Discarding the ‘resource curse’ label: the need for corporate accountability in natural resource exploitation in Sierra Leone

Two years ago, Manonkoh, a small farming village of about 35 households in an area close to the Marampa mining concession of London Mining Company in the north of Sierra Leone began complaining about creeping flood waters precipitated by the damming of a water way within the company’s concession area.  At the time, neither the company nor the country’s environment protection authority took the issue seriously.  Now, over 350 hectares of arable swamp land are completely under polluted water, destroying crops in the process and nullifying any prospect of making a living by farming.  Probably, terrified of the potential cost of making good this breach, the company’s response has been less than admirable.  Initially, a company official accepted responsibility at a meeting with the community people and promised to minimise the hardship caused.  Later, the company issued an outright denial of liability claiming a report prepared by experts it hired cleared it of any responsibility.  A copy of the report was never shared with the community.  As a ‘humanitarian gesture’ the company offered the community over 200 bags of rice in exchange for the community agreeing to drop the complaint.^[1]  For a company that recently sold 2% of its royalty on iron ore sales from the same mines for $110 million,^[2] this has been seen as nothing short of ‘corporate bullying’ of a poor community.^[3]

The IMF has predicted a massive one-time expansion of real GDP growth in excess of 50% in 2012, at a time when many developed countries are experiencing negative growth figures.^[4] Estimated reserves for iron ore, gold, rutile and bauxite are music to the ears of the long-suffering people.^[5] With these levels of reserve and the current commodities boom, many agree that Sierra Leone stands a real chance to prison-break from the jail of poverty and underdevelopment through the ‘judicious use of its extensive natural resource endowment’.^[6] But does it?  Fifty years ago, the country had a similar opportunity to leverage these natural resource endowments for a better future but failed dismally. Now, another opportunity has been presented. Are policy makers learning from the past and the experiences of other countries so as to avoid making the same mistakes their predecessors did and chart a different, more beneficial path for the many poor citizens?^[7] Is enough being done now to avoid the unenviable label of a ‘resource cursed’ nation for a second spell?^[8]

In 2010, against the backdrop of vociferous opposition by civil society groups, the government ratified mining agreements with two companies- London Mining Company Limited and African Minerals Limited.^[9]  These companies were given licences to exploit iron ore reserves in excess of 12 billion tonnes with African Minerals Limited presiding over the lion’s share of approximately 11 billion tonnes on terms that were particularly advantageous to them. Even when the London Mining Agreement was revised, reportedly on the instructions of the president, many still found the final product still heavily weighted in favour of the company.^[10] A serious concern was that after taking steps to consolidate and improve the laws on mines and minerals in 2009, the mining agreements simply ignored the provisions of the new law and myriad others, potentially resulting in the loss of much needed revenue for the country.

This apparent willingness to circumvent provisions of law using rather vague economic expediency arguments is a worrying signal, an inauspicious start of a supposedly new era in the mining sector.^[11] It is hardly a departure from the old epoch which brought mostly poverty and conflict and the warranted label of a resource cursed nation. It conveys a rather disquieting message- that the interests of corporations could easily trump the interest of an entire nation.

In a developing country context such as ours, the economic might of these corporations and their apparent facility at winning nationally detrimental concessions from the authorities make proper regulation of their activities extremely difficult. More effort has been put into ‘improving’ the ‘business environment’ in the country in order to attract foreign investment,^[12] than into creating or strengthening structures of accountability. Undeniably, a raft of new laws such as the Mines and Minerals Act 2009 and the Environment Protection Agency Act 2008 have been enacted to regulate the exploitation of natural resources.

However, little provision has been made for citizens or communities to directly hold these corporations accountable with minimum hassle or little cost, for actions that violate their basic rights or are deleterious to their way of life. In 2010, the judiciary set up a new fast track commercial court, fully automated to ensure transparency and efficiency with built-in alternative dispute resolution provisions, for ‘business people who do not want to spend too much time in court’.^[13]  The new commercial court is expected to considerably slash the time for disposing of commercial cases from 2-3 years to about 6 months.^[14]  Laudable as these developments may be, the fact remains that those desperately poor victims whose rights are trampled and livelihoods banished by the activities of natural resource-exploiting companies can have little hope of similarly swift and inexpensive justice from the state. Civil society however has taken up the challenge.

Since the end of the country’s decade-long conflict, civil society has been instrumental in addressing the access to justice deficit resulting from the wholesale destruction of accountability mechanisms nation-wide. An experiment to develop a creative, flexible model to advance justice particularly in rural communities, using community-based paralegals that started in 2003 is now coalescing into a national approach to basic justice services.^[15]  These paralegals address intra-community breaches of rights as well as justice conflicts arising between people and government officials or corporations. They have been helpful in ensuring that corporations such as London Mining are held accountable for their transgressions.

