Artificial intelligence and the Extractive Industries Transparency Initiative as anti-corruption tools for Canadian extractive companies

Abstract

Artificial Intelligence (AI) offers the promise of improving natural resource governance, including addressing bribery and corruption risks. The mobilisation of computing power requires access to large amounts of data, a task facilitated by disclosure instruments. This paper examines the rationale and potential of artificial intelligence and the Extractive Industries Transparency Initiative (EITI) as anti-corruption tools, with a focus on extractive companies based in Canada. The paper concludes that the integration of AI and the EITI Standard holds some promise to curtail corruption in extractive sectors, despite some ethical, legal and practical challenges.

Keywords:

• artificial intelligence
• Canada
• corruption
• EITI
• extractive industries
• transparency

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

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3 ‘Using Machine Learning for Anti-Corruption Risk and Compliance' (Coalition for Integrity 2021). See also N Köbis, C Starke and I Rahwan, ‘Artificial Intelligence as an Anti-Corruption Tool (AI-ACT) – Potentials and Pitfalls for Top-down and Bottom-up Approaches' (2021) ArXiv abs/2102.11567 3

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6 Per Aarvik, Artificial Intelligence – A Promising Anti-Corruption Tool in Development Settings? (U4 Anti-Corruption Resource Centre, 2019), 1; Aled Williams and Philippe Le Billon, Corruption, Natural Resources and Development: From Resource Curse to Political Ecology (Edward Elgar 2017)

7 Ivar Kolstad and Tina Søreide, ‘Corruption in Natural Resource Management: Implications for Policy Makers' (2009) 34(4) Resources Policy 214; Philippe Le Billon, ‘Natural Resources and Corruption in Post-War Transitions: Matters of Trust’ (2014) 35(5)Third World Quarterly 770 <https://doi.org/10.1080/01436597.2014.921429>

8 Sam Leon, ‘How Can We Use Artificial Intelligence to Help Us Fight Corruption in the Mining Sector?' Global Witness (8 November 2018) <https://www.globalwitness.org/en/blog/how-can-we-use-artificialintelligence-help-us-fight-corruption-mining-sector/> accessed 15 June 2021

9 Philippe Le Billon, ‘Extractive Sectors and Illicit Financial Flows: What Role for Revenue Governance Initiatives?' (2011) 13, U4 Issue <www.cmi.no/publications/4248-extractive-sectors-and-illicit-financial-flows> accessed 15 November 2021

10 Heidi Vella, ‘Ending Anonymous Company Ownership: The Extractive Sector Takes Action' Mining Technology (25 November 2021) <www.mining-technology.com/features/corruption-companies-mining/> accessed 13 January 2022

11 Melisha Charles and Philippe Le Billon, ‘Corporate Accountability and Diplomatic Liability in Overseas Extractive Projects' (2021) 8(1)The Extractive Industries and Society 467

12 Ibid

13 Frederick Stapenhurst and others, ‘The Supply and Demand Sides of Corruption: Canadian Extractive Companies in Africa' (2017) 23(1) Canadian Foreign Policy Journal 60

14 James Walker, ‘Interview: Mining Companies Use Data Analytics to Beat Corruption (Includes interview)', Digital Journal (21 December 2017) <www.digitaljournal.com/tech-science/interview-mining-companies-use-data-analytics-to-beat-corruption/article/510306> accessed 13 January 2022

15 Oludolapo Makinde, ‘Artificial Intelligence and Corporate Social Responsibility Can Strengthen Anti-Corruption Efforts', The Conversation <http://theconversation.com/artificial-intelligence-and-corporate-social-responsibility-can-strengthen-anti-corruption-efforts-177883> accessed 25 March 2022

16 Transparency International, ‘2020 Corruption Perception Index’, Transparency.org <www.transparency.org/en/cpi/2020> accessed 4 October 2021

17 Transparency International Canada, ‘World’s Largest Exporters Fail to Punish Bribery in Foreign Markets’, Transparency International Canada (13 October 2020) <https://transparencycanada.ca/news/worlds-largest-exporters-fail-to-punish-bribery-in-foreign-markets> accessed 13 January 2022

