Lawyer Monthly Magazine -December 2019 Edition

for managers, who may at times take the ‘tick-and-flick’ approach, signing off on purchase orders or receipt of goods, without checking if the good/service was really needed or whether it had been delivered. These approaches are often adopted by managers due to time pressures, the belief that managers below them in the hierarchy who have signed off have completed the necessary checks, or due to generally trusting staff to do the right thing. Random monitoring can be an effective deterrent against corrupt activity. Why is the mining sector vulnerable to corruption? Mining projects in Australia are obviously big business. With billions of dollars invested, and the potential to deliver jobs and other economic benefits, there can be a lot at stake in the approvals process. Unfortunately, like any industry where the stakes are so high, the approval process for mining projects is complex and can be vulnerable to abuse and corruption. What are some of the key areas of risk? Transparency International Australia (TIA) outlined some of the key risks in a 2017 report. These risks are largely to do with the approvals process for mining leases. First of all, the application process itself presents corruption risks as there is insufficient due diligence and background research into the applicants seeking mining approvals. Furthermore, there is the risk of approvals being granted by corrupt ministers for personal or professional gain or bargaining. Transparency International also noted the potential for inappropriate lobbying and industry influence, particularly in a context where there is inadequate regulation of political donations and frequent movement of employment between industry sector and government workers. Insufficient protection for whistleblowers was a further risk identified in the report, which could perpetuate systemic corruption. It will be interesting to observe whether the proposed Treasury Laws Amendment (Whistleblowers) Bill 2017, which is aimed at corporate, financial and credit industries, may, in turn, be extended to include the mining sector. Are there any sectors of the mining industry which are particularly high risk? A recent report highlights the specific risks in the oil and gas sectors.Market challenges such as a lack of natural resources in more established markets and volatile commodity prices have seen companies operating in these industries expand into emerging markets that may have traditionally been regarded as too risky. Furthermore, the global nature of these sectors and the complexity of the working and contractual relationships with governments, venture partners, suppliers and other contractors make compliance with anti-bribery and anti- corruption (ABAC) legislation something that requires significant management focus. We have just discussed the inherent corruption risks in the procurement process and of course, this is a key consideration in the oil and gas sectors. The report identifies a number of compliance ‘pressure points’ in the procurement process including: “Both procurement and the mining sector have been identified as high-risk areas for corruption.” “This needs to be accounted for in the procurement process, whilst minimising the potential for corruption that this discretion can introduce.” 77 DEC 2019 | WWW.LAWYER-MONTHLY.COM Expert Insight By Dennis Miralis, Nyman Gibson Miralis