TNRC Topic Brief Accessing, harvesting and trading in wildlife: Corruption in the use of permits and allocation of access rights

Accessing, harvesting and trading in wildlife: Corruption in the use of permits and allocation of access rights

Willow Outhwaite, Research and Analysis Senior Programme Officer, TRAFFIC

October 2020 | TNRC Topic Brief

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The challenge

Governments commonly act as the “gate-keeper” responsible for managing the exploitation of and trade in wildlife including forestry and fisheries. Companies, communities, individuals, and others who wish to access, harvest or trade wildlife must obtain the necessary rights and permits. The significant revenue generated, combined with the discretionary power often afforded to government employees makes this sector highly vulnerable to corruption by those with power and those wishing to exploit and trade wildlife (OECD, 2020a).

The right to access wildlife typically involves applying for concessions, tenure or harvest rights (hereafter termed “access rights”). Licenses may be needed for breeding wildlife or developing plantations. Permits may be required to process wildlife, for domestic transportation, international import/export, and to verify the health of the wildlife, among other stages.

The recipients of permits or access rights may be public or private companies, community groups, private individuals or other entities. Access rights may be subject to competing claims, as shifting attitudes, political arrangements or market conditions variously give precedence to and de-prioritize different communities’ and stakeholders’ access. Additionally, companies and economic elites with vested interests in access to land or resources may finance political networks and engage in quid pro quo arrangements with politicians at various levels in order to manipulate access and permitting processes. For example, a demonstrated link has been found between the expansion of palm oil plantations and electoral corruption in Indonesia, which has led to deforestation and land conflicts (The Gecko Project, 2018). These political, social and economic dynamics fundamentally shape the enabling environment for the reforms outlined in this brief.

The role of corruption

This brief focuses on the stages in a wildlife supply chain where permits for harvest or trade are issued, inspected or accepted, or where access rights are allocated. Permits or access rights are of course just one element in the exploitation, management and trade in wildlife that can be corrupted (Zain, 2020). However, they are vulnerable due to the interaction required between public authorities and the (potential) recipients of permits or access rights (CoP17 Doc. 28, 2016; UNODC, 2019a). Some characteristics of the wildlife trade mean these stages are particularly vulnerable to corruption. These characteristics are explored in Box 1.

Corruption in wildlife trade can take many forms, from a bribe offered by a trader to obtain a fraudulent export permit that falsely verifies wild animals as captive-bred, to an official awarding a logging concession to a company only because it is owned by a family member. Some government positions have significant discretionary powers, for example border permit inspectors or ministers awarding fishing or logging rights. This discretion is vulnerable to abuse if effective monitoring and accountability controls are absent. Abuse of discretionary power can also occur within the private sector, for example when individuals are tasked with obtaining lucrative fishing rights by any means necessary, with little oversight to ensure this is done legally.

The variety of forms of corruption that can occur is explored further in Box 2. Real examples to illustrate these forms of corruption for flora and fauna, marine and terrestrial and from across the globe can be found in Figure 1. While it is easy to identify some incidences of corruption, sometimes corrupt practices are so ingrained in the way that governments, companies and others operate and interact that is it much more difficult to identify and combat.

The impact of corruption

Managing permits and access rights fairly should mean harvest and trade adhere to government regulations, including those on sustainability, legality and disease risk, and that exploitation of wildlife can be tracked and monitored. Governments should benefit by collecting a fair amount of revenue from licensing fees and taxes on legitimate harvest and trade. Recipients of access rights and permits should be confident that they will be awarded, inspected and accepted fairly, and they should understand the criteria upon which any decisions are based.

Corruption undermines the best efforts of those governments, international bodies, companies and civil society who are working to regulate the wildlife trade effectively by:

• Enabling unsustainable and illegal exploitation and trade of wildlife, which reduces species populations and threatens human livelihoods that depend on the legal use of them.
• Negatively influencing the design of policies and regulations that control access and trade of wildlife.
• Misdirecting public money to private companies and individuals, therefore depriving the government of revenue that should have been invested back into public services and conservation.
• Posing a risk to human, livestock and wildlife health if it leads to regulations being circumvented, such as corrupt issuing of false health or phytosanitary certificates in return for a bribe. The Covid-19 pandemic highlights the risk zoonotic diseases pose to health and the global economy (Broad, 2020) underlining the importance of regulations being adhered to. (See WWF & TRAFFIC, 2015).

