Global Witness Skeptical of Anti-Corruption Measures

Sok Khemara, VOA Khmer
Washington, DC Wednesday, 13 October 2010

“The Cambodia government has a track record of pacifying its international aid donors with reformist rhetoric and commitments to transparency, while in fact doing little to change their actual behavior.”

The environmental watchdog Global Witness on Tuesday lambasted the government's recent anti-corruption efforts as unpersuasive and warned donor countries a new law would not attack the problem at senior levels of government.

“This strategy will will not succeed in catching the real villains,” Global Witness representative George Boden said in a statement Tuesday, referring to the recent passage of anti-corruption legislation and the formation of an anti-corruption investigative unit. “This does not represent a break from the well-documented and entrenched patterns of corruption at the highest levels of Cambodia's government, and it should not be welcomed as such.”

The anti-corruption law and Anti-Corruption Unit have been criticized as toothless to attack the pervasive corruption across the government. But government officials have dismissed the criticism and called Global Witness' statement untrue.

Global Witness, which was expelled from the country in 2005 after critical reports of the timber trade, said the ACU was too close to the executive branch of government to effectively prosecute “senior political figures.”

“The threat of defamation against whistleblowers is also likely to deter many from coming forward,” the group said. It also called Om Yentieng, the head of the ACU, “a close associate of Prime Minister Hun Sen [who] has links to mining interests.”

“Global Witness has repeatedly documented how senior Cambodian government officials have sold off the rights to the country’s natural resources in dubious deals, against the interests of ordinary Cambodians and the environment,” the group said. “Senior figures close to the prime minister have personally benefited from this wholesale stripping of the country’s assets, and yet very little action has been taken to address this situation.”

“The Cambodia government has a track record of pacifying its international aid donors with reformist rhetoric and commitments to transparency, while in fact doing little to change their actual behavior,” Boden said. “This anti-corruption strategy looks like the latest example of this tactic.”

Keo Remy, a spokesman for the Anti-Corruption Council, a policy body built by the new law, dismissed the statement. Specifically, he said, the law was set up to protect informants.

“The government did not establish this law in vain,” he said. “It was established with the willingness to crack down on corruption.”

Donors, meanwhile, had shown “a lot of support” for the anti-corruption measures, he said, adding that all countries, including Global Witness' UK, have forms of corruption.

“But for Cambodia, we knew this, and we made a law, and the government showed its willingness to prevent and counter it,” Keo Remy said.

New Cambodian anti-corruption plan will not stop high-level offenders

12/10/2010
Press Release
Source: Global Witness

Cambodia's new anti-corruption strategy is a welcome step forward but there are some serious flaws in its design that mean it will fail to tackle corruption at the top of the political elite, warned Global Witness today. The lack of separation between the new Anti-Corruption Unit and the executive is a major weakness that makes prosecution of senior political figures extremely unlikely.

"The need for a credible anti-corruption initiative is clear but as it stands this strategy will not succeed in catching the real villains", said Global Witness campaigner George Boden. "Cambodia's donors should not be fooled: this does not represent a break from the well-documented and entrenched patterns of corruption at the highest levels of Cambodia's government, and it should not be welcomed as such."

Global Witness has repeatedly documented how senior Cambodian government officials have sold off the rights to the country's natural resources in dubious deals, against the interests of ordinary Cambodians and the environment. Senior figures close to the Prime Minister have personally benefitted from this wholesale stripping of the country's assets, and yet very little action has been taken to address this situation.

The new anti-corruption strategy offered an opportunity to form a genuinely independent oversight mechanism. Instead the government has established a body which risks being undermined by undue executive influence. The threat of defamation against whistleblowers is also likely to deter many from coming forward.

The head of the new Anti-Corruption Unit is a close associate of Prime Minister Hun Sen and has links to mining interests. The concentration of the unit's decision making powers in this man's hands seriously undermines the chances of there being any real challenge to the behaviour of the prime minister's corrupt cabal of family members, senior businesspeople and government officials and politicians.

In spite of the obvious flaws, Cambodia's international aid donors have said the strategy will ‘play a major role in improving public sector governance' and ‘improve Cambodia's international competitiveness'.