18 Ibid; also see Transparency International, ‘Exporting Corruption 2020' Transparency.org (13 October 2020) <www.transparency.org/en/publications/exporting-corruption-2020> accessed 15 July 2021

19 Global Affairs Canada, ‘Canada’s Fight against Foreign Bribery: Twenty-First Annual Report to Parliament Implementation of the Organisation for Economic Cooperation and Development (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the Enforcement of the Corruption of Foreign Public Officials Act’, Global Affairs Canada, 28 October 2020 <www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/other-autre/corr-21.aspx?lang=eng> accessed 15 July 2021

20 Natural Resources Canada, ‘Extractive Sector Transparency Measures Act (ESTMA)', (24 February 2016) Government of Canada <www.nrcan.gc.ca/our-natural-resources/minerals-mining/extractive-sector-transparency-measures-act/18180> accessed 15 July 2021

21 Kristin Ciupa and Anna Zalik, ‘Enhancing Corporate Standing, Shifting Blame: An Examination of Canada’s Extractive Sector Transparency Measures Act' (2020) 7(3) The Extractive Industries and Society 826

22 Stephane Eljarrat, Malcolm Aboud and Sarah Firestone, ‘Background to Canadian Anti-corruption Law and Enforcement', Chambers and Partners (8 December 2020) <https://practiceguides.chambers.com/practice-guides/anti-corruption-2021/canada/trends-and-developments> accessed 15 July 2021

23 [2013] AJ No 412 (ABQB)

24 Susana C Mijares, ‘The Global Fight Against Foreign Bribery: Is Canada a Leader or a Laggard?' (2015) 5(4) Western Journal of Legal Studies 27

25 (2011), 101 W.C.B. (2d) 118 (Alta. Q.B.)

26 Michael L Ross, ‘What Have We Learned about the Resource Curse?' (2015) 18(1) Annual Review of Political Science 239

27 Transparency International Canada (n 18)

28 Milos Barutciski and Sabrina A Bandali, ‘Corruption at the Intersection of Business and Government: The OECD Convention, Supply-Side Corruption, and Canada’s Anti-Corrution Efforts to Date Perspectives from Practice' (2015) 53(Special Supplement) Osgoode Hall Law Journal 231

29 Stapenhurst and others (n 13)

30 Mijares (n 24)

31 Global Affairs Canada (n 19)

32 Global Affairs Canada (n 19)

33 Clifford Sosnow, ‘The COVID-19 Challenge to Bribery and Corruption Due Diligence in International M&A Transactions: Some Practical Solutions' Fasken (25 March 2020) www.fasken.com/en/knowledge/2020/03/25-covid-19-challenges-to-bribery-and-corruption; ‘Corruption and the Coronavirus’, Transparency International (18 March 18 2020) www.transparency.org/en/news/corruption-and-the-coronavirus; see also Sarah Steingrüber and others, Corruption in the Time of COVID-19: A Double-Threat for Low Income Countries <www.u4.no> U4 Brief 2020(6) (U4 Anti-Corruption Resource Centre 2020) accessed 20 October 2021

34 ‘The EITI Standard', Extractive Industries Transparency Initiative <https://eiti.org/collections/eiti-standard> accessed 20 October 2021

35 Ibid

36 See ‘EITI' <https://eiti.org/governance>

37 See <https://resourcegovernance.org/sites/default/files/nrgi_EITI.pdf>. The EITI Standard is also regarded as complementary to disclosure requirements out in place by regional and national governments such as the EU and Canada, which require companies to disclose payments made to governments in countries where they do business

38 Ibid

39 Extractive Industries Transparency Initiative, ‘Countries', Extractive Industries Transparency Initiative <https://eiti.org/countries>

40 Isaac ‘Asume’ Osuoka, ‘From Rules to Standards: Civil Society Contestations, EITI and the Missing Link to Accountability in Nigeria: Interview with Faith Nwadishi' (2020) 7(3) The Extractive Industries and Society 820

