Transparency Group Seeks OZ Minerals Inquiry

Incident makes case for good governance efforts, group says

A transparency group yesterday called for an investigation after it was revealed that the Australian miner OZ Minerals had in 2009 paid hundreds of thousands of dollars to women who were reportedly the family members of government officials.

Both OZ Minerals and the Ministry of Industry, Mines and Energy last week categorically denied any wrongdoing, with Minister Suy Sem saying that no payments had been made to officials at the ministry, which he said had strictly observed the law.

Mam Sambath, chairman of Cambodians for Resource Reve­nue Transparency, an association of NGOs promoting transparency in the management of oil, gas and mining revenues, said it would be “premature” to draw conclusions but that an independent investigation could “shed further light on the matter.”

“We hope the government’s adoption of more stringent anti-corruption measures will provide a mechanism to investigate and address this issue,” said Mr Sam­bath. “Assuming the facts as presented prove to be accurate, it certainly raises legitimate questions about such business practices.”

“I would hope that the Royal Government of Cambodia would use this incident as an example of what’s to be avoided in the future and use the experience as a model against which they can measure the effectiveness of governing laws that should be in place to prevent such incidents in the future,” he said.

There was no word yesterday of any possible law enforcement action. Phay Siphan, spokesman for the Council of Ministers, referred questions to the Anticorruption Unit. ACU spokesman Keo Remy declined to speak with a reporter.

OZ Minerals in October 2009 paid $4.6 million to Shin Ha Mining Co Ltd, a local concern, buying its 20 percent stake in a gold mining operation in Mondolkiri province’s Keo Seima district.

Three of the Shin Ha board members, added to the company six weeks before the joint venture agreement was concluded in 2006, received $923,077 and were reportedly the mothers-in-law and the daughter of government officials.

They 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 joint venture; 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. The officials have been either unavailable or declined to speak to reporters.

While Cambodia is making some progress toward transparency–the Finance Ministry now discloses extractive industries revenues on its website–observers say there is still a lot of work to be done to assure transparency.

“[M]uch more remains to be done to ensure that no conflict of interests and accountable management of revenues from negotiations,” said Brian Lund, regional director for Oxfam in East Asia.

“It is clear that it is in the interest of the Royal government to ensure that all sectors including mining are managed transparently and accountably. That is why we have seen the introduction of the anticorruption law and the establishment of the anticorruption unit,” he added.

Mining experts said yesterday it was not common for a firm to pay individual shareholders defined amounts of money when buying out a partner. Rather firms tend to simply acquire smaller company paying specific amounts to individuals, they said.

OZ Minerals did not immediately respond to questions yesterday asking why individual shareholders had been paid as part of the 2009 deal with Shin Ha.

Scrutiny of Cambodia’s nascent extractive industries drew particular attention last year after reports in Australia said that BHP Billiton, the world’s largest miner, was being investigated by US authorities for the potential bribery of officials in Cambodia.

The government has said it has accounts held at the National Bank of Cambodia for revenues, royalties and commissions paid to the government by firms operating in the extractive industries. But there is still no public disclosure of positions and balances in these accounts.

Glen Kendall, an advisor on extractive industries at the UN Development Program, said the mining sector should be developed to ensure the prosperity of all Cambodians.

“In principle, UNDP advocates for development of a responsible, transparent mining sector to ensure equitable share of its benefits to reduce poverty of the Cambodian people,” he said.



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