Cambodian Minister denies illegal payments from BHP

(Photo: Reuters)

April 29, 2010
AU.IBTimes.com

The term "tea money" is coined by government officials for unofficial payments.

The Prime Minister of Cambodia denied allegations that Broken Hill Proprietary (BHP) Billiton bribed the government with a huge amount of money for mining explorations in his country.

In a recent discovery by the US Securities and Exchange last week, BHP paid a hefty amount of $A2.7 million or $US2.5 million as payment related to a mining exploration in Cambodia.

However, Cambodian Minister Hun Sen refuted the accusations, stating that the money was used to build hydroelectric dam, schools, and hospitals. The money received was a "social fund," which was established in a contract between Australia and Cambodia.

''Let's see the contract - it was a social fund. It is written in the contract. It is not secret," Minister Hun Sen said.

Last week, BHP Billiton was probed by the US SEC concerning the "tea money" graft scandal in Cambodia.

The term "tea money" is coined by government officials for unofficial payments.

BHP denied these claims and insisted that the money was used as a development fund for local social welfare programs. It also paid $US1 million to the Cambodian government for bauxite exploration rights in September 2006.

The mining giant said it has discovered evidences of possible violations of anti-corruption laws linking local government officials in several of its abandoned projects. However, the firm did not specify a country.

A spokeswoman for BHP dismissed other claims and said that the US SEC's investigation does not relate to any activity in China nor its marketing activities or sales relating to the company's products. She said that the inquiry is related to past exploration projects some as recent as a year ago.

BHP said it paid $US2.5 million to a community in Cambodia while another $US1 million was disbursed to the government as payment for bauxite explorations rights.

According to the U.S. Foreign Corrupt Practices Act, BHP may be facing a $US2 million penalty while individual employees may be fined up to $US100, 000 and jail sentence up to five years.