Safeguards and Quality Controls

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The presence and quality of checks and oversight mechanisms that encourage integrity and guard against conflicts of interest.

The Index report reveals unsatisfactory safeguards to promote integrity in the natural resource sector. Most countries lack mechanisms for limiting conflicts of interest, curbing discretionary powers and ensuring the quality of information that is disclosed to the public. Forty-two out of the 58 surveyed countries fail to score in the satisfactory range (above 70) on this component and 16 countries fall in the failing category (below 40), pointing to major shortcomings in terms of safeguards and quality controls (see Figure 1).

Figure 1: Safeguards and Quality Controls: ranking and scores

   For more detail, go to the RGI Data Tool

 

Most satisfactory performers such as Norway and Brazil exhibit strong checks over the licensing and revenue processes. They enforce limits on the discretionary powers of the authority in charge of awarding licenses, follow due process when third parties appeal licensing decisions, audit resource revenue and ensure that the legislature oversees both licensing and revenue collection processes. Other good practices include the timely publication of high quality reports produced by relevant government agencies, state-owned companies and special funds.

The 42 countries with unsatisfactory performance share some common characteristics. 38 countries, including Peru and Saudi Arabia, do not publish the audits of government finances or publish them more than a year late. The Index found no evidence of government audits in four countries: Guinea, Myanmar, Qatar and Turkmenistan. In 31 countries, such as in Botswana and Timor-Leste, the legislature has negligible oversight of contracting and licensing processes; in 29 countries, including Chile and Sierra Leone, the legislature has very limited oversight of resource revenues. The research for this report finds that the quality of government reports on extractive revenues is very weak in 23 countries.

Finally, the Index assesses whether officials who manage the extractive sector, or who work for state-owned companies or natural resource funds, are required to disclose their financial interests in the oil, gas or mining sector. The Index research shows that such government officials do not disclose information about such potential conflicts of interest in 18 countries, including Canada (Alberta). In some countries, such as Malaysia, state-owned company officials are exempt from such disclosres because the company is considered to be a commercial entity. In Azerbaijan, officials are required to disclose their financial interest – the question asked by the Index – but the government does not prohibit them (or their families) from investing in the sector that they regulate or manage.