AUSTRALIA MINING COMPANIES IN CAMBODIA-F​OR WHOSE GOOD?

16 April 2012
By Mu Sochua

The people of Cambodia are grateful to the government of Australia for taking the lead role in the 1991 Paris Peace Accords.

Australia invests Aus.$ 77.4 million in 2011-2012 in Cambodia in agriculture, health and access to justice.

Agriculture policies and strategies can not ignore the devastating impact of land economic concessions that have lead to close to 30% of Cambodia's land mass now in the hands of close to 250 companies. Among these companies are mining concessions given to Australian companies.

Land grabs are only mentionted in the AUSAID strategy documents but not addressed.

In 2006, BHP paid US$1 million to the government to get special concessions in Mondol Kiri for mining in the North -East. The final deal was signed with BHP and the prime minister of Cambodia with an additional US$2.5million as "tea money" that never appeared in the books of the finance ministry http://www.smh.com.au/business/bhps-tea-money-missing-in-cambodia-20100514-v4fs.html.

Such deals must be stopped. Such deals must be a serious alarm and warning for AUSAID to be super cautious of its aid in the agriculture sector as well as other sectors.

We want quality of aid and accountability.

Click here to read Geogia Wilkins' article about "Call to stop firms accepting Cambodian land"

No Clear Use Found for BHP ‘Social Fund’ [-It's all: Corruption! Corruption! Corruption!]

Ros Sothea, VOA Khmer
Phnom Penh Thursday, 27 May 2010

“We don’t know of a clear policy for granting concessions or licenses to those companies, and what we are facing now is the limited disclosure of related information.”

A year after it pulled out of Cambodia, the Australian mining giant BHP Billiton has found itself under a US Securities and Exchange Commission investigation for allegations related to bribery in a foreign country.

Officials have not said which country the alleged corruption took place in, but the company has said it gave $2.5 million to the government here in exchange for mining exploration rights, making Cambodia among the likely countries under the scope of the investigation.

It is not uncommon for companies to pay bonuses for concessions here, but what happened to that money remains unknown, with government and company officials sending conflicting statements and no apparent accounting for the funds.

The mystery underscores worries from environmental and development advocates who say money from Cambodia’s natural resources will be lost or squandered to corruption if and when gold, oil and other minerals and resources are explored in full.

BHP came to Cambodia under a 100,000-hectare exploration license for gold in 2006. After three years of exploration in Mondolkiri province, the company withdrew from the country, claiming it had not found enough to continue its investment. The company told the UK-based watchdog Global Witness that it had paid a $1 million signature bonus and $1.5 million for a social fund in 2006.

Global Witness now says there is no sign of that money.

Prime Minister Hun Sen told a private sector conference in April the $2.5 million had been put into a social fund for a hydropower project in Pursat Province.

Contacted by VOA Khmer in April, Pursat Governor Khuy Sokha said he was unaware of any hydropower projects other than one venture paid for by a $300-million Chinese investment.

“There is only one hydropower [project] in Pursat, and it belongs to the Chinese company, and for which the construction process began in December 2009,” he said. “That is called Atay Hydropower.”

BHP did not respond to queries related to the social fund. Officials have said they are looking into the company’s practices abroad in the wake of the US investigation.

The company published information on its website indicating it provided money to a handful of non-governmental organizations here, though the website does no say how much money the company offered each group.

VOA Khmer was able to identify four institutions that received BHP money for development projects between 2007 and 2010: the Cambodian Mine Action Center, the Danish Red Cross, Health Net International and Village Focus International.

The total amount of money given to these organizations was a little more than $615,000, according to individual representatives of the organizations, nearly three times less than the company told Global Witness it had paid.

Where the other $885,000 was spent remains unclear. Likewise, there is no record of the $1 million signature bonus the company claims to have made.

The lack of accounting for such large sums of money is cause for concern for development groups and donor countries, who warn Cambodia could face a “resource curse” when millions of dollars in oil and other resources begin to flow.

George Boden, a researcher for Global Witness, said the current complications in managing revenue from the extractive industries does not bode well for future, more lucrative ventures.

So far, 33 countries have been granted exploration licenses here. Thirteen of them have begun exploration for oil and gas and minerals.

“We don’t know of a clear policy for granting concessions or licenses to those companies, and what we are facing now is the limited disclosure of related information,” Mam Sambath, president of Cambodians for Resource Revenue Transparency, told VOA Khmer. “The information regarding the [BHP] case has never been revealed in public, so our research on the issue will also be limited.”

The outcome of the SEC investigation could affect investment in Cambodia, Mam Sambath said, because potential investors may shy away from a country implicated in a corruption scandal.

And BHP is not the only company to have put money into a social fund. In 2006, Indonesia’s MedcoEnergi provided $4.5 million for a license to explore blocks of onshore and offshore oil. The company withdrew in 2010, without citing a reason.

Meanwhile, the French oil and gas company Total, which has a license to explore oil and gas in the overlapping area near Thailand, has said it paid a $20 million signature bonus and another $8 for a social development fund.

A Total official told VOA Khmer from France the company had already provided $6 million of the social fund, which is to be used for a healthcare program under the joint control of a local Total representative and the Cambodian National Petroleum Authority. The official declined to elaborate.

Michael McWalter, an adviser to the CNPA, said signature money is properly deposited into an official account to “become a part of the revenue for the government,” and social funds are carefully watched by companies.

All companies are required to pay signature bonuses based on potential investment, and some are required to provide for a social fund, based on negotiations with the government, but neither should be a concern, he said. “So what one has to do is to trust the government to do the job properly.”

Don't lecture Dr. Hoon Xhen about transparency, he learnt everything from Pol Pot's and Uncle Ho's Universities already!

Cambodia tells donors to quit lecturing on fiscal transparency

May 26, 2010
DPA

'Global Witness is a group of thieves, they cooperate with foreign agencies' - Hun Xen, leader of Cambodia's family of the thieves of the nation

Phnom Penh - Prime Minister Hun Sen told a conference on good mining practices Wednesday that foreign organisations must stop giving advice on how to manage expected revenues.

'This is not the hour to talk about spending the money,' Hun Sen told several hundred business executives, diplomats and civil society members in a speech opening the two-day meeting.

'And don't talk too much looking on Cambodia as a child; the (government) is not a child,' he said. 'So do not advise too much.'

In recent years, foreign companies have signed dozens of exploration deals in industries from oil and gas to bauxite and gold.