41 See n 37

42 Ibid

43 Ibid

44 Ibid

45 Ibid

46 Osuoka (n 40)

47 Ibid

48 Siri Aas Rustad, Philippe Le Billon and Päivi Lujala, ‘Has the Extractive Industries Transparency Initiative Been a Success? Identifying and Evaluating EITI Goals' (2017) 51 Resources Policy 151

49 Ibid

50 Philippe Le Billon, Päivi Lujala and Siri Aas Rustad, ‘Transparency in Environmental and Resource Governance: Theories of Change for the EITI' (2021) 21(3) Global Environmental Politics 124; Anna Zalik and Isaac ‘Asume’ Osuoka, ‘Beyond Transparency: A Consideration of Extraction’s Full Costs' (2020) 7(3) The Extractive Industries and Society 781

51 Other scholars have made similar suggestions. See Marjanneke J Vijge and others, ‘Transforming Institutional Quality in Resource Curse Contexts: The Extractive Industries Transparency Initiative in Myanmar’, (June 2019) 61 Resources Policy 200 <https://doi.org/10.1016/j.resourpol.2019.02.006> and Extractive Industries Transparency Initiative, ‘Achievements and Strategic Options: Evaluation of the Extractive Industries Transparency Initiative' (30 June 2011) <https://eiti.org/document/achievements-strategic-options-evaluation-of-extractive-industries-transparency-initiative> accessed 17 February 2022

52 Le Billon, Lujala and Rustad (n 50)

53 Ibid

54 They also note that in 2019, the EITI created a ToC based on the validation criteria, but they adjudge this ToC as inadequate because it does not expressly stipulate how development goals will be achieved

55 Nathan Andrews, ‘A Swiss-Army Knife? A Critical Assessment of the Extractive Industries Transparency Initiative (EITI) in Ghana' (2016) 121 Business and Society Review 59

56 Ibid

57 Tumai Murombo, ‘The Extractive Industries Transparency Initiative (EITI) in Zimbabwe: An Appraisal of Prospects and Challenges’ (2021) Journal of Energy & Natural Resources Law, 21 at 21 <https://doi.org/10.1080/02646811.2021.1894006>

58 Susan Ariel Aaronson, ‘Limited Partnership: Business, Government, Civil Society, and the Public in the Extractive Industries Transparency Initiative (EITI)' (2011) 31(1) Public Administration and Development 50

59 Ibid

60 Zalik and Osuoka (n 50)

61 Ibid

62 In Mutua and Anghie’s words, TWAIL is founded on the understanding that ‘the regime of international law is illegitimate. It is a predatory system that legitimizes, reproduces and sustains the plunder and subordination of the Third World by the West’. Makau Mutua and Antony Anghie, ‘What Is TWAIL?' (2000) 94 Proceedings of the Annual Meeting of the American Society of International Law 31

63 Antony Anghie, Imperialism, Sovereignty, and the Making of International Law, Cambridge Studies in International and Comparative Law (1st edn, Cambridge University Press 2007)

64 Eric Breit, Thomas Taro Lennerfors and Lena Olaison, ‘Critiquing Corruption: A Turn to Theory' (2015) 15(2) Ephemera 319

65 BS Chimni, ‘Third World Approaches to International Law: A Manifesto' (2006) 8 International Community Law Review: 3

66 Osuoka (n 40)

67 Ibid

68 Abdullah Al Faruque, ‘Transparency in Extractive Revenues in Developing Countries and Economies in Transition: A Review of Emerging Best Practices' (2006) 24(1) Journal of Energy & Natural Resources Law 66

69 Milan Babic, Jan Fichtner and Eelke M Heemskerk, ‘States versus Corporations: Rethinking the Power of Business in International Politics' (2017) 52(4) The International Spectator 20

70 John Reynolds and Sujith Xavier, ‘‘The Dark Corners of the World’: TWAIL and International Criminal Justice’ (2016) 14(4) Journal of International Criminal Justice 959