Recommendations to reduce corruption

Relevant government authorities, donor agencies, international bodies (such as UNODC and FAO), the private sector, other countries in the trade chain and civil society can all play a role in reducing corruption in the permitting system and allocation of access rights. In cases where the entity that needs to implement a recommendation suffers from a high degree of corruption itself, the role of the other actors is even more vital. The recommendations below are interrelated and strengthened by each other, and undertaking a realistic assessment of the political enabling environment for change will help identify the most viable opportunities in any given context.

Map trade chain and identify corruption risk points

The exact vulnerabilities of permits and access rights depend on the specific countries and wildlife in the supply chain. Understanding where these risks lie is important in customizing effective mitigation methods that are realistic and affordable. Existing practical guidance can be used by wildlife authorities to undertake a corruption risk assessment and/or adapted to assessing specific permit or access rights systems (see UNODC, 2019a; UNODC, 2019b).¹ These guidance documents can be tailored for use by anyone wishing to understand and mitigate risk, including the private sector, donors and civil society. In almost any case, a strategy for addressing corruption risks in one trade chain or institution will benefit from being part of a more comprehensive effort to assess and control corruption risks.

Increase transparency and accountability in allocation and issuance of access rights and permits

Transparency and accountability in the processes underpinning the allocation and issuance of permits or access rights can reduce opportunities for corruption and strengthen public confidence. A transparent system gives the public assurance that the system is working in their best interest, and applicants can have some level of assurance that they will be treated fairly. Where the ability of the public and civil society to hold governments or companies to account is hampered, the role of actors such as donors and the private sector is even more crucial.

Some examples of measures to increase transparency can be found in Box 3, but it is critical that measures are realistic, affordable and appropriate for the local context. Some measures are expensive to establish and implement on an ongoing basis, therefore possibilities for sustainable funding need to be considered.

Limit the role of discretion by using technology

Wherever authorities are able to use their discretion to allocate, issue or inspect permits or access rights, there is the potential for corruption to occur. Regulations that are complicated, untransparent or even contradictory increase the scope for corruption even further (Kolstad & Søreide, 2009). Automation and computerization of bureaucratic processes such as issuing or checking permits can reduce corruption by removing interactions between the applicant and issuer. Electronic systems can also be used to detect the use of fraudulent permits, which may have been issued corruptly (Outhwaite, 2020).

However, the scope of these approaches is limited, and they may carry risks that need to be examined. For example, such systems are more effective for dealing with petty corruption involving lower-level bureaucrats than for grand corruption involving higher-level officials. Systems may have unexpected consequences and introduce new actors if not well designed. For example, if permits originally purchased physically from a public official are made available online, a small number of individuals might be able to take advantage of the change by buying up lots of permits online and selling them on for a profit (Baniamin, 2015). Technological systems can be incredibly sophisticated, but all cost money to develop and implement on an ongoing basis, and this must be factored in to ensure resulting systems are fit for purpose and do not become obsolete in a few years. Levels of internet use and the general robustness of telecommunication infrastructure are important factors to take into account. Automation may also mean that fewer staff are needed to complete required processes, resulting in job losses.

While technology has the potential to reduce the role of corruption through limiting discretion, it will not stop it fully—particularly when high-level officials are involved. Monitoring will be required, and where irregularities are detected these should be investigated and sanctions imposed where necessary.

Apply serious penalties to deter companies from engaging in corrupt behaviors

Companies engaging in corrupt behavior to obtain or use permits or access rights should face the prospect of revocation, at minimum, as well as other penalties. Blacklisting such companies from future access or permit opportunities can form part of the clear and transparent rules and procedures regarding to whom permits/access rights can and should be issued to discussed above. Implicated individuals should be subject to civil or criminal charges brought in a just, timely fashion (FAO, 2017).

