Major flaws in mining royalties system, Corruption Watch report finds

27 March 2019 - 07:22 By Ernest Mabuza
The Modikwa platinum mine in Limpopo. A report by Corruption Watch shows that the majority of people living in mine-affected communities in North West and Limpopo remain without any tangible benefits.
The Modikwa platinum mine in Limpopo. A report by Corruption Watch shows that the majority of people living in mine-affected communities in North West and Limpopo remain without any tangible benefits.
Image: Elijar Mushiana

Communities in North West and Limpopo - who are living atop some of the richest mineral resource real estate on the globe - find themselves poor as a result of unequal or no payment of mining royalties.

A mechanism should be put in place that creates a platform for these communities to enjoy the fruits of development and prosperity.

This is contained in the Mining Royalties Research Report 2018 by Corruption Watch, which was released on Tuesday.

Although the report only focused on two provinces, Corruption Watch said it believed that corruption involving mining royalties was widespread and replicated throughout the country.

“The findings of this report are clear evidence of the entrenched deviations from the mining royalties governance framework.

“It is clear that a ripe space for grand corruption and mass looting has been created that, although well-known by all South Africans, continues to go unaddressed," the report said.

It said there was widespread lack of accountability and effective community consultation.

There were also accusations from the communities of fraud, corruption, and misappropriation of funds and community assets by the leaders of traditional authorities and trustees.

Corruption Watch said its community engagements in Limpopo, a province rich in platinum resources, were marked by a deep level of tension and threatening action and behaviour among community members.

“Many were frightened to go on record to speak about what they consider collusion between traditional authorities and mining companies,” the report said.

Researchers also noted an absence of documentation or financial records even when these were explicitly requested.

Of prime importance is our demand for traditional authorities and traditional councils to be empowered by the relevant bodies and equally scrutinised by community members
Corruption Watch

In the Bokoni platinum mine communities, the report found that a trust was established to undertake, fund and maintain community development activities for the benefit of the communities.

“However, the trust deed has not been made available to the community, making it difficult to confirm details of the provisions of the trust," Corruption Watch found.

The report said community members claimed that their community trust account was worth R24m in contributions from Bokoni platinum mine and was controlled by traditional leaders who, they say, fought among themselves.

Although Corruption Watch requested that financial statements and other information relating to deals signed by the traditional leaders be made available, the traditional leaders had not been forthcoming.

“It is clear that little development has taken place in this community. The roads are in a bad condition, there are challenges in accessing clean drinking water, there is a lack of skills development and little food production.”

The report also had a number of engagements in North West.

In Jericho, there was clear reluctance from the community members that had gathered for the meeting to engage. They felt uncomfortable speaking in the presence of a senior member of the royal family.

“The community is divided and suspicious of each other. Different factions back different role players, while blaming others for what appears to be maladministration that has collapsed the system of mining royalties.”

The report called for transparency and a stronger, more enforceable form of accountability from mining companies with regards to the royalty agreements that they enter into with the communities.

“Of prime importance is our demand for traditional authorities and traditional councils to be empowered by the relevant bodies and equally scrutinised by community members, to ensure not only compliance with legislative prescripts but enforcement of community resolutions.

“Like mining companies, traditional authorities must be required to present audited financial statements and reports on a regular basis to communities.”


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