71 James Thuo Gathii, ‘Third World Approaches to International Economic Governance' in Richard A Falk, Balakrishnan Rajagopal and Jacqueline Stevens (eds), International Law and the Third World: Reshaping Justice (Routledge-Cavendish 2008)

72 International Development Innovation Alliance (IDIA) organised a workshop examining the implementation of emerging technology products in developing countries with the aim of developing an inclusive approach to AI. Workshop participants discussed issues ranging from ethical considerations to cultural nuances and operational challenges in developing and implementing AI. Nethope', Global Submit <https://nethope.org/global-summit/> accessed 22 June 2022

73 Aaron A Dhir, ‘Shareholder Engagement in the Embedded Business Corporation: Investment Activism, Human Rights, and TWAIL Discourse' (2012) 22(1) Business Ethics Quarterly 99

74 ‘Pan-Canadian AI Strategy', Invest in Canada <www.investcanada.ca/programs-incentives/pan-canadian-ai-strategy> accessed 15 January 2022

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76 Andre Petheram and Isak Nti Asare, ‘From Open Data to Artificial Intelligence: The Next Frontier in Anti-Corruption' Oxford Insights (27 July 2018) <www.oxfordinsights.com/insights/aiforanticorruption> accessed 15 Janaury 2022

77 Ibid; see also Iyad Rahwan and others, ‘Machine Behaviour' (2019) 568(7753) Nature 477

78 Emma Martinho-Truswell and others, Towards an AI Strategy in Mexico: Harnesing the Revolution (British Embassy in Mexico, 2018)

79 Ibid

80 Naveen Joshi, ‘Can AI Be Used As An Anti-Corruption Tool?', Forbes <www.forbes.com/sites/naveenjoshi/2021/09/19/can-ai-be-used-as-an-anti-corruption-tool/> accessed 10 November 2021

81 Aarvik (n 6)

82 Kyle Wiggers, ‘Microsoft Launches Effort to Fight Corruption with AI and Other Emerging Technologies' VentureBeat (9 December 2020) <https://venturebeat.com/2020/12/09/microsoft-launches-effort-to-fight-corruption-with-ai-and-other-emerging-technologies/> accessed 10 November 2021

83 ‘Shining a Light on Beneficial Ownership' Microsoft <www.microsoft.com/en-us/microsoftacts/shining-a-light-on-beneficial-ownership> accessed 9 April 2022

84 ‘Open Data Helps Power Anti-Corruption Efforts' Microsoft <www.microsoft.com/en-us/microsoftacts/open-data-helps-power-anti-corruption-efforts> accessed 9 April 2022

85 Oludolapo Makinde (n 15)

86 Rob Wile, ‘A Venture Capital Firm Just Named an Algorithm to Its Board of Directors – Here’s What It Actually Does’ Business Insider <www.businessinsider.com/vital-named-to-board-2014-5> accessed 29 January 2022

87 Yuval Noaḥ Harari, Homo Deus: A Brief History of Tomorrow, Vintage Popular Science (Harvill Secker 2016), 322

88 ‘Welcome the Newest Member to Your Board of Directors: AI’, Govenda (12 July 2018) <www.govenda.com/blog/artificial-intelligence-in-corporate-governance/> accessed 15 January 2022

89 Wile (n 86)

90 Joshi (n 80). It is important to note that open data can be quite costly, involving infrastructure costs ranging from €10,000 to €5,000,000, maintenance and operational costs ranging between €10,000 and €200,000 per year, and adaptation costs between €20,000 to €100,000 per organisation. Scholars, however, assert that the benefits outweigh the cost. See Frederika Welle Donker, ‘Funding Open Data' in Bastiaan van Loenen, Glenn Vancauwenberghe and Joep Crompvoets (eds) Open Data Exposed, Information Technology and Law Series (TMC Asser Press, 2018) 55

91 Ilya Ivaninskiy and Irina Ivashkovskaya, ‘What Impact Does Artificial Intelligence Have on Corporate Governance?' (2020) 14 Journal of Corporate Finance Research/Корпоративные Финансы 19

