Authorities in Israel detained billionaire Beny Steinmetz for questioning about money laundering in connection with bribes allegedly paid to officials in Guinea for mining rights.
Entries in Rio Tinto (8)
The former Minister of Mines and Geology of the West African country of Guinea was arrested in New York and charged Tuesday with laundering $8.5 million in bribes he allegedly took from a Chinese conglomerate in exchange for mining rights.
BSG Resources Limited said it sent a letter to Rio Tinto plc Monday alleging that Rio Tinto contributed to the loss of BSGR's mining rights in Simandou, Guinea by paying bribes and making false allegations.
The Rio Tinto imbroglio around its mining concession in Guinea continues to become stranger and stranger.
Global mining giant Rio Tinto said it suspended the chief executive of its energy and minerals division while it investigates more than $10.5 million paid to a consultant for the Simandou iron ore project in Guinea.
The issue of whether the identities of confidential sources for business intelligence reports should be protected from disclosure in civil litigation was the subject of a High Court decision in London yesterday arising from ongoing proceedings in New York.
Australia is the world's sixth largest country by land mass, only slightly smaller than America's lower 48 states. With just 22 million people and abundant resources, the country exports coal, iron ore, gold, uranium, alumina, meat, wool and wheat, as well as wine, olives, fruit and vegetables.
Its open trade policy produced 17 consecutive years of economic growth before the global financial crisis, which hardly slowed the progress. Last year the economy managed 1.5% growth during the first three quarters -- the best performance in the OECD.
But for overseas anti-corruption enforcement, Australia is an international laggard, a recalcitrant country without any numbers on the scoreboard. What's going on?
This week, one of Australia's biggest natural resource firms, BHP Billiton, disclosed that it's the target of a U.S. SEC investigation for potential FCPA offenses. The company would only say the investigation relates to "certain terminated minerals exploration projects" and involves "possible violations of applicable anti-corruption laws involving interactions with government officials."
It hasn't said where the compliance problems may have occurred. There are large-scale copper projects in Chile and Zambia, nickel targets in Australia, manganese targets in Gabon, and diamond targets in Canada. It explores for iron ore, coal, bauxite and manganese at home and in South America, Russia, and West Africa.
U.K. investigators also said this week they're looking into BHP's operations in Cambodia and beyond; they've reportedly identified several possible instances of multi-million dollar bribes to foreign officials.
BHP isn't the only Australian company under the gun. Rio Tinto, the world's largest mining company and a superpower in the iron-ore business, is making headlines. Last month, four of its executives were given long jail sentences -- up to 14 years -- by a court in China. They were convicted of bribery and industrial espionage. (Germany's Cartel Office is examining the planned merger of the iron-ore production of BHP and Rio Tinto, which would create a duopoly in control of most of the world's supply.)
Another Aussie company in international hot water is Securency -- half owned by the Reserve Bank of Australia. Late last year, the Central Bank of Nigeria began investigating whether a Securency company called Note Printing Australia bribed Nigerian officials in return for a banknote supply contract. Australian police were said to be looking into what a press report described as "a series of multi-million-dollar payments made by the RBA companies to politically connected middlemen to help win contracts in Asia, Africa and Latin America."
Meanwhile, the Australian Securities & Investments Commission -- the chief anti-corruption enforcement agency -- hasn't said whether it's investigating BHP or the other companies.
That's the problem. Australia hasn't recorded any enforcement against bribery abroad. The OECD scores the country in the worst category -- "little or no enforcement" -- along with 21 other slumbering members. In October last year, the head of the OECD's anti-corruption group, Patrick Moulette, complained that Australia hasn't "launched a single prosecution for foreign bribery offences in the decade since it joined dozens of nations in ratifying an anti-bribery convention."
At home, Australia is perceived to be among the cleanest countries in the world for business -- it ranked 8th in Transparency International's latest survey. Abroad, however, its reputation is taking a beating and its OECD partners appear to be losing patience. What will Australia do?
The Chinese government this week alleged that employees of Rio Tinto bribed executives from 16 Chinese steel mills that buy its iron ore for themselves and China's 120 steel producers. Anglo-Australian Rio Tinto is among the world's largest iron ore miners and has been a major supplier to China's steel industry, which is mostly state-owned.
Last Sunday the Shanghai State Security Bureau arrested Stern Hu, the China-born Australian who heads Rio Tinto's Shanghai office, and three other Chinese employees, charging them with stealing state secrets consisting of "sensitive industry data critical to China's iron ore price talks."
The China Daily, an English-language publication that generally reports the Chinese government's views, said executives from five domestic steel makers and officials from the steel-makers association are under investigation as part of the case against the Rio Tinto employees.
Rio Tinto plc has American Depositary Shares that trade on the New York Stock Exchange under the symbol RTP. Foreign companies with shares traded on U.S. exchanges have to comply with the Foreign Corrupt Practices Act. If the allegations against Rio Tinto's employees in China are true, the employees and the company could be subject to criminal and civil FCPA enforcement actions by the U.S. Securities and Exchange Commission and the Department of Justice.
Last month Rio Tinto pulled out of a deal with Chinalco -- the Aluminum Corporation of China -- which is the country's largest diversified mining firm. Chinalco planned to invest nearly $20 billion in Rio, in which it already holds a nine percent interest. The Washington Post said Qin Gang, a spokesman for China's foreign ministry, denied that the bribery and spying allegations are retaliatory. Rio Tinto has been leading price negotiations with the Chinese iron ore buyers. Those talks deadlocked last month.
The Washington Post said: "China's vague spying and national security laws give authorities wide latitude in deciding what to prosecute. The government treats a sweeping array of economic and other data as state secrets. The maximum penalty for an espionage conviction is life in prison."
The China Daily has published an unusual amount of alleged details about the case. Quoting an anonymous senior manager at a large state-owned steel company, it said Rio Tinto got to know the key executives of the 16 steel mills who have sensitive industry information. "And then Rio Tinto bribed them (to get access to industry data), which has become an unwritten industry practice," the executive reportedly said.