Critics charge that the deals are opaque, with revenues failing to reach the national budget.

Hun Sen also lashed out at Britain-based Global Witness, which has published highly critical reports on the government's handling of state assets, including forestry and mining.

'Global Witness is a group of thieves, they cooperate with foreign agencies,' he charged. 'We have no money (from extractive industries) but they teach us about how to spend the money, and even blame us for stealing it.'

Global Witness spokesman George Boden last month urged donors to pressure Phnom Penh to account for millions of dollars in contract bonuses from French oil firm Total SA and Australian mining company BHP Billiton Ltd.

Boden said there was no sign that the bulk of the money had reached the budget.

'Donors must use the upcoming round of donor-government meetings to ask some tough questions and get some answers,' Boden said.

The government has said the money from Total and BHP Billiton went into a social fund, although details of that fund remain unclear.

BHP Billiton is currently under investigation by US and British regulatory authorities for possible violations of anti-graft legislation reportedly committed in Cambodia.

Hun Sen's speech came ahead of next week's donor conference at which pledges are made. In 2009, Cambodia received about 950 million dollars from foreign governments, roughly half its annual budget.

Cambodia is ranked as one of the world's most corrupt countries. It was listed last year in 158th place by graft watchdog Transparency International, with 1st place going to the least-corrupt country. Only 19 nations were ranked worse.

Tea-time free for all [-Fund embezzlement by the CPP regime?]

May 15, 2010
BEN DOHERTY, PHNOM PENH
The Age (Australia)

Corruption in Cambodia's mining boom
Mining has the potential to drag the people of Cambodia out of poverty, but corruption means millions of dollars are going into the pockets of a powerful few.

IT'S JUST after midday when the group arrives at Titanic, a restaurant on the banks of the Tonle Sap River. The restaurant is the nicest on the Phnom Penh waterfront, despite its pessimistic name.

Tailor-made suit jackets are discarded and ties are loosened as the party of 20, entirely male save one, takes its seats at a long table.

Immediately, bottles of whisky appear, and generous glasses are poured.

The group stands, noisily charges its glasses to a short speech, and downs the lot.

Five minutes later, it's another speech, noisier and longer, before another, and another, each a little more raucous than its predecessor.

"It's a business deal. Celebrating a business deal. A Chinese company," a waiter informs other diners. There are three government ministers in the group, he whispers conspiratorially.

This is the public face of doing business in Cambodia. The benign bonhomie of a successful negotiation sealed over a long lunch.

But there is also a hidden side that is never so indiscreetly displayed and is threatening to stop the benighted country ever pulling itself out of the mire of poverty: corruption.

Cambodia is widely regarded as one of the most corrupt countries. Of the 182 countries tracked for public sector corruption by the Transparency International corruption index, Cambodia ranks 159th.

Corruption exists at all levels. Low-ranking public servants, most of whom have had to pay their superiors for the privilege of a job, recoup the money by requiring bribes to perform even the most routine of duties, to process a driver's licence application, approve a building permit, or register a business.

And it extends to the very top of the government. Senior ministers are regularly accused of accepting millions of dollars in ''tea money'' - a colloquial term for illegal, under-the-table payments - to grant forestry, oil and mining licences.

Sometimes, the money is window-dressed as donations for ''social funds'' or ''development projects'', but little of it is seen again. In 2009, the US ambassador to Cambodia, Carol Rodley, opined that $US500 million went missing in Cambodia each year.

So perhaps it should not have been a great surprise that last month, when the US financial markets regulator, the Securities and Exchange Commission, said it was investigating allegations of corruption involving BHP Billiton, speculation turned quickly to the company's operations in Cambodia. The SEC investigation is believed to centre on a deal between BHP Billiton and the Cambodian government signed in 2006, during a visit by Cambodian Prime Minister Hun Sen to Australia.

BHP conceded in its latest quarterly statement that an internal investigation had uncovered evidence "regarding possible violations of applicable anti-corruption laws involving interactions with government officials".

But the company has never confirmed that the SEC investigation is in any way related to dealings in Cambodia.

Whether or not it is the subject of the SEC inquiry, it is known that BHP paid $US1 million to the Cambodian government for a mining concession to conduct exploratory drilling for bauxite on 100,000 hectares in Mondolkiri province, in Cambodia's poor far east.

The world's biggest mining company also gave the government an additional $US2.5 million to go towards a ''social fund'' for development projects for local communities.

BHP's money was paid into a Cambodian bank account in September 2006. The money has not been seen, or accounted for, since.

BusinessDay has obtained the Cambodian government's budget statement for 2006, which is not released publicly. It shows revenue from mining concessions for that year of just $US443,000.

Despite promises from the government that the social fund money would be administered by the Finance Ministry, the documents show none of BHP's $US3.5 million appeared on the government's books. And while the ''social fund'' money was variously promised, by BHP and the Cambodian government, to start irrigation projects, and to build dams, schools and hospitals in the province, none of the money was seen in Mondolkiri.

Asked in 2007 about the money received from BHP, Cambodian Water Resources Minister Lim Kean Hor told the national parliament the money was "tea money".

"The royal government got tea money, $2.5 million, from the bauxite investment with Australia," he told parliament.

Hor was backed by another senior member of the ruling Cambodian People's Party, Cheam Yeap, who said "the money is just for friendship".

Both ministers refused interviews with BusinessDay. BHP has steadfastly denied the money it paid was ''tea money''.

''BHP Billiton operates over 100 assets in 25 countries,'' a spokeswoman said.

''We operate according to a strict code of business conduct, which is based on the values contained in the company's charter and has been prepared to assist our people, wherever they may be located, to work in a way that upholds the highest ethical standards.

''Each of BHP Billiton's businesses is required to ensure that all employees, contractors and others with whom they work understand the requirements of the code. The code prohibits bribery and corruption in all forms.

''The code is supported by a business conduct advisory service. This includes a multi-lingual, 24-hours-a-day call centre and online case management system. As a leading global resources company operating in so many parts of the world, we believe that operating sustainably and responsibly underpins everything we do.''

But anti-corruption campaigners and members of the Cambodian parliament say BHP must have known the money it paid in September 2006 was a bribe and would never reach the communities displaced by its mining activities.

For 15 years, Cambodian-born, Adelaide-educated Son Chhay has sat on the opposition benches in Cambodia's parliament, railing against rampant corruption.

