Corruption Risk Assessment in Mining Sector of Mongolia

Jun 7, 2016

Launch of the report

“Corruption Risk Assessment in Mining Sector of Mongolia”

Speech by Ms. Beate Trankmann, UNDP Resident Representative

7 June 2016, Puma Imperial hotel, B section

Ms. Bat-otgon, Director of Prevention and Public Awareness Department of the Independent Authority against Corruption (IAAC)

Mr. Javkhlanbold, Director of Monitoring & Evaluation and Internal Audit, Ministry of Mining

Ladies and gentlemen,

Good morning,

It is a pleasure to mark the launch of the Corruption Risk Assessment in Mining Sector of Mongolia, commissioned by the United Nations Development Program and prepared by the Independent Research Institute of Mongolia.

The recently adopted Sustainable Development Goals (SDGs) recognize the crucial importance of corruption-free societies in contributing to poverty reduction, facilitating people’s access to services and ensuring that everyone can benefit from development. The SDGs have therefore for the first time included a target on substantially reducing corruption and bribery in all its forms under Goal 16 – the governance goal.   

Corruption prevention is also an obligation that Mongolia has committed to internationally under UN Convention against Corruption (UNCAC), since becoming a party to the Convention in 2005. And Mongolia’s national laws including the Anticorruption law and the recent Glass Account legislate measures to effectively combat and prevent corruption.

Most importantly, living and working in a society free from corruption is what the people of Mongolia want; they expect more to be done to prevent corruption.

The mining sector in Mongolia represents, on average, 17% of the country’s GDP over the last five years. This makes the sector a key driver of the country’s economy despite its slowdown in the last 2-3 years. As seen from international experience, natural resource endowment can make a significant contribution to human development, economic transformation and environmental regeneration, if these resources are managed in a transparent, inclusive and sustainable manner and if opportunities for leakages and corruption in the extractive sector are addressed.  

This is also the reason why we are all here today to discuss corruption risks and suggested risk mitigation plans for the mining sector. I thank all of you for coming to participate and contribute to the mining sector’s initiative for greater transparency and accountability.

The extractive industry is regarded as vulnerable to corruption because it involves large inflows of investments and big money. It is also complex - technically, commercially, and structurally.

Public perception studies in recent years have shown that the mining sector is considered as one of the most corrupt.

However, tackling corruption in the mining sector is possible! To do this, we need to better understand where exactly the corruption risks lie, what the causes are and the areas that need most attention and how these risks can be mitigated and by whom.

The study that we are launching today reviewed various stages of mining activities to look at the dynamics of different actors involved in mining – ministries, agencies, local governments, companies and CSOs, and identify the corruption risks.

The research team will present to you the assessment findings. At this point, I would simply like to highlight that most of the corruption risks identified in mining activities are related to a lack of transparency of information, missing clarity and consistency of legal regulations and laws, and weak engagement of local authorities and communities in decision making.

The identification of the corruption risks is essential, but won’t lead us anywhere if actions to mitigate them are not taken. Let me conclude by congratulating the Ministry of Mining on the development and adoption of a corruption risk mitigation plan that aims to address risks identified in the assessment. 

We, in UNDP, look forward to continuing the cooperation with relevant stakeholders that will lead to the identification of practical and effective solutions minimizing these corruption risks.

Effectively reigning in these risks and strengthening responsible and accountable management practices in the sector that foster transparency, involve communities and are in line with social and environmental safeguards are essential to ensure that the economic benefits of mining translate into real long-term gains for the people of Mongolia.

Thank you.

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