Australian mining giant BHP Billiton has announced that it is in negotiations with the U.S. government to settle allegations of corruption abroad, which include claims that the company paid a $2.5 million bribe to Cambodian officials to secure exploration rights in the country’s northeast.
Prime Minister Hun Sen personally oversaw a 2006 deal for BHP to explore for bauxite in Mondolkiri province.
The company pulled out of Cambodia in 2009, the same year the U.S. Securities and Exchange Commission (SEC) asked BHP to provide evidence of payments that may have breached the U.S. Foreign Corrupt Practices Act. The SEC and U.S. Department of Justice (DOJ) have both informed the firm that it could face charges.
In its latest annual report, released last month, BHP said settlement negotiations with the U.S. had begun.
“The issues relate primarily to matters in connection with previously terminated exploration and development efforts,” it says, without specifically referring to its abandoned project in Cambodia. “The Group is currently discussing a potential resolution of the matter.”
After the request for information from the SEC in 2009, the report adds, “the Group commenced an internal investigation and disclosed to relevant authorities evidence that it has uncovered regarding possible violations of applicable anti-corruption laws involving interactions with government officials.”
A spokeswoman for BHP said Monday the company could not comment beyond its statement in the annual report.
With the SEC and the DOJ involved, the Australian miner could end up owing money to both.
Any payout to the SEC would be a civil penalty for failing to record a bribe or to keep proper books, said Brandon Garrett, a professor at the University of Virginia School of Law who has researched corporate white-collar crime.
DOJ cases deal with the bribe itself, Mr. Brandon said, and usually end with the firm pleading guilty to violations of the Foreign Corrupt Practices Act. A case could also end in a conviction or a settlement.
“No matter what form the agreement ultimately takes, they typically involve fines which are related at least to the amount of bribes paid and any gains the company obtained from the payments,” he said.
“However, those fines may be reduced quite a bit if the company fully cooperates in investigating the crime and in improving its compliance systems to prevent any such violations in the future. In some cases the fine reductions are dramatic.”
If and when BHP does strike a deal with the U.S., the public may also end up finding out more about what exactly happened between the firm and Cambodian government officials.
Mr. Brandon said prosecutors have increasingly been targeting individuals in Foreign Corrupt Practices Act cases. But in researching his new book, “Too Big To Jail,” he said he found that only in about one-third of deferred or non-prosecution agreements do those individuals get named.
“One challenge in [Foreign Corrupt Practices Act] cases is that foreign employees may need to be extradited—and it is not easy for prosecutors to investigate conduct abroad—that is why they place such weight on the company’s cooperation,” he said.
There’s no telling how long BHP’s negotiations with the U.S. could last. An unsourced report in the Sydney Morning Herald on Monday said a settlement in the case with the SEC and DOJ “is understood to be close.”
Water Resources Minister Lim Kean Hor told the National Assembly in 2007 that BHP had agreed to pay $2.5 million in “tea money,” a term widely used to refer to a bribe, for the bauxite deal. News of an investigation into the deal first emerged in 2010.
The government defended the payment by claiming the money went straight into a “social fund,” whose accounts have never been made fully public. The Council of Ministers’ Press and Quick Reaction Unit also stepped in, insisting it was normal for Mr. Hun Sen to become involved in such deals and adding that only $1.35 million was ever paid, as the project had been cut short.
Pech Pisey, programs director and spokesman for Transparency International Cambodia, said Monday that there has still not been an accounting of the purported social fund that benefited from BHP’s “tea money” in the government’s budgets. And the Finance Ministry has yet to account for Cambodia’s resource revenues beyond releasing an annual total, he said.
“In this sector, there is no improvement” in transparency, Mr. Pisey said. “The parties involved still guard close what they are doing.”
Mr. Pisey said Transparency International and other organizations are still urging Cambodia to join the Extractive Industries Transparency Initiative, which requires governments to declare what they earn from extracted resources and how they spend this money.
“[The officials] have [said] the government is working toward that, but so far we have not seen any concrete steps,” he said.
Officials at the Mines and Energy Ministry declined to comment Monday. Officials at the Finance Ministry could not be reached.
(Additional reporting by Hul Reaksmey)
Correction: A previous version of this story mistakenly named Brandon Garrett, a professor at the University of Virginia School of Law, as Garrett Brandon.