of reporting companies with anti-corruption policies and engage companies on their due diligence processes. Of the 15 reporting companies, 11 disclosed their anti-corruption policies while four companies do not have an anti-corruption policy in place. The disclosed policies feature guidance on codes of conduct, monitoring and vetting of suppliers, financial reporting, anti-bribery and fraud. Some of the disclosed policies also provide guidance on fair trading, conflict of interest, anti-money laundering and economic sanctions. The companies providing these disclosures range from multinationals (BP and Shell) to state enterprises (NGC and Heritage) as well as lease and farm out operators (Lease Operators Ltd).
Corruption red flags
The Natural Resource Governance Institute (NGRI) created a list of 12 red flags by examining over 100 cases of licence or contract awards in 49 oil, gas and mining sectors, in which there were accusations of corruption. These red flags can be used by oversight actors (e.g. journalists, law enforcement, regulators, civil society groups and other oversight actors, can use these red flags to detect and prevent corruption in the extractive sectors.
Twelve red flags to detect and prevent corruption in the extractive sectors (by frequency)
In T&T the energy sector has been transformative. Revenue from the sector helps fund social expenditure directly linked to citizens’ wellbeing, whether CDAP drugs for the elderly or GATE for university students. Ensuring accountable management of this revenue demands publicly available data and strengthening institutions to target corrupt practices and promote effective oversight. When the word anti-corruption is mentioned, the tendency is to think about investigations and prosecutions but democratising data is a big part of mitigating against corruption risks.
Data is a tapestry and one loose thread can unravel further threads where public scrutiny should be magnified. The TTEITI’s reports publicly disclose company anti-corruption policies but also how companies set up systems to mitigate against corruption risks. The reports also disclose the beneficial owners and whether any politically exposed persons own companies developing our natural resources. These are but a few examples of data published. And, as the risk of corruption remains, the TTEITI will continue to promote revenue transparency and offer recommendations to correct deficiencies in the country’s audit and assurance, governance and revenue collection systems.
For more information on data linked to addressing anti-corruption risks in the oil, gas and mining sector visit www.tteiti.com
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The HYPERLINK “http://www.tteiti.com”is the local arm of the HYPERLINK “http://www.eiti.org” (EITI), the global gold standard for transparency, accountability, and governance in the oil, gas, and mining sectors. The initiative, which is currently being implemented in 56 countries, focuses on reconciling tax and royalty payments made by extractive companies with the Government’s reported receipts of those payments.
The TTEITI, through its independent auditor, also makes detailed recommendations aimed at improving Government revenue collection, data management and audit and assurance systems within the extractive industries.
The TTEITI produces an annual EITI report which not only reconciles Government receipts against extractive company payments, but also contains contextual information on key extractive sector issues including: oil spill data, beneficial ownership disclosure and greenhouse gas emission disclosure. In its 11 reports to date, the TTEITI has reconciled approximately TT$180 Billion in extractive company payments with government’s declared receipts, ensuring all monies are accounted for and independently verifying revenue earned from the extractive sector.