Critical to avoiding the mistakes of the past is a framework for corporate accountability. This means that those who are affected by the conduct of corporations should have the ability to hold them to account. This would require important changes to the legal environment under which companies operate and an empowerment approach to community engagement. Legal reforms for business purposes have largely been geared towards wooing investors and making them feel safe and confident of good profit margins. They include simplifying business registration and licensing processes,^[16] access to information,^[17] and establishment of commercial dispute resolution mechanisms.^[18] In natural resource exploitation, companies routinely interface with disempowered and often desperately poor rural populations who are unquestionably dependent on their lands for survival. The adverse effects of mining operations usually extend beyond concession areas, into adjoining communities, such as the Manonkoh Village disaster, wreaking havoc to livelihoods and the environment. For obvious reasons, these communities are unable to directly challenge erring companies and in the rare cases that they do, are not taken seriously by the companies who prefer to use their resources to either buy out spirited community leaders or frighten them off with their connection to a state apparatchik. Formal justice mechanisms are too expensive, complicated and far removed to be of much use and there are no guarantees that they are immune from the influence of these corporations.^[19] Regulatory bodies as currently constituted do not seem to be meeting the expectations of many.^[20]

For corporate accountability to be a reality, these non-state efforts need to be complemented by corresponding practical state reforms which would make it less onerous for citizens to challenge the excesses of corporations and obtain appropriate remedies. In this respect, robust administrative tribunals with specialised knowledge and simple, speedier and cheaper procedures are critical to achieving that goal. These tribunals would be able to receive complaints from individuals or groups without much formality and with their specialised knowledge investigate them and make binding decisions in less than half the time it would take to settle pleadings in a civil case in court. These reforms do not require large-scale restructuring of the existing legal landscape, merely small but important tweaks. For instance, the Environment Protection Agency Act 2008 could be amended to ensure that the protection mandate of the agency is made more vigorous by allowing for submission of complaints and empowering it to give binding remedies. Similarly, the National Minerals Agency Act 2012 could be modified to allow for a complaint and redress mechanism as part of the agency’s regulatory functions. To discourage corporate hijack of the regulatory process or influence peddling by regulators, the anti-corruption footprint in natural resource exploitation should be significantly enlarged with built-in control mechanisms and tenacious, professional spotlighting by anti-graft and other related bodies. Actively and resourcefully encouraging whistleblowing and steadfastly pursuing crooked public officials and errant companies.

With these changes, civil society organisations could set to the task of empowering communities through education and sensitisation to use these accountability mechanisms to channel their complaints. A more desirable outcome, one would think, than communities succumbing to the temptation of self-redress, which is a compelling option in a situation where justice needs remain unmet.

In the absence of appropriate corporate accountability mechanisms corporations will continue to ride roughshod over poor, illiterate villagers, just like in the old days and because of the resources they command could even buy the complicity of state officials. To exorcise the demons of the past, there needs to be a deliberate departure from the unwholesome practices which characterised natural resource exploitation in the periods after independence by adopting best practices which go beyond just paying lip service to the notions of ‘community participation’ or ‘corporate governance’. The law must work for everyone not just companies whose primary objective is to turn a profit for their owners.

In its State of the World’s Human Rights Report 2012 which documents the state of human rights in 155 countries and territories during 2011, Amnesty International’s entry for Sierra Leone on corporate accountability is quite disconcerting: ‘land use agreements between corporations, the government and communities where characterised by inadequate consultation, lack of information, lack of transparency and intimidation. Some human rights defenders faced intimidation and threats over their work on corporate accountability’.^[21]  The report also referenced an incident in October 2011 when 40 people were arrested in the south of the country during protests against the lease of their lands to an oil palm and rubber company called Socfin.^[22] On 16 April 2012, protests over low wages and claims of unfair treatment at one of the mining sites of African Minerals Limited in northern Sierra Leone resulted in the shooting dead of one protester by the police and the wounding of many others.^[23] Such incidences generate an unwelcome feeling of déjà vu, a warranted fear that the longed-for volte-face in natural resource exploitation is an unattainable fantasy. Nevertheless, civil society organisations, particularly those providing justice services should continue to push the envelope on corporate accountability and governance generally, as they play a vital role in empowering the poor to use the law to improve their lives.

By Sonkita Conteh, Programme Director, Namati Sierra Leone

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