Two important questions that businesses should ask themselves regarding corruption risks in their supply chains are:
- What are the corruption risks and red flags across the supply chain?
- What can be done to manage these risks and how can you carry out effective corruption due diligence?
As a focus on mineral value chains, corruption is endemic across the industry both upstream and downstream and often goes hand in hand with various other crimes. The operating contexts and systems reward corruption, which is why it is difficult for many companies to become clean, especially Artisanal and Small-Scale Mining (ASM). The environmental and human rights impact of these practices are extremely unsustainable and harmful. That is why all stakeholders with influence should work together to combat this practice
Although corruption is certainly not unique to mineral supply chains, it is very prevalent in this area, therefore other industries would benefit greatly from learning from the extractive industries efforts to end corruption.
How can you identify and mitigate corruption risks in your supply chain?
- Know where your raw materials are coming from.
- Do heightened due diligence in high risk countries.
- Refer to the Ease of Doing Business Rankings – For example, if you are doing business with a company operating in a country where it is difficult to do business, yet getting permits etc. is going very efficiently, then this could be an indication of corruption.
- Look further, do research into the companies and countries that you do business with and in.
- If you are a downstream company, lead by example in making sure your own anti bribery and anti-corruption polices are well established and publicly available.
- Do strong due diligence before entering a relationship and make sure you choose the right supplier.
- Use leverage where you can to get suppliers to operate ethically. For example, big companies like Microsoft can set up policies for their suppliers to adhere to. Leverage competition if you can.
- Include anti-corruption and bribery contractual clauses. Moreover, include clauses that allow you to require corruption training as well as consequence and non-compliance clauses.
- Very Importantly, strengthen the capacity of your supply chain partners where you can, according to your means. Provide training, education and propose instead of imposing.
- Follow the OECD due diligence guidelines as these are being incorporated into legislation due to the increase in countries developing domestic law adopting these guidelines. For example, companies operating in the UK can be held liable under Section 7 of the UK bribery act. See also the Beny Steinmetz case in a Geneva court.
The discussion was based on the recently published OECD FAQ’s on how to address bribery and corruption risks in mineral supply chains.