By John Durie
From: The Australian
April 22, 2010
NEWS that BHP is under US SEC investigation for alleged payments to government officials in Cambodia has underlined the caution needed in dealing in some developing countries.
Cambodia is a popular source for Australian investment, with ANZ running the ANZ Royal bank - one of the biggest foreign banks in the country.
Former Treasurer Peter Costello was recently in the country looking for investments for a $600 million private equity firm. Oz Minerals was also recently spruiking a promising gold prospect, the Okua project, and Toll Holdings last year signed a deal with the Cambodian government to run its national rail network.
None of which means any of the above is guilty of or have even considered bribing anyone, but it’s a massive risk management exercise for all concerned.
A Wall Street Journal report in February last year on the Global Witness study on Cambodia was focused more on the fact the government had not recorded payments from foreign companies than straight out bribery.
It said: “Concession fees paid by mining giant BHP Billiton and other large companies weren't recorded in Cambodian government income statements and remain unaccounted for after requests by Global Witness for information about their whereabouts.”
“An official at Global Witness said the organisation suspected portions of the payments were siphoned off by government officials, relatives or private business people. The group blasted Cambodia's government for failing to provide more transparent accounting of mining and oil leases it signed with foreign partners,” it added.
The US SEC normally sends so called Wells notices to people giving them the chance to explain why it shouldn’t take proposed enforcement action before any action is launched. At this stage it is understood BHP hasn’t received any such notice.
Toll, ANZ, Oz Minerals et all may not be in the same position as BHP but you can be sure they will all be checking records to ensure their hands are clean.
The amounts of money may be small, but the reputational risk is enormous, as AWB can testify to.
From: The Australian
April 22, 2010
NEWS that BHP is under US SEC investigation for alleged payments to government officials in Cambodia has underlined the caution needed in dealing in some developing countries.
Cambodia is a popular source for Australian investment, with ANZ running the ANZ Royal bank - one of the biggest foreign banks in the country.
Former Treasurer Peter Costello was recently in the country looking for investments for a $600 million private equity firm. Oz Minerals was also recently spruiking a promising gold prospect, the Okua project, and Toll Holdings last year signed a deal with the Cambodian government to run its national rail network.
None of which means any of the above is guilty of or have even considered bribing anyone, but it’s a massive risk management exercise for all concerned.
A Wall Street Journal report in February last year on the Global Witness study on Cambodia was focused more on the fact the government had not recorded payments from foreign companies than straight out bribery.
It said: “Concession fees paid by mining giant BHP Billiton and other large companies weren't recorded in Cambodian government income statements and remain unaccounted for after requests by Global Witness for information about their whereabouts.”
“An official at Global Witness said the organisation suspected portions of the payments were siphoned off by government officials, relatives or private business people. The group blasted Cambodia's government for failing to provide more transparent accounting of mining and oil leases it signed with foreign partners,” it added.
The US SEC normally sends so called Wells notices to people giving them the chance to explain why it shouldn’t take proposed enforcement action before any action is launched. At this stage it is understood BHP hasn’t received any such notice.
Toll, ANZ, Oz Minerals et all may not be in the same position as BHP but you can be sure they will all be checking records to ensure their hands are clean.
The amounts of money may be small, but the reputational risk is enormous, as AWB can testify to.
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