He says bribery is "normal practice" in Cambodia and the major reason is that most Cambodians are still desperately poor.

Earlier this year, he walked out of parliament in protest at new anti-corruption laws, which allow senior government officials to keep their compulsory declaration of assets confidential.

"The law legalises corruption, it's not a fight against it,'' he says. ''People in government do not have the will to fight corruption because it is they who benefit. You can see that all the senior ministers, including the Prime Minister, have hundreds of millions [of dollars].

''Their houses are like castles, their wives are wearing $100,000 rings, compared to the poor, who hardly even have a proper place to live.

"No doubt BHP knew from the beginning this money is a bribe, is bribery; they knew from the beginning. They cannot ignore this reality by saying the company believed that the money was just paid properly, legally, to the government. There is no excuse for BHP."

Defending the payment's legitimacy this month, Hun Sen said: "I ordered to use this money to build the Charoek dam in Pursat province, but later this company requested a part of the fund to build schools and hospitals in Mondolkiri province."

For its part, BHP said in a letter to non-government organisation Global Witness that it had retained control of the money, which was to be administered by a committee over which it had veto. However, the company concedes it lost control, with some money allocated to a "social infrastructure project not approved by BHP Billiton".

Former BHP Billiton employees say the money has never been seen in Mondolkiri province. The miner's former community official in Mondolkiri, Nok Ven, says no community projects were funded with BHP Billiton's money.

"There's no such thing happen in Mondolkiri province,'' he says. ''There's no school, there's no irrigation. There's nothing at all happened.''

Nok Ven resigned from BHP Billiton because he felt the mining giant ignored the wishes of the indigenous Bunong people, who were shut out of forests they used for food and cultural practices.

BHP Billiton did, separately from the $US2.5 million social fund payment, donate nearly $US470,000 to six non-government organisations working in Mondolkiri province.

Chhay says it is common for tea money to be paid over and above mining licence fees, and for the money to vanish.

"The tea money paid by BHP to the government I think is just the same thing,'' he says. ''We could not find where this money [went] … there is no doubt that this money was somehow paid to someone, but there's no evidence it will be part of the government budget."

He says Cambodia is institutionally corrupt, with senior government officials bleeding natural resources for their own profit, while international donors contribute fully half the budget to keep the state afloat.

Cambodia is also one of the region's least-developed nations. Nearly 70 per cent of the populace survive on less than $2 a day. A third of children under five are malnourished.

And yet, Cambodia is not a country without means, nor potential. It is simply that the country's means are in the hands of so few, and it's potential so often abused.

Eleanor Nichol, a campaigner with Global Witness and author of Country For Sale, an examination of the developing country's extractive industries, says Cambodia's political and economic system is sculpted to the benefit of a few key individuals.

"It's a system of government where the state is treated as a personal slush fund, as opposed to what we understand as normal government, which is one that acts in the best interests of its people,'' she says.

She says donor money is funnelled to keep basic state services such as health, education, and infrastructure operating, while private interests ''bleed the state of its other assets'' - particularly its natural resources.

In the decades after the Khmer Rouge period, Cambodia's greatest natural resource - its wealth of untouched forest - was comprehensively stripped. Primary forest cover was reduced from 70 per cent in 1970 to just 3.1 per cent today.

Between 1990 and 2005, Cambodia lost 2.5 million hectares of forest, with the huge profits going into the pockets of a powerbroking few, members of the cabal that surrounds Prime Minister Hun Sen.

Now there are serious concerns the same will happen with Cambodia's remaining natural resources: its minerals, its fish stocks, its oil. These industries are all in their infancy, and their eventual value is not yet clear, but they are growing exponentially and unchecked. Potentially, they are worth hundreds of millions of dollars a year to a country that still cannot pay its own bills.

As well as being excluded from any of the economic benefits of the sale of their country's resources, it is ordinary Cambodians who suffer most directly from the land concessions being granted across their country.

Typically, the people are simply kicked off farmlands or forests they have used for generations for food and to generate income. But in many cases, entire villages are forcibly evicted by government soldiers, homes burnt and land seized, all without compensation.

Thousands of people have been displaced, and scores shot and killed by troops acting on government orders.

Most of the companies coming to Cambodia seeking mining licences are from China and Vietnam. Many are new enterprises, without a corporate reputation to uphold, and bring no mining experience to their new venture.

These companies, Chhay says, are uninterested in a transparent process, and are happy to pay whatever, to whomever, for access to Cambodia's natural resources.

And so, while it may not surprise many to learn that BHP found corruption in Cambodia, anti-corruption campaigners in Cambodia were surprised to hear the allegations levelled at BHP.

Time and again, BusinessDay hears that BHP's presence was welcomed in Cambodia. BHP was supposed to be the good guy.

With its hard-won reputation as a scrupulously honest operator, it was hoped the world's biggest miner could use its corporate influence to insist on strict standards of propriety.

Other multinational companies have also become embroiled in corruption allegations.

French oil company Total paid $US8 million to a social development fund, and $US20 million as a ''signature bonus'' direct to the government for the right to drill for oil offshore, while South Korean miner Kenertec paid a $US1 million ''start bonus'' simply for permission to begin work.

But while there is no shortage of interest, domestically and internationally, in Cambodia developing a transparent governance system for its new extractive industries, for every step the country takes towards greater accountability, there has been an equivalent leap back.

Global Witness' Eleanor Nichol says Cambodia has been effectively "captured" by a dishonest and self-interested clique, formed around the Prime Minister, his friends and family.

"The fact that Cambodia is completely corrupt is not a national secret,'' she says. ''Any company with even basic due diligence would know this and I'm sure BHP had very good due diligence procedures and systems in place. So they'd have gone in with their eyes wide open."

She says the BHP case raises questions about multinational companies, many with strong corporate reputations to protect, dealing with highly corrupt states.

"What responsibility do companies have to make sure the money that they pay the government actually reaches government coffers?'' she says.

"How do they ensure that the bank account numbers they've been given aren't the bank account numbers of senior public officials and are actually going to the Ministry of Finance? When you're dealing with a state that is captured by a small group of individuals, corruption can be more nuanced than the straight up 'give me a million dollars under-the-table' bribery."

BHP's 'tea money' missing in Cambodia [-Hun Xen was lying about social fund?]

May 15, 2010
BEN DOHERTY
The Sydney Morning Herald

Corruption in Cambodia's mining boom
Mining has the potential to drag the people of Cambodia out of poverty, but corruption means millions of dollars are going into the pockets of a powerful few.