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96 Ibid

97 See Center for Effective Global Action, Machine Learning to Fight Corruption in Brazil – Thiago Marzagão (2017) <https://www.youtube.com/watch?v=2prrNVaD-Nc> accessed 9 May 2022

98 Makinde (n 15)

99 Rachel Adams, ‘Can Artificial Intelligence Be Decolonized?' (2021) 46(1–2) Interdisciplinary Science Reviews 176

100 Kate Crawford and others, AI Now 2019 Report AI Now Institute <https://ainowinstitute.org/AI_Now_2019_Report.html> accessed 8 May 2022

101 Adams (n 99)

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103 Anna Bon and others, ‘Decolonizing Technology and Society: A Perspective from the Global South' in Hannes Werthner and others, eds, Perspectives on Digital Humanism (Cham: Springer International Publishing, 2022) 61

104 Mohamed, Png and Isaac (n 102)

105 Kukutai, Tahu and John Taylor , Indigenous Data Sovereignty: Toward an Agenda (2016) 38 ANU Press

106 Tania DoCarmo and others, ‘The Law in Computation: What Machine Learning, Artificial Intelligence, and Big Data Mean for Law and Society Scholarship' (2021) 43(2) Law & Policy 170

107 Beatriz Kira, ‘Governing a Globalized Digital Economy: How to Make Technology Policy and Regulation Work for Developing Countries' (2020) Global Policy <https://papers.ssrn.com/abstract=3679406>

108 Isabelle Adam and Mihály Fazekas, ‘Are Emerging Technologies Helping Win the Fight Against Corruption? A Review of the State of Evidence' (2021) 57 Information Economics and Policy 100950

109 Ibid

110 Ibid

111 Natalie Helbig, J Ramón Gil-García and Enrico Ferro, ‘Understanding the Complexity of Electronic Government: Implications from the Digital Divide Literature' (2009) 26(1) Government Information Quarterly (From Implementation to Adoption: Challenges to Successful E-government Diffusion) 89; see also Richard Rose and Caryn Peiffer, ‘Understanding Corruption in Different Contexts' in Heike M Grimm (ed) Public Policy Research in the Global South: A Cross-Country Perspective (Springer International 2019) 27

112 Aarvik (n 6)

113 Kelsey Landau, Robin Lewis, and Carter Squires, ‘Using Extractive Industries Data for Better Governance' Brookings (6 October 2020) <www.brookings.edu/blog/up-front/2020/10/06/using-extractive-industries-data-for-better-governance/> accessed 8 May 2022

114 C Nwapi, C Ezeigbo, and O Oke, ‘Developments in Beneficial Ownership Disclosure in the Extractive Industries in Nigeria’ (2021) 8(1) The Extractive Industries and Society 443

115 ‘Extractive Industry Transparency Towards Spatial Transparency’, PWYP Indonesia (blog) (24 March 2015) <https://pwypindonesia.org/en/report-extractive-industry-transparency-towards-spatial-transparency/> accessed 15 November 2021

116 Landau, Lewis, and Squires (n 113)

117 ‘Open Data', EITI <https://eiti.org/open-data> accessed 8 May 2022

118 Ibid

119 Ibid

120 Ibid

121 ‘Systematic Disclosure Mapping Tool: A Toolkit for Mainstreaming EITI Disclosures’, Extractive Industries Transparency Initiatives, April 2018

122 ‘Guidance Note: Annual Progress Reports ' Extractive Industries Transparency Initiative (26 May 2016) <https://eiti.org/guidance-notes/annual-progress-reports> accessed 20 January 2022

123 ‘How Do You Train Artificial Intelligence (AI)?’, TELUS International <www.telusinternational.com/articles/how-to-train-ai> accessed 27 January 2022

Additional information

Funding

This project was supported by a Liu Scholar grant from the School of Public Policy and Global Affairs, University of British Columbia, Canada, and the Social Sciences and Humanities Research Council under Grant F15-03508.