The small Cambodian firm Shin Ha Mining Co is seeking an out-of-court settlement with the Australian miner OZ Minerals, which Shin Ha accuses of withholding key mining data and vastly underpaying for a stake in a Mondolkiri province gold project in 2009.
The $4.6 million deal apparently involved more than $900,000 in payments to the family members of government officials. The Ministry of Mines has denied any wrongdoing.
The Australian Embassy said yesterday that any information about potentially irregular payments should be brought to the attention of the Australian police.
The transaction in October 2009 occurred five months before OZ Minerals announced an initial resource discovery of 605,000 ounces of gold at its Okvau and Ochhung explorations in Keo Seima district. At the time, OZ Minerals made no announcement to investors about the sale.
On the day of the agreement, such a quantity could have had a value of nearly $650 million. The sale price for Shin Ha’s 20 percent stake was $4.6 million. A settlement with OZ Minerals could have the effect of enriching women who are reportedly related to government officials.
KB Thuraisingham, a legal consultant advising Shin Ha, said Shin Ha and OZ Minerals were to begin settlement talks within a month, a requirement of Australian law. If such talks fail, a lawsuit can follow.
“Before you take action in Australia under litigation rules there must be a draft statement of the claim and a consultation meeting to negotiate a settlement,” said Mr Thuraisingham. “Obviously settlement means both parties will give up something.”
Asked whether some of those on the board of Shin Ha are in fact family members of government officials, Mr Thuraisingham said that he was “not aware of the circumstances.”
“I don’t really know if it would be used as an arguing tool,” he said.
He said that the fact that family members of government officials were on the board of Shin Ha did not necessarily mean that he officials had been paid.
“Whether they are shareholders means nothing,” he said.
One board member, Sam Davin, said last week that she had acted as a stand-in for her husband. Her husband, Tieng Virakratha, said he had repaid personal debts to three government officials at the Ministry of Industry, Mines and Energy by transferring shares in Shin Ha to them.
The Australian Embassy yesterday declined to comment on the matter directly but said relevant information would be welcomed.
“The Australian Embassy takes seriously any credible allegations of bribery of foreign public officials by Australians or Australian companies,” a spokesman said by e-mail. “Any parties which have information, which could be reasonably suspected to relate to an offence under Australian law, should provide it to the Australian Federal Police.”
He added that Australia also expected Australians and Australian companies in Cambodia to abide by Cambodian law. “Alleged offences against Cambodian law are a matter for Cambodian law enforcement authorities,” he said.
The government so far has been mum on revelations that a large amount of money was paid to those with reported family ties to the government.
Keo Remy, spokesman for the Anticorruption Unit, could not be reached and government spokesman Khieu Kanharith did not immediately reply to questions.
Those who received money as part of OZ Minerals’ payment apparently included the mother-in-law of Keo Rottanak, the current managing director of Electricite du Cambodge who was MIME Cabinet director at the time of the Shin Ha joint venture in 2006; the daughter of Sok Leng, director general of mineral resources at MIME; and the mother-in-law of Yos Monirath, a director at the same MIME department.
OZ Minerals said yesterday that such transactions, whereby individuals are paid specific amounts of money in the acquisition of a company, were normal practice in the mining industry.
“This is common in these transactions,” said Natalie Worley, spokeswoman for OZ Minerals. “The way we go about business in Cambodia as we do any where in the world is to comply with local regulations and to international business standards.”