PHNOM PENH: BHP-Billiton knowingly bribed the Cambodian government in 2006, anti-corruption campaigners say, paying $US2.5 million ($2.8 million) in ''tea money'' which never appeared on government books, and which never built a single school or irrigation channel as promised.

In September 2006, BHP-Billiton paid $US1 million to the Cambodian government for a mining concession to conduct exploratory drilling for bauxite on 100,000 hectares in Mondolkiri province, in Cambodia's far east. The world's biggest mining company also gave the government an additional $US2.5 million to go towards a ''social fund'' for development projects for local communities.

Despite promises from the government the social fund would be administered by the finance ministry, budget documents obtained by the Herald show none of BHP's money ever appeared on the government's books.

And while the money was variously promised, by both BHP and the Cambodian government, to start irrigation projects, and to build dams, schools and hospitals in the province, none was ever seen in Mondolkiri.

Anti-corruption campaigners and members of the Cambodian parliament say BHP knew the money it paid in September 2006 was a bribe and would never reach the communities displaced by its mining activities.

"No doubt BHP knew from the beginning this money is [sic] bribe, is bribery, they know from the beginning. They cannot ignore this reality by saying that the company believe that the money was just paid properly, legally, to the government," said Son Chhay, a 15-year member of the Cambodian National Assembly and outspoken anti-corruption campaigner. ''There is no excuse for BHP.''

BHP left Cambodia in 2009, after finding insufficient bauxite reserves to mine commercially, but the US Security and Exchange Commission is understood to be investigating the irregular payment.

And the company, while refusing to confirm its Cambodian payment is under suspicion, conceded in its latest quarterly statement that an internal investigation had uncovered evidence "regarding possible violations of applicable anti-corruption laws involving interactions with government officials".

The original deal between BHP and the Cambodian government was signed in 2006, during a visit by the Cambodian Prime Minister, Hun Sen, to Australia.

BHP's $US3.5 million, which government officials said would be received by the finance ministry, was paid into a Cambodian bank account in September 2006. It has not been seen, or accounted for, since. It appears nowhere on the government's books.

The Herald has obtained the Cambodian government's budget statement for 2006, which is not released publicly.

It shows revenue from mining concessions for that year of just $US443,000. The $US1 million for the mining licence, and the $US2.5 million for the social fund, do not appear anywhere else in the budget papers.

Quizzed on the deal in 2007, the Cambodian Water Resources Minister, Lim Kean Hor, told the national parliament the money was "tea money", a colloquial term for an undeclared bribe.


"The royal government got tea money, $US2.5 million, from the bauxite investment with Australia," he told parliament.

Mr Hor was backed up by another senior member of the ruling Cambodian People's Party, Cheam Yeap, who said "the money is just for friendship".

Both ministers refused interviews with the Herald.

There is continuing confusion over what the money was promised.

Defending the payment's legitimacy this month, Mr Hun Sen said: "I ordered to use this money to build the Charoek Dam in Pursat province, but later this company requested a part of the fund to build schools and hospitals in Mondolkiri province."

For its part, BHP-Billiton says it retained control of the money, which was to be administered by a committee over which it had veto. However, the company concedes it lost control of the money, with some allocated to a "social infrastructure project not approved by BHP-Billiton".

Former BHP employees say the money has never been seen in Mondolkiri province.

The miner's community official in Mondolkiri, Nok Ven, said no community projects were ever funded by BHP-Billiton's money.

"There's no such thing happen in Mondolkiri province. There's no school, there's no irrigation. There's nothing at all happened," he said.

Separately from the $US2.5 million social fund payment, BHP-Billiton did donate nearly $US470,000 to six non-government organisations working in Mondolkiri province.

Mr Chhay said it was common practice for tea money payments to be made over and above mining licence fees, and for the money to disappear.

"The tea money paid by BHP to the government … is just the same thing. We could not find where this money [went] … there is no doubt that this money was somehow paid to someone, but there's no evidence that they will be part of the government budget."

He said Cambodia was institutionally corrupt, with government officials bleeding the country's natural resources for their own profit, while international donors contribute fully half the country's budget to keep the state afloat.

UN figures show 68 per cent of Cambodians survive on less than $US2 a day.

"But there are so many rich people in Cambodia. You can look on the streets, there are a lot of LandCruisers, Lexuses and Mercedes … Cambodia receives more than half [its] budget from donor countries, but the officials are so rich and live in castles.''

More tea money went into the pocket of Hun Xen's corrupt regime?

Extracting the dollar figures

Friday, 14 May 2010
Steve Finch
The Phnom Penh Post

COMPANIES involved in Cambodia’s extractive industries have revealed further information about controversial payments to the government, as more detailed revenue figures showed the state received more than 9 billion riels (US$2.25 million) from the sector last year.

Following an announcement by Australian miner BHP Billiton that it was conducting an internal investigation of possible graft violations widely believe to have taken place in Cambodia, the French energy giant Total responded this week to revelations made by Prime Minister Hun Sen last month that it had paid $28 million as part of a deal for offshore Area III in October.

The figure appeared to contradict an official disclosure by a Ministry of Economy and Finance official in March that showed payments of $26 million were paid in January, but Total spokeswoman Phenelope Semavoine said by email Tuesday that the additional $2 million “will be made at a later date”.

She added that Total would co-manage a social fund programme for education and health in the Kingdom, without giving further details.

Total’s response comes on the heels of a report indicating that the government received $1.45 million from the mining sector and $800,000 from the oil and gas industry last year, the first year the government has made public official payments from the extractives industries.

Although the government still has not published complete 2009 revenues from the sector as part of TOFE (state financial operations notice) on the Finance Ministry website, the Post obtained a presentation from last month’s Oxfam America conference that showed the full-year payments.

Chevron spokesman Gareth Johnstone declined to comment Thursday on whether the US firm had made similar payments to the state as part of its involvement in offshore Block A, citing “contractual arrangements” and “commercially confidential information”.

Southern Gold, which is exploring for minerals in western Cambodia, said late Wednesday it had not made any payments to the government as part of its concession agreements.

“We have good relationship[s] with our joint-venture partners and have regular audits, doubled when we consider our JV partners audits and checks,” Cambodia representative Grant Thomas said by email.

“We at Southern Gold do not pay those types of payments [or] fees.”

