By the gun or by the bribe: Firm size, environmental governance and corruption among mining companies in Guatemala

(You can also read the most important points in this publication in our blog: Steps to limit the endemic corruption around junior mining companies)

This U4 Issue discusses the corruption risks faced by mining companies in Guatemala, with a particular focus on the risks faced by small, “junior” mining companies primarily engaged in exploration. Several factors make such companies highly prone to engaging in corrupt behavior, especially when operating in weak institutional contexts: the highly competitive nature of the mining industry, the risky dynamics of the exploration stage, and the specific characteristics of junior companies – their short operational timelines, low reputational risks, highly mobile and flexible nature, and reliance on fickle venture capital. Additionally, public environmental governance, and in particularly the approval of the environmental impact assessment, represents a moment of acute vulnerability to corruption, particularly for junior companies. In order to mitigate corruption risks among junior mining companies, donor agencies should help to build community capacity to monitor mining operations, build central state government capacity for environmental governance, work with countries to improve the rigor for environmental impact assessment processes, increase the visibility and reputational risks for junior companies, and build cultures of compliance in junior companies’ countries of origin as well as within companies.