Panel targets mining corruption

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A panel of foreign and local experts have called for improved transparency and accountability in Vietnam's gas and mining sector


A copper mine run by the Vietnam Coal and Mineral Industries Group in the north-western province of Lao Cai. An anti-corruption dialogue on May 25 called for improved transparency and accountability in Vietnam's gas and mining sector.

The Vietnam Coal and Mineral Industries Group (Vinacomin) paid more than VND201 billion (US$9.76 million) last month in back taxes.

The company also issued a formal apology nearly two months after a government inspection found that the state-owned mining corporation had violated a wide array of national laws.

In March, government inspectors asked Vinacomin to pay natural resource, corporate, value-added and export taxes that the company claimed it had "miscalculated" between 2006 and 2009.

The Ministry of Public Security investigators also alleged that Indevco Corporation, in the northern Quang Ninh Province, was responsible for the illegal exportation of 2.8 million tons of coal.

Seven of the nine coal mining companies that were investigated were found to lack wastewater treatment systems and had failed to pay into an environmental mitigation fund.

Furthermore, several of Vinacomin's subsidiaries were operating without licenses. The inspectors charged that a lack of corporate oversight had lead to collusion between its employees and customers.

Vinacomin's kafuffle represented the latest case of mining misconduct.

According to a Government Inspectorate report released May 17, provincial government inspectors from across Vietnam have issued fines totalling VND12 billion ($583,000) against the mining sector over the past three years.

Violations have been found at all levels of the mining industry: from lax licensing to poor environmental protection. The report said the authorities have also censured a number of firms for failing to effectively compensate the residents of communities that had been adversely affected by mining operations.

The report also found poor management in the zoning of mining areas.

The report only detailed the geographical locality of problem mines instead of pointing out their exact position and area.

"Half of the 16 provinces were found to contain illegal mining operations," said Le Tien Chien of the Government Inspectorate. "Notably, many of these violations were brazen and communal authorities failed to address them."

By April, 121 valid licenses for surveying minerals and 3,882 mining licenses had been issued nationwide.

Paradox of plenty

At the 9th Anti-Corruption Dialogue Meeting in Hanoi on Wednesday (May 25), Swedish Ambassador Staffan Herrström warned against the "resource curse" in developing countries with abundant resources.

The talk focused on corruption in the management of extractive resources"”which include subterranean mineral, earth metal, oil and natural gas resources.

"The World Bank's list of highly indebted poor countries consists of 12 of the world's most mineral-dependent states and six of the world's most oil dependent states. At the same time, 1.5 billion people living in resource-rich countries earn less than $2 per day," he said.

"These figures are a warning that wealth derived from the extraction of resources and the wealth of nations do not always go hand-in-hand," he told the biannual dialogue.

Herrström blamed corruption for the country's resource wealth not translating into less poverty and welfare for its citizens.

"Vietnam has relatively plentiful volumes of untapped extractive resources," he said "Experiences from "˜resource curse' countries suggest that fighting against corruption is crucial to ensuring the translation of resource wealth into increased growth and less poverty."

Make it clear

Herrström called for greater transparency in revenue management, bidding and licensing.

He also urged Vietnam to weed out dishonest officials and companies to prevent corruption in extractive industries.

"Company payments and government revenues must be subject to disclosure," he said. "Citizens must be able to scrutinize the collection, disbursement and investment of the revenue [generated in these industries]."

The ambassador hailed Vietnam's Minerals Mining Law which will take effect this July. The law stipulates that the Prime Minister and provincial administration will designate which mines will be assigned to miners and which mines will be put out to bid.

"We know that the Extractive Industries Transparency Initiative (EITI) is a strong tool for improving transparency and accountability," he added. "We anticipate that the Vietnamese government will speed up the process to join this initiative."

At a press briefing on Tuesday, Minister Marie Ottosson, head of Sweden's Development Cooperation Section also stressed the importance of joint efforts between government agencies, civil society groups, private companies, and the international community in tackling corruption in the extractive industry.

Ottosson said Vietnam is home to over 70 types of minerals and 5000 deposit ore mines, including promising reserves of bauxite and titanium. The nation's rare earth metal reserves and crude oil production ranked 7th in the Asia and Pacific region and the 3rd in Southeast Asia, she said.

Ottosson added that empirical studies in different mining provinces in Vietnam have demonstrated a negative correlation between rich resources and poverty reduction.

"A presentation from Binh Dinh Province pointed out clearly that weak management makes illegal transportation of titanium across the border workable, leading to losses of commodities that should translate into revenue," she said. "Titanium extraction also negatively affected shrimp production, forestry, and the environment surrounding these mining communities."

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