This Anti-Corruption Helpdesk brief was produced in response to a query from a U4 Partner Agency. The U4 Helpdesk is operated by Transparency International in collaboration with the U4 Anti-Corruption Resource Centre based at the Chr. Michelsen Institute.
Query
What are the linkages between corruption and commodity trading? Please provide a brief overview of the state of knowledge including on the mechanisms involved, an estimate on the money flows and some case studies.
Content
- Setting the scene: the nature and importance of commodity trading
- Corruption risks in commodity trading
- Overview of mitigation measures and strategies
- References
Summary
Commodity trading is a sector of significant strategic importance that is exposed to major corruption risks that are not always sufficiently known or acknowledged. Generating high financial flows, trading companies often operate in high-risk countries with weak governance, institutions, rule of law and limited state accountability. The sector is also notoriously opaque and poorly regulated, with low levels of transparency and accountability.
Against such a backdrop, corruption is widespread, with practices ranging from bribery, money and commodity laundering, and various forms of favouritism. A number of measures can be envisaged to mitigate corruption risks in commodity trading, including transparency of commodity sales, open and transparent tenders, transparency of payments, specific due diligence processes covering both the production conditions and trading partners, the establishment of supervisory authorities as well as transparency of beneficial ownership. Banks and financial intermediaries can also potentially play a role in the process.
Authors
Marie Chêne, Transparency International, [email protected]Reviewers
Finn Heinrich, PhD, Transparency InternationalDate
06/05/2016
