Nonprofit organisation Corruption Watch this week released its ‘Improving Transparency and Accountability in the Flow of Benefits to Mining Communities’ report, and an accompanying legal review, titled ‘Distribution of Mining Equity to Community Trusts’, with these highlighting the persistent challenges regarding the flow of benefits paid to people in mining-affected communities.  

The report identifies rightful beneficiaries as the households which have often been overlooked in favour of traditional authorities, government officials, consultants, mining company employees and others, indicating that these have in many instances reaped the financial advantages of mining at communities’ expense.  

Corruption Watch legal researcher: extractives Mashudu Masutha says the organisation’s work in the mining royalties space illustrates that systematic looting is taking place and that the victims and beneficiaries of this large-scale corruption can be identified.

“This report aims to move a step beyond uncovering the system by providing legal mechanisms which can equip those most affected by mining development with agency to advocate for their rights and achieve sustainable economic prosperity,” Masutha says.

The report indicates that changes in legislation, mainly the Minerals and Petroleum Resources Development Act (MPRDA) and the Mining Charter, have brought little material change to the living conditions of mining communities, which are still often impoverished, vulnerable and dispossessed of their livelihoods.

Compounding this is the Traditional Leadership and Khoi-San Act, which empowers traditional councils to enter into partnerships and agreements with external entities, including mining companies, on behalf of communities.

When traditional leaders abuse their power, the rights and interests of communities are disregarded, the report notes.

This report follows Corruption Watch’s ‘2018 Mining Royalties Research Report’, which reflected on widespread corruption in the failure to provide the most-affected communities with equity benefits and compensation flowing from mining on their land.  

The new report explores the best interventions to shape mechanisms designed to channel benefits to communities, while improving transparency and accountability, and rooting out the corruption and fraud that is prevalent in the industry.    

It also distinguishes between compensation and equity, to shift the conversation from merely highlighting the inadequacies and injustices of current arrangements, to providing concrete actions and recommendations for changing the status quo.

The legal review provides a legal and policy analysis of community compensation arrangements, specifically community trusts and the financial vehicles that are intended to provide economic mobility.

It seeks to close the gaps in interpretation to promote good governance in the way community trusts are administered.

The report focuses on the gaps inherent in existing financial and legal vehicles, namely the Mining Charter, the MPRDA and the Broad-based Black Economic Empowerment (BBBEE) Act.

Moreover, it aims to address the inefficiencies of social and labour plans, community trusts, and BBBEE equity and other benefit-sharing arrangements the organisation says falls short of providing real benefit.

The case studies included in the report, namely Wilgespruit, Mogalakwena Platinum Mine, and Kumba, demonstrate some approaches to ensuring that communities receive proper benefits and long-term sustainable support as a result of mining on their land.

The final recommendations look at areas of existing legislation that can be strengthened to improve transparency, accountability and the flow of money to communities.

Also included are recommendations around the amendments of instruments, the term of office, provision for democratic decision-making, management of the trust, matters of transparency, distribution and expenditure, diversification, accessibility, conflict resolution and other elements.

The report ends with an emphasis on key points of law to be considered when creating better conditions for proper compensation of mining-affected communities.

During a webinar to launch the report, Public Interest Practice director Erica Emdon explored some of the issues around community trusts, which are meant to benefit mining communities.

She mentioned important areas that need to be emphasised if legal vehicles such as this are to be of value to mining communities.

This includes a clear definition of the beneficiaries of a community trust as a prerequisite. Emdon said a problem was that, in the past, this was too broad a definition, with the concept of ‘host community’ not being clear enough.

Moreover, there must be clear definition of entitlement; clearly stated objects; trustees; and transparency and information, among others.