Far-reaching laws such as the Foreign Corrupt Practices Act (USA), the Bribery Act (UK), the Criminal Law (China) and anti-corruption legislation adopted by European Union Member States can be a powerful deterrent against corrupt actions. For example, the U.S. Foreign Corrupt Practices Act prohibits the payment of bribes to foreign officials and can apply anywhere in the world and extend to publicly traded companies and their officers, directors, employees, stockholders, and agents (U.S. Securities and Exchange Commission, 2017). Similarly, China’s Criminal Law prohibits the bribery of foreign public officials or officials from international public organization (CECC, 2011). This complements China’s Foreign Trade Law, which prohibits unfair competition in foreign trade activities (such as selling commodities at unreasonably low prices, commercial bribery and colluding with others in a tender bid) (Zeng, 2017).

Investigate corruption using anti-money laundering tools

If penalties faced by government employees, companies and individuals who engage in corrupt acts are not serious enough to act as a deterrent to them or to others, anti-money laundering legislation (AML) may be more effective. AML tools can lead to the individuals involved, including their families, losing assets they have acquired with the laundered money. AML tools can be used to address corruption involving politically exposed persons (PEPs) and large sums of money (Fontana & Pereira, 2012), so they may be of most use when significant bribes have been paid to secure lucrative access rights for timber or fisheries. The financial institutions that accept corrupt proceeds should also be subject to scrutiny.

Limit incentives and opportunities to engage in corrupt behaviors and punish violations

Low pay is commonly thought to be a driver of government employees engaging in corrupt behaviors by supplementing their income with bribes. However, there is little evidence that pay reform alone is effective in curbing corruption (Johnsøn et al., 2012). Instead it should be part of a wider package to reform government employees’ behavioral norms, incentives and oversight structures (DfID, 2015). Corruption may be reduced through a focus on integrity in recruitment, training, appraisal and promotion of government employees; individuals may be less willing to engage in corruption if they believe it will harm their job security and long-term prospects (DfID, 2015). Government employees found to be engaging in corruption should face repercussions brought in a timely fashion and appropriate to the seriousness of their violation, from being fired or blacklisted from applying for other government jobs, to being subject to civil or criminal charges.

Streamlining bureaucratic processes is often suggested as another way to decrease opportunities for corruption. Excessive or overly rigid administrative procedures, requirements for unnecessary permits or licenses and protracted decision-making processes may all create incentives to use bribes to circumvent them (Martini, 2013). The evidence supporting the true impact on corruption of reducing bureaucracy is limited (DfID, 2015). A certain level of bureaucracy is required to ensure resource exploitation is sustainable, that stocks can be monitored and that relevant fees and taxes can be collected. In some cases, involvement of multiple people or committees in decision making can actually be an important anti-corruption tool to increase oversight and reduce concentration of discretionary powers. Conducting a Regulatory Impact Analysis (RIA) is one approach that can be used critically to assess the positive and negative effects of regulations and identify non-regulatory alternatives (OECD, 2020b).

As noted above, technology can be used to decrease government employees’ discretionary power as well as strengthen the capacity to trace and monitor administrative actions and flag suspicious activity (DfID, 2015).

Way forward

Reducing corruption in permitting and access rights allocation systems can increase revenues earned by the State through fees and licensing and reduce illegal or unsustainable exploitation or trade of wildlife. However, there are challenges in implementing any of the recommendations suggested above. The most immediate of these is limited financial resources that can be directed at anti-corruption efforts, which are likely to be further squeezed as the Covid-19 pandemic reduces budgets of government authorities, the donors and civil society that support them, and the private sector. This makes the first recommendation to identify corruption risk points and develop mitigation measures that are politically realistic, affordable and appropriate for the local context even more critical.

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¹A third document focusing on addressing corruption in the forestry industry is currently in development by UNODC.

Author’s Disclaimer

The author is not responsible for the source information used in this brief and does not take a position on the claims made regarding the specific allegations of corruption that are cited. Readers should refer to the original references to make their own conclusions.