SRP lawmaker seeks info on resource deals

Thursday, 06 May 2010
Vong Sokheng
The Phnom Penh Post

OPPOSITION lawmaker Son Chhay wrote a letter to National Assembly President Heng Samrin on Wednesday asking for government officials to explain their dealings with mining giant BHP Billiton and energy firm Total.

BHP secured a mining concession in Mondulkiri province in 2006 before abandoning it last year, saying that a feasability study conducted at the site had shown that large-scale production there would not be cost-effective. The firm has been thrust into the media spotlight in recent weeks after disclosing last month that it was conducting an internal inquiry based on evidence of possible corruption violations by employees working on one of its overseas projects.

Though BHP has declined to disclose the project at the centre of its inquiry, speculation has been focused on Cambodia and the Mondulkiri project in part because of comments made by Minister of Water Resources Lim Kean Hor in 2007. Speaking before the National Assembly, Lim Kean Hor said BHP had paid US$2.5 million in “tea money”, or off-the-books fees, to secure its concession.

Son Chhay inquired into this issue. “As a member of the National Assembly, I have the right to write a letter to invite government officials to explain to the National Assembly about what we did not know,” he said Wednesday. “Within my letter, there was a question related to the deals that the government made with BHP Billiton and Total over the oil and gas business.”

Council of Ministers spokesman Phay Siphan said Wednesday that he had not seen the letter and therefore could not comment. Son Chhay said he had given government officials a deadline of next week to respond to his request.

Hang Chuon Naron, secretary general at the Ministry of Economy and Finance, revealed in January that Total had paid the government $26 million in January to secure conditional rights to drill for oil in the Gulf of Thailand. In a speech last week, Prime Minister Hun Sen put the payment at $28 million, a figure confirmed by Total.

BHP has said that the $2.5 million payment to which Lim Kean Hor referred was devoted to social development projects, and Total said last week that $8 million of its payment to the government would be earmarked for similar projects.

On Tuesday, the government inked an oil exploration deal with the Japanese Oil, Gas and Metals National Corporation for an area covering the Northern Tonle Sap basin. Officials and company representatives have thus far declined to make the terms of this deal public.

Cambodia rejects BHP bribe allegations [-No surprise there!!!]

May 3, 2010
ABC Radio Australia

The Cambodian government has rejected suggestions that money it's been paid by the mining giant BHP was effectively a bribe. BHP has acknowledged it gave two point five million US dollars to a community living near a bauxite exploration project in north-east Cambodia. That payment's being investigated by the Securities and Exchange Commission in the United States. A minister in the Cambodian government reportedly referred to the money from the BHP as "tea money", a slang term for a bribe. But Prime Minister Hun Sen says the money's being used on development projects, including a hydro-electric dam, schools and hospitals.

Presenter: Kate McPherson
Speakers: George Boden, Global Witness; Phay Siphan, spokesperson for the Council of Ministers in Cambodia

Click here to listen to the audio program (Windows Media)

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.

Sacrava's Political Cartoon: Social Funds Club

Cartoon by Sacrava (on the web at http://sacrava.blogspot.com)

BHP urged to open up on payments

April 28, 2010
MATHEW MURPHY
The Age (Australia)

BHP Billiton has been urged to show leadership and voluntarily disclose all payments made on a country-by-country basis to avoid allegations such as the Cambodian ''tea money'' scandal from damaging its reputation.

Non-government organisation Oxfam called for the action in the wake of the US Securities and Exchange Commission's investigation of payments BHP made to the Cambodian government, allegedly to secure bauxite leases.

Oxfam's mining advocacy co-ordinator, Serena Lillywhite, said BHP, as a supporting company to the Extractive Industries Transparency Initiative (EITI), should honour the principles of the agreement.

The EITI is a coalition of governments, companies, civil society groups, investors and international organisations that sets a global standard for transparency in oil, gas and mining operations.

''BHP has invested in the development of policies to encourage responsible business conduct including an anti-bribery standard. But the Cambodian allegations show policies alone are not enough,'' Ms Lillywhite said. ''Our view is that BHP, and indeed all Australian miners, can make a decision to voluntary disclose all payments to governments.

''I think the Cambodian incident sends a very strong message to all companies operating in high-risk countries that they do need to develop and implement robust, transparent and verifiable policies and practices, and that includes revenue transparency.''

Cambodia is yet to join the EITI.

Ms Lillywhite said the benefits of such transparency would help track payments and better indicate the benefits to mine-affected communities.

BHP has refused to disclose where the bribery took place. An investigation by British advocacy group Global Witness concluded that BHP paid $US1 million in 2006 but financial documents from that year show the payment was not recorded.

Cambodia's Minister for Water Resources, Lim Kean Hor, has told the country's National Assembly that BHP paid $US2.5 million to the government to secure a bauxite mining concession.

In a memo to staff last week, BHP chief executive Marius Kloppers stressed that working with integrity was ''critical to our success''. ''That means working in a way that upholds our values, which underpin everything we do,'' he said.

There's no bribery in Cambodia ... only "social funds": Hanoi Spin Doctor Hun Xen

Cambodian leader says cash was for social fund

April 28, 2010
AFP
PHNOM PENH

THE Cambodian Prime Minister has denied that BHP Billiton paid a large bribe for an exploration contract in his country.

It was reported last week that the US Securities and Exchange Commission was probing BHP over a $US2.5 million ($A2.7 million) payment related to a project in Cambodia.

But Cambodian leader Hun Sen said the money was for a ''social fund'' established in an agreement between Australia and Cambodia, and was used to build a hydroelectric dam, schools and hospitals.

''These days, they have been saying BHP paid illegal money to Cambodia,'' Mr Hun Sen said.

''Let's see the contract - it was a social fund. It is written in the contract. It is not secret.''

BHP last week said it had evidence of possible corruption involving ''interaction'' with government officials, related to a minerals exploration project terminated last year.

It declined to reveal the location of the project, but said it was not in China, where four staff of rival miner Rio Tinto were jailed for bribery and commercial espionage last month.

BHP has said it paid $US2.5 million to a community in Cambodia's east and $US1 million to the government for bauxite exploration rights, according to reports.

BHP said it handed evidence to the US SEC and was conducting an internal investigation.

Cambodian PM denies BHP paid bribe [-It was not bribe, just "tea money"]

April 27, 2010
AFP

The Cambodian prime minister has denied that mining giant BHP Billiton paid a large bribe for an exploration contract in his country.

