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Wednesday
Mar072018

Tom Fox: BSGR files for receivership

In one of the most high profile corruption stories around, reports in the Financial Times said BSGR filed for receivership, and on Tuesday entered into voluntary administration in Guernsey, where the company is registered.

It will now be run by independent administrators.

The matter began in the middle of the past decade when the company swooped in and obtained the mining rights to half of the vast Simandou iron-ore prospect. The other half went to BSGR’s joint venture partner Vale. The rights were awarded to them after they were striped from the Australian entity Rio Tinto by the Guinean dictator Lansana Conté, some eight days before his death in 2008.

This story was told by Patrick Radden Keefe, in a piece in the New Yorker in 2013.

There were allegations of payments to one of Conté’s wives (No. 4) and then attempts to reclaim original copies of contracts allegedly specifying the bribe payment scheduled in Florida, which led to the arrest and conviction of Frederic Cilins, a former BSGR representative in Guinea, for trying to obstruct the U.S. investigation into the matter.

Subsequent Guinean governments stripped BSRG of the concession, finding the company obtained the rights through bribery and corruption. BSRG is in an international legal dispute with the country over this act. Vale sued BSRG over the joint venture. The company is reportedly subject to corruption investigations in the United States, Switzerland and Israel. It has denied the allegations.

At this point, the liabilities of the company are greater than the assets, hence the receivership filing.

Given all the criminal and civil actions literally flying across the globe, one can only wonder if the receivership is a litigation tactic to shield assets from potential creditors.

Malcolm Cohen, a partner at the accountancy firm BDO, which will be handling the administration, was quoted in the FT as saying that “BSGR will now enjoy a moratorium on the enforcement of any legal judgments that might be made against it."

He added, "It’s a complicated situation. There’s litigation that’s under way and obviously the administrators will work very closely with legal advisers to take these matters forward.”

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Tom Fox is the Compliance Evangelist™. He leads the social media discussion on compliance with his award-winning blog, The FCPA Compliance and Ethics Blog and eight podcasts; The FCPA Compliance Report, Compliance into the Weeds, Everything Compliance, This Week in FCPA, 12 O’clock High-a Podcast on Business Leadership, Compliance Report-International Edition, Countdown to GDPR and Across the Board. 

He's the author of 12 books on compliance, ethics and leadership, including the international best-selling “Lessons Learned on Compliance and Ethics” and “Best Practices Under the FCPA and Bribery Act” and his series Fox on Compliance. His book "The Complete Compliance Handbook" will be published by Compliance Week in April 2018. It is available for PreSale by clicking here.