Two days after Australian mining giant BHP Billiton reported it was being investigated for violating anticorruption laws in the US, an independent coalition for revenue transparency called on the government Friday to provide public evidence refuting the allegations.
Speaking from the sidelines of a roundtable discussion in Phnom Penh on the management of natural resource wealth, Mam Sambath, executive director of Cambodians for Resource Revenue Transparency, said the government should provide proof that dealings with the mining giant were above board.
“The government has to digest the information first. I think they have to give the evidence to the public that the government does not do that,” he said, referring to charges that the government accepted under-the-table payments from BHP in exchange for mining exploration rights.
The allegations are “a lesson learnt for all of us—the private sector, civil society and the government as well—on how we should avoid this repeat again in the future,” Mr Sambath said. “Learning from this experience, I think the government might consider how to establish a mechanism or judicial system to ensure that this will not [happen] again.”
On Wednesday, BHP, which pulled out of a massive bauxite exploration project in Mondolkiri province last year, announced that it had provided investigators from the US Securities and Exchange Commission with evidence of “possible violations of applicable anticorruption laws involving interactions with government officials.”
Although BHP has so far declined to comment on where the alleged violations took place, Australian newspapers have been quick to suggest that the bribery in question concerned “tea money,” or an unofficial commission, which the Cambodian government in 2007 said BHP had paid in order to secure exploration rights.
The “tea money” charge emerged in 2007 when Minister of Water Resources Lim Kean Hor told the National Assembly that Prime Minister Hun Sen had telephoned him from Australia in 2006 to inform him of a signing bonus in the BHP contract.
“The Royal Government of Cambodia got tea money, $2.5 million, from the bauxite investment with Australia,” Mr Kean Hor said at the time. “Samdech Prime Minister was really happy.”
BHP has acknowledged paying the government $1 million for mineral exploration rights in 2006, but UK-based advocacy group Global Witness claimed in a report last year that no record of this money could be found on the government’s nontax revenue statements for this period.
Government officials were mum Friday on claims that the government had illicitly taken money from BHP.
When asked whether allegations made against BHP would have repercussions on other firms operating in Cambodia, Supreme National Economic Council Deputy Secretary-General Phan Phalla could only defer questions elsewhere.
“I am sorry to say that I am not the person to know of these specifics,” he said at Friday’s roundtable discussion, which was organized by CRRT and the Heinrich Boell Foundation, an independent German organization.
Secretary of State for the Ministry of Industry, Mines and Energy Khlaut Vandy declined to comment Friday on the BHP affair, while Secretary of State Ith Praing said he was too busy to comment.
Nevertheless, Mr Phalla said that the government would “adopt the principles” set out inside the Extractive Industries Transparency Initiative, a coalition of governments, civil society groups, investors and international organizations with aims to improve governance in resource-rich countries.
But Cambodia will not yet become a member of the EITI, he said, explaining that the government must first establish laws on taxation and transparency before the country can meet requirements for membership.
EITI rules dictate that member-states must regularly publish all oil, gas and mining payments and revenues and disseminate the information to “a wide audience, in a publicly accessible, comprehensive and comprehensible manner.”
Mr Phalla added that the general department of taxation within the Ministry of Commerce is in the process of drafting a taxation law for the petroleum sector, while the Cambodian National Petroleum Authority is drafting a separate petroleum law to regulate the entire industry.
“All revenue to the government must be deposited into the National Treasury single account” in the National Bank of Cambodia, he said.
Officials at BHP in Australia declined to comment on Friday.
The questions raised over the activities of BHP come as Cambodia’s extractive industries are fast developing, with mining activities now taking place in eight of Cambodia’s 23 provinces and offshore oil extraction by US oil giant Chevron expected to start in 2012.
In a statement Wednesday, Global Witness campaigner Eleanor Nichol did not specifically point to Cambodia’s involvement in the SEC investigation of BHP, but said the company’s bauxite payout to the government appeared to have vanished.
“ Other extractive companies [also] paid large amounts of money to the Cambodian government which are not showing up in the national accounts,” she added.
At Friday’s roundtable event, President Jose Ramos-Horta of East Timor – which has a petroleum fund that now holds over $6 billion – warned that as revenues from natural resources rise, so does the risk of corruption and the mismanagement of funds.
“Whenever suddenly there is wealth, there is money…the temptation to rip off the nation is there,” he said.
(Additional reporting by Phann Ana and Julia Wallace)