Australian media last week reported that authorities in the United States were probing BHP over a $US2.5 million ($A2.7 million) payment related to a project in Cambodia.

But Cambodian leader Hun Sen said the money was for a so-called "social fund" established in an agreement between Australia and Cambodia, and was used to build a hydroelectric dam, schools and hospitals.

"These days, they have been saying BHP paid illegal money to Cambodia. Let's see the contract - it was a social fund," Hun Sen said in a speech.

"This issue is written in the contract. It is not the under-the-table money," Hun Sen told a meeting between the government and private sector which Australia's ambassador to Cambodia also attended.

"It is written in the contract. It is not secret," he said.

The Anglo-Australian miner on Wednesday said it had evidence of possible corruption involving "interaction" with government officials, related to a minerals exploration project that was terminated about a year ago.

It declined to reveal the location of the project, but said it was not in China, where four staff of rival miner Rio Tinto were jailed for bribery and commercial espionage last month.

BHP has said it paid $US2.5 million to a community in Cambodia's east and $US1 million to the government for bauxite exploration rights, according to The Australian newspaper.

BHP declined to comment on the reports. On Wednesday, it said it had handed evidence to the US Securities and Exchange Commission and was also conducting an internal investigation.

Anti-corruption watchdog Global Witness said in a statement last week that Cambodian government accounts do not appear to reflect large amounts of money paid by BHP and other companies for mining concessions.

BHP chief plays down Cambodia fallout

April 24, 2010
BARRY FITZGERALD
The Sydney Morning Herald

BHP Billiton chief executive Marius Kloppers has effectively pre-empted the findings of two investigations into its Cambodian bribery scandal by saying he expects only modest fallout for the company.

Rather than wait for the findings of an investigation by the US Securities and Exchange Commission and an internal report being conducted with the help of a US law company, Mr Kloppers jumped the gun in an interview this week with the Financial Times, said by BHP to have been planned months ago.

"We think the potential issue we've got in the total scale of the company is very modest," Mr Kloppers is reported to have said.

The report quoted the chief executive as saying the potential wrongdoing needed to be put in context, which he said was why BHP limited its disclosure of the SEC probe and its own investigations to the bottom of its March-quarter exploration report, released on Wednesday.

"If there was any view that this was something that would have had a material impact on the company - and I'm not talking about financial-only terms, I am talking about overall reputational damage, all of the things that we weigh when we look at a disclosable event - you can clearly see we thought of this in one way," he said.

But Mr Kloppers also seemed to want an each-way bet.

"I don't want to detract from the seriousness of these issues at all because there is absolutely nothing more important in life than our reputation, as events at Toyota and Citibank show. So even if there was 50¢ that had changed hands to a government official, it would have been an unbelievably big deal."

BHP has so far refused to disclose where the bribery scandal took place, but nor has it bothered to deny widespread reports that it involved a $US1 million payment by the company to the Cambodian government in 2006 to secure bauxite leases.

There has also been speculation that there could be lingering issues for BHP from an aborted nickel project in the Philippines, with a Catholic Church aid agency saying in 2008 that the company needed to be more careful in picking its local joint-venture partners.

The Catholic Agency for Overseas Development alleged that BHP's Filipino partner in a nickel joint venture had offered bribes to community leaders to buy support for the project and silence opposition to the mining.

CAFOD said that while there was no evidence that BHP was involved, the company had a responsibility to ensure that partners and contractors it had chosen to work with did not partake in bribery or corruption.

ASIC's eyes on BHP

April 23, 2010
Rachel Hewitt, with AAP
Herald Sun (Australia)

AUSTRALIAN regulators are likely to do their own investigations into corruption claims involving mining giant BHP Billiton, according to a leading corporate law expert.

The Australian Securities and Investments Commission yesterday would not confirm whether it was investigating already, but Melbourne University's Professor Ian Ramsay said local regulators would be "almost forced" to make inquiries.

Prof Ramsay noted that ASIC chief Tony D'Aloisio had confirmed the regulator was making routine inquiries into Rio Tinto in the wash-up of the Stern Hu affair, and expected it would have to respond the same way to the BHP situation.

US regulator, the Securities and Exchange Commission, and Britain's Serious Fraud Office are probing the claims, apparently related to a bauxite exploration project in Cambodia.

BHP revealed on Wednesday it had uncovered evidence of possible violations of anti-corruption laws involving dealings with government officials, but it has refused to say whether it is connected to allegations of an unofficial $US2.5 million payment to secure exploration rights in the Mondulkiri province.

Foreign Minister Stephen Smith said yesterday he could not see grounds for an inquiry into the conduct of Australian mining executives overseas.

"I don't think that is a sensible or appropriate response for the Government to take," Mr Smith told Sky News.

In a message to BHP staff yesterday, company chief executive Marius Kloppers said: "While matters of this kind are of great concern, they remind us that we must work in a way that is consistent with our code of business conduct and our charter values. Along with safety, nothing is more critical to our success than working with integrity.

"That means working in a way that upholds our values, which underpins everything we do."

Prof Ramsay said the type of wrongdoing alleged was more common than the conduct in Rio Tinto's bribery scandal. "So that's why I would have thought that regulators in Australia would be making inquiries. In fact, they're almost forced to make inquiries now," he said.

Prof Ramsay noted the increased focus of governments and regulators on bribery matters in recent years, including the much higher penalties for bribery under Australian law which came into effect this year.

He said it was inevitable BHP would be pressured to disclose more.

"It's just better to put it all out there initially -- and that assists in terms of preventing speculation," he said.

Sacrava's Political Cartoon: Tea Money

Cartoon by Sacrava (on the web at http://sacrava.blogspot.com)

BHP declines comment on 'tea money'

22 Apr 2010
AAP

BHP Billiton Ltd is refusing to confirm corruption claims relating the company are connected to so-called "tea money" paid to officials in Cambodia.

Non-government group Global Witness last year highlighted allegations originally aired in a local Cambodian newspaper in 2007 that the company had paid the "tea money" a customary term for unofficial payments.

A BHP Billiton spokeswoman on Thursday said she was unable to add to comments already made by the company.

In its quarterly production report on Wednesday, BHP Billiton revealed it had uncovered potential corruption in company dealings with government officials.

The company did not disclose which country or countries the allegations related to, or whether any workers had been stood down or sacked in relation to the claims.

