Graft Probe of Mining Firm Widens to UK

Australian Media Claims Investigations Uncovered Cambodia E-Mails

The probe of an Australian mining giant for corrupt dealings surrounding a mineral exploration project that many believe to be in Cambodia widened on Friday to encompass British authorities.

The UK Serious Fraud Office, an independent government agency that investigates fraud cases, is making what it calls a “preliminary assessment” of possible corruption by employees of BHP Billiton, the largest mining firm in the world, joining the US Securities and Exchange Commission.

“I can confirm that BHP Billiton have opened a dialogue with the SFO, been in to see us and are offering their cooperation,” SFO spokeswoman Katie Winstanley wrote in an e-mail yesterday. “The company has approached SFO to report that it has uncovered evidence of possible violations of anticorruption laws by its employees.”

Ms Winstanley declined to elaborate on the substance of any potential breaches of the law, or to confirm that they took place in Cambodia.

BHP revealed on Wednesday that it was under investigation by the SEC for corruption violations related to unidentified exploration projects that have since been canceled. BHP has also launched its own probe into the irregularities.

It is still unclear where these projects were located, but Australian media on Thursday and Friday focused on a 100,000-hectare bauxite exploration site in Mondolkiri. BHP acquired the exploration rights to the site in 2006 and terminated the project last year.

Sydney-based newspaper The Australian reported on Friday that BHP had uncovered questionable e-mail correspondence between managers in Cambodia and government officials, and handed the messages over to the SEC.

The Australian also reported that the Australian Securities and Investments Commission would likely begin investigating the matter. An ASIC spokeswoman declined on Friday to confirm or deny this report, citing company policy.

BHP spokeswoman Amanda Buckley also declined to answer any questions about the exploration project, the various corruption probes, or BHP’s dealings in Cambodia.

The mining firm acknowledges paying a $1 million fee in 2006 to secure the exploration deal, but UK-based advocacy group Global Witness says the government officially took in less than half a million dollars in mining revenues that year.

Shortly after the exploration deal was inked, Minister of Water Resources Lim Kean Hor announced the government had also received $2.5 million worth of “tea money”- or under-the-table commissions -from the company. He said at the time that the funds would be used to pay for an irrigation project in Pursat, and another senior official confirmed on Thursday that the $2.5 million did indeed go to that project.

However BHP insisted in a letter to UK advocacy group Global Witness that these funds were actually slated for a social development program with rigorous anticorruption safeguards that would “improve the general health, education, culture and welfare of the people of Cambodia.”

If BHP did indeed make under-the-table payments, it would be business as usual for Cambodia’s highly corrupt extractive industries, Global Witness campaigner Eleanor Nichol said on Friday.

“Our investigations into the extractive industries in 2008 revealed that a number of companies had been asked to pay financial bonuses to secure concessions totaling millions of dollars,” Ms Nichol wrote in an e-mail. “These payments did not show up…in the 2006 or 2007 revenue reports from the Ministry of Economy and Finance.”

Ms Nichol added that at least three other companies-PT Medco, Total and PetroVn-have also paid into social development funds in exchange for access to natural resources here.

“BHP claims that it went to a social fund, and now the government says, no, it went to Pursat, so where did it go?” SRP lawmaker Mu Sochua asked. “It should be recorded, and if it is recorded BHP and the government officials should pull out those records. But even if it is for a social fund it is still not acceptable…because it implies that BHP alone had a monopoly for the bidding on those minerals.”

Officials at the Ministry of Water Resources, the Ministry of Finance and Ministry of Mines and Industry could not be reached for comment on Friday.


            (Additional reporting by Kuch Naren)



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