Who benefits? A series on beneficial ownership and integrity screening in the mining sector

Beneficial ownership

22 March 2021

The conviction of controversial businessman Beny Steinmetz for corrupt dealings in Guinea via the company BSGR was a wake-up call for governments that had granted mining rights to BSGR over many years. In Sierra Leone, a subsidiary of the company was already making headlines because of legal action brought by communities affected by the company’s mining operations.

Governments need to protect their mining sector from dishonest investors and irresponsible operators. Allegations and findings of corruption, conflicts of interests and questionable conduct are relevant considerations for government officials when deciding whether a company should be granted mining rights.

Integrity due diligence involves companies disclosing, and governments checking, the owners, political connections and integrity record and reputation of the company as part of evaluating its licence application or bid. It is a way that governments can prevent companies with a history of non-compliance, illegal conduct and corporate abuse from doing business in the country. The World Bank, Natural Resource Governance Institute and Columbia Center for Sustainable Investment have developed useful guidance and resources.

This blog series features developments in four countries where Transparency International national chapters are actively working to have their governments introduce rigorous beneficial ownership and integrity due diligence as part of the licensing process.

The case for integrity due diligence

When a company applies or bids for exploration or mining rights, government regulators make an assessment about whether it should be granted the rights. While in some cases government officials consider if the company has the financial resources or technical capacity to productively carry out mining activities, on the whole, most countries do not conduct integrity checks.

Integrity checks (due diligence) are important to make sure that the individuals behind the company do not have unlawful political connections (conflicts of interests) or a history of illegal conduct or corruption.

Companies conduct integrity due diligence on their suppliers and business partners as a standard part of their operations. It’s about knowing who you’re doing business with and understanding and managing the risks. For governments with a duty to their citizens and where the consequences of doing deals with the wrong people have even greater impacts, integrity due diligence should be top priority.

Beneficial ownership transparency is key

When the owners and beneficiaries of entities applying for a mining right are hidden behind opaque corporate structures, it is difficult to conduct adequate due diligence or verify statements about the character and compliance track record of the licence applicant. It also makes it challenging to detect if there are conflicts of interests involving government officials or their associates. This creates significant corruption risks.

Recent progress through the Extractive Industries Transparency Initiative to require extractive companies to disclose their real owners (beneficial owners) and identify any politically exposed persons is a good first step. Decision-makers and the public need to have access to accurate information about the companies wanting to do business in the country.

However, for beneficial ownership transparency to make an effective and meaningful contribution to reducing corruption in the mining sector, beneficial ownership disclosures need to be used by government officials as part of background checks when making licensing decisions.

Developments in Australia, Mongolia, Indonesia, and Sierra Leone

In this blog series, we learn how an independent government commission in Australia endorses integrity due diligence as a key part of mining regulations. Despite holding itself out as a world-class destination for mining, the commission finds that Australian mining regulations fall short of leading practice.

Turning to Mongolia, we learn how the country’s Extractive Industries Transparency Law is an opportunity for the new government to plug the gaps that leave its mining sector exposed to conflicts of interests and corruption.


In Indonesia, we see how civil society efforts have brought to light weaknesses in the implementation of the country’s beneficial ownership agenda. There are opportunities for progress in the 2021-2022 National Strategy for Corruption Prevention and through the work of a civil society advocates.

Sierra Leone mining

Finally, Sierra Leone is poised to become a leading jurisdiction on beneficial ownership and integrity due diligence in the mining sector with the proposed amendments to its national mining law. Transparency International Sierra Leone has provided technical inputs and worked with communities to support public consultations on the bill that is expected to be tabled in Parliament in the coming weeks.

The time for action is now

Governments are the gatekeepers to the country’s mining resources – deciding which companies are in and which are kept out when they make decisions about granting mining rights. Through this blog series we hope to start a conversation about progress on the potential for beneficial ownership and integrity information to be used at this critical gatekeeping stage to fight corruption.

Photo credit: Alex Knight/Unsplash