But Global Witness has said: "According to an article published in The Cambodia Daily on 24 May 2007, Cambodia's Minister for Water Resources, Lim Kean Hor, told the National Assembly that BHP Billiton had paid $US2.5 million to the government to secure a bauxite mining concession.

"In the same article, Lim Kean Hor is reported to have described this payment as tea money, a customary term for an unofficial payment in Cambodia," Global Witness said in its Country for Sale report.

The report went on to say that in accordance with the terms of a minerals exploration agreement BHP Billiton paid $US1 million to the Cambodian government in September 2006.

It said the money did not appear to be accounted for in government financial documents, raising questions about where the $US1 million had gone.

Global Witness wrote to BHP Billiton in 2008 about the allegations and the miner replied that it had paid $US2.5 million for a social development fund in Cambodia.

"We reject any assertion that the payment under the minerals exploration agreement is, or the amounts contributed to the social development projects fund are, tea money," the miner told Global Witness.

BHP Billiton on Wednesday said it was cooperating with relevant authorities and had disclosed evidence it uncovered regarding "possible violations of applicable anti-corruption laws".

The corruption investigation comes at a crucial time for BHP Billiton, as it is trying to convince regulators in Australia, Europe and Asia to sign-off on a controversial joint venture with Rio Tinto.

While refusing to name which country the corruption allegations relate to, BHP Billiton has volunteered that it does not relate to China.

Four Rio Tinto workers based in Shanghai were recently convicted of receiving bribes and jailed in China.

BHP shares were 1.47 per cent weaker at $42.10 at 1242 AEST, against a 1.17 per cent slide in the benchmark index.

Doing business in Cambodia, BHP-style

22 April 2010
By former Phnom Penh Post journalist Georgia Wilkins
crikey.com.au

Today’s broadsheets reported that mining giant BHP Billiton could be guilty of paying $US2.5 million in bribes to the Cambodian government to secure a bauxite mining concession in the country’s north-west.

Further investigations have revealed that BHP discretely shelved its mining plans at the same time as a probe into the deal by the US Securities and Exchange Commission began. It seems Japan’s Mitsubishi were also part of the deal.

Is this a repeat of the Rio Tinto saga, or are we seeing a pattern emerge?

It seems that even the world’s largest mining company and one of the world’s largest diversified trading and investment companies believe that they can get away with corrupt behaviour; at least in vulnerable corners of the world in which few in London or New York pay attention too.

The Sydney Morning Herald claims that the latest graft scandal to hit a mining company has been under investigation by SEC since August. This coincides exactly with the company’s sudden pull-out from the bauxite mine in Mondulkiri province, Cambodia.

BHP at the time attributed the pull-out to their failure to find bauxite in sufficient quantities, with a spokesman for BHP in Australia quoted in the Phnom Penh Post as saying: “We completed our exploration field work in the Mondulkiri province and are in the process of sharing our evaluation with the Royal Government of Cambodia. As such, we have reduced our presence in Phnom Penh.”

The spokesman, who was not named, refused to give further details, saying that “…we do not comment publicly about the results of our exploration activities”.

Another source confirmed this alibi, telling the Post a feasibility study, which reportedly cost $US10 million and covered 400 hectares of the company’s 996-hectare concession, failed to find bauxite in sufficient quantities to make extraction profitable and justify the construction of the aluminium refinery.

But it seems that the news of poor profits was so devastating to BHP that it not only exited the deal, but exited the country, quickly vacating their large French-colonial building on the city’s main boulevard and no longer returning the Post’s calls.

The question needs to be asked: Why is this coming to light now?

The Global Witness report has been on the record for over a year, claiming BHP is involved with gross wrongdoing. But only now is it reaching papers in the developed world — surely in part because of the blow-up of the Stern Hu case.

Tireless watchdogs like Global Witness have long been a thorn in the side of Cambodia’s political and military elite. But officials know that without a large international audience, the group’s naming and blaming usually falls on deaf ears. It is this isolation from the world community that, as Global Witness itself points out, makes Cambodia such a natural fit with extreme corruption and kleptocracy.

So why were these commercial titans with huge reputations on the line dipping into the forbidden fruit on offer in small, backwater countries?

Global Witness says the fact that Cambodia has been resting on the cusp of a “petroleum and minerals windfall” is at least partly to blame.

“High demand worldwide for these commodities has, until recently, led to high prices. As a result companies are beginning to search for economically viable reserves in previously untapped countries once thought to be too politically unstable to operate in,” it says in its report, Country for Sale.

So, was it only a matter of time?

Cambodia and Vietnam, with fractured economies and greedy politicians, both have a reputation in south-east Asia for being the lowest hanging fruit on the dirty-money tree. Cambodia also has the seductive advantage of a huge bureaucracy in which standard accounting practices can disappear without a trace; not to mention a system of bullying predicated on fear which guards corrupt deals against squealers.

Indeed, the Cambodian government has been labeled the biggest in size in the world per capita; and they may likely be the richest. A nomenklatura of inter-wed and blood-related elites manage the country’s wealth through a sophisticated pyramid-shaped network of handshaking and intimidation. It is almost impossible to defy this natural hierarchy of power and its coercive logic of bribery: Global Witness claim every mine they investigated for their report was indeed run by a member of the government or military, or their relative.

So protected is the government from opposition that it can be genuinely humoured by attempts to threaten its power – especially when they come from outside the country. Following the release of Global Witness’s report, the Cambodian ambassador to the UK and son of the Minister for Commerce, Hor Nambora, responded by whipping up his own “report” with a poorly drawn image of the initial report going into a waste-paper basket.

But as the government squanders so much of the country’s wealth on big cars and expensive watches, teachers and low-level government workers are starved and forced to perpetuate the cycle of bribery.

‘Tea money’ may sound like a sinister misnomer, but to most Cambodians, a kickback is simply the cost of an every-day service. A legitimate monetary system can be easily reversed once one person’s salary is not paid. Because teachers receive barely any income, children learn from an early age that if they want to pass subjects, they must take a few hundred riel along with their lunches to school every day.

With this culture in place, it is difficult to believe that any company, large or small, international or local, can avoid paying this ‘tea’ tax on top of bloated concession fees. With SEC’s investigation underway, we are no doubt likely to see that the Stern Hu case is the rule, rather than the exception, when it comes to second and third-world business deals.

BHP dawdles to reveal SEC probe

April 22, 2010
Malcom Maiden
The Age (Australia)

BHP Billiton learned last August that its acquisition of exploration rights in Asia years earlier was the subject of a US Securities and Exchange Commission investigation, and it found out because the SEC told it so.

