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Illicit financial flows within the extractive industries sector: a glance at how legal requirements can be manipulated and diverted

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Abstract

The extractive industries sector is considered to be one of the most prone to illicit financial flows. To date, numerous instruments at the national, regional and international level have been adopted targeting the extractive industries sector or specifically combating illicit financial flows but the effectiveness of these instruments remains uncertain as highlighted with the recent scandals that tarnished this sector. In fact some stakeholders, in particular extractive companies and government officials, are being creative and innovative in order to play with legislations combating these illicit practices and perpetuate illicit financial flows. Playing with the rules of the game is made possible not only through the support of intermediaries but also the availability of legal tools. This article provides a glance at how these actors use the law to abuse and manipulate legal frameworks.

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Notes

  1. Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, [2013] OJ L 182 and Directive 2013/50/EU of the European Parliament and of the Council of 22 October 2013, [2013] OJ L 294.

  2. Norway: Fastsatt av. Finansdepartementet 20. desember 2013 med hjemmel i lov 17. juli 1998 om årsregnskap § 3–3 c syvende ledd og lov 29. juni 2007 nr. 75 om verdipapirhandel § 5–5 a fjerde led; Canada: Extractive Sector Transparency Measures Act (S.C. 2014, c. 39, s. 376).

  3. United Kingdom: The Reports on Payments to Governments Regulations (2014 n° 3209). 2014. The Payments to Governments and Miscellaneous Provisions Regulations (2014 n° 3293). 2014. France: Loi n°2014–1662 du 30 décembre 2014 portant diverses dispositions d’adaptation de la législation au droit de l’Union européenne en matière économique et financière. JORF n°0302 du 31 décembre 2014.

  4. Loi n°28–2016 du 12 octobre 2016 portant code des hydrocarbures. Journal officiel de la République du Congo n°8 du 13 octobre 2016. Retrieved from http://www.sgg.cg/imageProvider.asp?private_resource=2588&fn=jo_es2016_08.pdf. Accessed 28 August 2018.

  5. The roadmaps can be found on the EITI website. https://eiti.org/publications?search_api_views_fulltext=&field_doc_type_public=5542&field_doc_publisher=&field_doc_published_date%5Bmonth%5D=&field_doc_published_date%5Byear%5D=&field_doc_published_date_1%5Bmonth%5D=&field_doc_published_date_1%5Byear%5D=. Accessed 28 August 2018.

  6. Please note that on “On December 31, 2016, Total E&P Congo returned its interests in the Tchibouela, Tchendo, Tchibeli and Litanzi fields (65%) to the Republic of the Congo, as the licenses have expired” [82].

  7. For more information, see https://www.traceinternational.org/TraceCompendium/Detail/342?class=casename_searchresult&type=1. Accessed 28 August 2018.

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  1. Institut de l’Ouest : Droit et Europe (UMR CNRS 6262), University of Rennes 1, Rennes, France

    Sophie Lemaître

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  1. Sophie Lemaître
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Correspondence to Sophie Lemaître.

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The Paper is dated November 2017. It is part of a wider research project conducted by the author at the Law Faculty of Rennes University – France on how stakeholders use legal frameworks and tools to perpetuate illicit financial flows within the extractive industries sector. The author would like to thank Nathalie Hervé-Fournereau for providing constructive comments on earlier drafts, resources persons met throughout this research project, the anonymous reviewers who have provided support, and Margareth Dufay for editing.

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Lemaître, S. Illicit financial flows within the extractive industries sector: a glance at how legal requirements can be manipulated and diverted. Crime Law Soc Change 71, 107–128 (2019). https://doi.org/10.1007/s10611-018-9791-x

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