Canada Mining Corruption: Survey Finds Canadian Provinces Seen As Riskier Than Parts Of Africa

Corruption in Canada’s mining industry is worse than in some African and Latin American countries, says a new survey from the Fraser Institute.

Alberta, British Columbia, Quebec, Nunavut and the Northwest Territories all ranked in the survey as more corrupt than Chile and Botswana. The remaining provinces and territories ranked better than any developing country, but were still seen as more corrupt than many U.S. and Australian jurisdictions.

The study notes that Chile and Botswana have the fastest-growing resource sectors on their respective continents, suggesting a link between economic growth and lack of corruption.

The Northwest Territories ranked as the most corrupt in Canada, with fully 16 per cent of respondents saying corruption would keep them from investing in the area.

Sweden, Norway and Finland, as well as the U.S. states of Minnesota and Missouri, were ranked as the least corrupt in the survey that looked at 93 countries and sub-national areas and surveyed 802 mining companies worldwide.

Most of the developing world, and some developed countries such as Poland and Spain, ranked worse than any Canadian province.

It’s a surprising result that suggests some Canadian jurisdictions may have a way to go in ensuring confidence in their mining sectors, and it indicates that controversies surrounding Canadian mining companies may go beyond concerns about their operations abroad.

“It’s clearly a concern, though a concern amongst a minority of miners,” survey co-ordinator Fred McMahon told the Globe and Mail. “I doubt there’s big money passing hands, but it might be a favour here or a favour there. … It’s something that plagues mining companies around the world.”

The report does not cite examples of corruption in Canadian mining. But concerns have traditionally centred around Canadian companies’ activities abroad. Mining firms have often been criticized for their links to resource-fuelled wars in Africa.

Bribery is seen as being among the most common problems. Last year, Calgary-based Niko Resources agreed to pay a $9.5-million fine after admitting it bribed a Bangladeshi government minister. Under Canada’s Corruption of Foreign Public Officials Act, it is illegal for Canadian companies to bribe officials anywhere in the world.

In another case, the RCMP raided the offices of Calgary-based Blackfire Exploration last year as part of an investigation into allegations the company bribed Mexican officials to suppress dissent against an open pit mine in Chiapas. In 2009, three men linked to Blackfire were arrested for the murder of an anti-mining activist.

“This tragic outcome can be traced directly to the Harper government’s refusal to end the impunity currently enjoyed by Canadian mining companies,” Council of Canadians chair Maude Barlow said at the time.

But in a 2009 report on corruption in mining, Ernst & Young reported that heavy regulation may also be to blame. Mining is among the most heavily regulated industries in the world, and “as a result, officials who have the power to block, delay or frustrate a project may attempt to solicit bribes for the benign exercise of that power.”

The report also suggests that corruption may not be worth it, financially.

“The impact of such activities can seriously degrade a company’s share price and potentially trigger costly shareholder or other litigation,” the report stated. “Furthermore, the time spent by management in attending to investigations, press inquiries or regulatory processes can distract management from the business of developing or operating a mineral property, or exploring for new properties.”

Canada's mining sector was worth $54 billion to Canada's economy in 2010, amounting to 4.4 per cent of GDP.

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