BHP sat on that information until yesterday, when it used a routine quarterly announcement to reveal that it had checked out the matter, had found evidence pointing to ''interactions'' with government officials that may have breached anti-corruption laws, and had passed that information on to the authorities.

The questions raised by this are: why didn't BHP brief the markets last August; and why did it choose not to announce the probe separately yesterday.

And the short-term answers are: BHP didn't reveal the SEC investigation last August because its legal advice was that under its continuous disclosure obligations it did not need to; and it revealed the investigation yesterday inside another, regular announcement because it believed the matter did not warrant immediate, separate disclosure.

As unsatisfying as those answers might be, they suggest one thing: BHP at this stage is confident that it is not headed into the same kind of nightmare that Rio Tinto has been in for more a year since the detention, charging and conviction of four of its Shanghai-based executives for taking bribes and obtaining commercial secrets about China's steel industry. That confidence is going to be tested as the facts emerge.

BHP was precise and sparing with what it said yesterday in a single paragraph at the bottom of page three of its March-quarter exploration and development report.

It said that the SEC had requested information as part of an investigation into ''certain terminated minerals exploration projects'' and that as a result it had uncovered evidence of possible violations of anti-corruption laws involving ''interactions'' with government officials. The group said it was co-operating with the investigation while continuing its own examination, and said it could not predict where the affair was headed, or how long it would take it to get there.

Separately, a spokesman created distance from the Rio debacle, saying that the investigation did not relate to any activity in China, or the sale and marketing of BHP products.

It is believed that the SEC is looking mainly at the $US1 million acquisition of bauxite mineral rights in Cambodia in 2006 by a consortium led by BHP and Mitsubishi. The purchase of mineral rights in the Philippines may also be a focus.

A British anti-corruption advocacy group, Global Witness, reported in February last year that the $US1 million payment seemed not to have been booked by the Cambodian government, which recorded revenue of only $US443,866 from mining concessions that year.

BHP defended the deal at that time as being above board, and in an interview Global Witness director Gavin Hayman congratulated the mining group for being ''transparent'' and responding to inquiries.

Last August, however, BHP was contacted by the SEC and asked to use its own resources to inquire into the Cambodian deal. BHP took the position that the SEC's approach was not material, and its own investigation was complicated by the fact that the projects had already been shut down after being rated as non-goers commercially. But what it found raised enough questions about how BHP gained mineral rights for it to make renewed contact with the SEC.

Even then, however, BHP waited a short time before announcing the SEC probe, and its discovery of possible breaches of anti corruption laws. The group's position is that its

re-examination of the payments has raised questions about them, rather than revealed them to have been illegal, something that would have required immediate disclosure.

Despite BHP's apparent confidence, news of the probe comes at a challenging time for the mining group. It is in the midst of attempting to persuade competition regulators in Australia, Europe and the US to approve its proposed Pilbara iron ore merger with Rio, and it is also preparing for the imminent release of a tax report from Ken Henry that will almost certainly recommend a new tax on mining company super-profits.

The issues it potentially faces are similar to those Rio is dealing with in the wake of the Chinese court's finding that four of its employees obtained commercial secrets.

Regulatory inquiries are under way in the US, Australia and Britain to determine whether Rio should bear some responsibility for what the Chinese court says happened. If the SEC concludes that anti-corruption laws were breached as BHP and its partners acquired minerals rights, similar questions will be asked of BHP about whether the breaches were renegade acts, or sanctioned.

At the very least it looks as though the auditing trails that support BHP's comprehensive ban on preferential payments will need to be overhauled. The group's code of conduct expressly forbids improper payments, and defines them exhaustively. There are already enough doubts about what happened to suggest that its policing of those rules failed.

mmaiden@theage.com.au

BHP faces investigation into $2.7m Cambodia graft claim

April 22, 2010
Matt Chambers and Matthew Stevens
The Australian

BHP Billiton yesterday joined Rio Tinto in battling graft allegations, saying it had uncovered evidence of possible corruption by employees on an overseas project.

The Australian understands the conduct, now under investigation by the powerful Securities and Exchange Commission in the US, relates to a bauxite exploration project in Cambodia.

BHP has admitted making a $US2.5 million ($2.7m) payment to the community near the bauxite project, in the northeastern Cambodian province of Mondulkiri, near the Vietnamese border.

A Cambodian government minister described the payment as "tea money", a local term for unofficial payments to government officials.

BHP has rejected this, saying the money was put into a development fund investing in local social welfare programs. The company said it had paid $US1m in September 2006 to the Cambodia government for bauxite exploration rights.

BHP yesterday declined to reveal where the alleged corruption occurred, stressing only that it was not China. It would not comment on what the behaviour involved and whether employees had stood down or been fired but it said the activities involved mineral exploration, not marketing its products.

Last month, Rio sacked four workers, including Australian Stern Hu, after they were convicted of bribery and stealing commercial secrets related to deals to sell iron ore to Chinese steel mills. Rio has introduced sweeping changes to its Chinese operation and is conducting a review to avoid a repeat of the scandal.

Yesterday, BHP said the alleged corruption was uncovered after the SEC queried it during an investigation into mineral exploration projects.

"The company has disclosed to relevant authorities evidence it has uncovered regarding possible violations of applicable anti-corruption laws involving interactions with government officials," BHP said yesterday in a statement.

According to a report in The Cambodia Daily in July 2007, the nation's National Assembly was told BHP had paid $US2.5m to the government to secure exploration rights to a bauxite deposit in Mondulkiri with Japanese industrial giant Mitsubishi.

The claim was made by the then water minister, who described the payment as "tea money".

The minister's comments informed a report into Cambodian corruption by the non-government organisation Global Witness. The report, Country for Sale, details the claims and BHP's rejection of them.

Global Witness wrote to BHP in October 2008 requesting details of any and all payments made to the Cambodian government.

BHP responded saying it had put $US2.5m into a development fund and it had paid $US1m in September 2006 to the government for bauxite exploration.

"BHP Billiton has never made a payment to a Cambodian government official or representative, and we reject any assertion that the payment under the minerals exploration agreement is, or amounts contributed to the Social Development Projects Fund are, `tea money'," the miner said.

While Global Witness did not draw any negative conclusions about the management of the development fund, it did identify an issue with the $US1m payment to government, although one outside the control of BHP.