"The Cambodia government has a track record of pacifying its international aid donors with reformist rhetoric and commitments to transparency, while in fact doing little to change their actual behaviour. This anti-corruption strategy looks like the latest example of this tactic," said Boden. "Donors need to get serious about promoting transparency as a central plank of their engagement with the country."

/ Ends

For more information contact George Boden on +44 207 4925899 or Oliver Courtney on +44 207 4925848

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.

BHP bribe scandal could involve Cambodian project

Cambodia's Minister for Water Resources, Lim Kean Hor, told the National Assembly BHP had paid $US2.5 million to the government to secure a bauxite mining concession. ''Lim Kean Hor is reported to have described this payment as 'tea money', an unofficial payment in Cambodia''

April 22, 2010
BARRY FITZGERALD AND MATHEW MURPHY
The Sydney Morning Herald (Australia)

BHP BILLITON'S blue-chip reputation has been tarnished by a foreign bribes scandal, believed to involve the group's abandoned bauxite exploration project in Cambodia where the payment of ''tea money'' to gain access to exploration ground is rife.

The scandal has been under investigation by the US Securities and Exchange Commission since August but only became ominous for BHP in a reputational sense yesterday when the Australian resources giant admitted the bribery claims could have merit.

BHP disclosed that its own internal investigation - a response to inquiries from the SEC - had uncovered evidence ''regarding possible violations of applicable anti-corruption laws involving interactions with government officials''.

It did not name the country or the now abandoned projects involved. While Cambodia was the popular tip by the non-government organisations that monitor the behaviour of the global miners in Third World countries, a nickel project in the Philippines was also mentioned by the organisations.

Either way, the revelations are a blow to BHP Billiton's need to maintain a squeaky clean corporate image while waiting on clearance from global regulators for its $US115 billion ($123 billion) iron ore production joint venture with Rio Tinto, a proposed deal that has angered the Chinese steel industry, the world's biggest. It was notable that while BHP would not name the country at the heart of the bribery scandal, it was prepared to volunteer that it was not China.

''We are limited in what we can comment on as the matter is still under investigation,'' it said.

''However, we can confirm that the SEC's requests for information primarily relate to certain terminated minerals exploration projects and not any activity in China, BHP Billiton's marketing activities or the sale of any of the company's products.''

Rio itself has suffered damage to its reputation in recent weeks. Last month China jailed four iron ore traders, including the Australian citizen Stern Hu, for accepting bribes and stealing commercial secrets. They were sentenced to between seven and 14 years' jail.

BHP is being assisted in the investigation by the New York law firm Davis Polk & Wardell. BHP would not comment on whether any of its employees had been stood down pending completion of the inquiry.

The bombshell was contained on the third page of an exploration and development report to the stock exchange for the March quarter.

BHP believes it was not obliged to make an earlier disclosure on the SEC investigation. But it now considers it relevant information - at least in the context of announcing in the exploration and development report - following its more recent discovery of possible anti-corruption violations.

''The company is co-operating with the relevant authorities including conducting an internal investigation, which is continuing. It is not possible at this time to predict the scope or duration of the investigation or its likely outcome,'' BHP said.

Under the US Foreign Corrupt Practices Act, BHP could be fined up to $US2 million while ''officers, directors, stockholders, employees, and agents are subject to a fine of up to $US100,000 and imprisonment for up to five years''.

The laws were introduced in the 1970s after more than 400 US companies admitted making questionable or illegal payments to foreign government officials to secure favourable treatment.

In a report by the British advocacy group Global Witness, published in February last year, the group cites a 2007 article in The Cambodian Daily which says that Cambodia's Minister for Water Resources, Lim Kean Hor, told the National Assembly BHP had paid $US2.5 million to the government to secure a bauxite mining concession.

''Lim Kean Hor is reported to have described this payment as 'tea money', an unofficial payment in Cambodia,'' the report says.

BHP rejected the claim in a letter in November 2008 to Global Witness saying the money was used for a social development program. ''In … terms of the minerals exploration agreement with the Cambodian government, which granted BHP Billiton and Mitsubishi the right to explore for bauxite, an amount of $US1 million was formally paid to the Cambodian government in September 2006,'' BHP wrote.

''If the money appears elsewhere … it is not clear where,'' the Global Witness report said. ''This raises questions as to where BHP Billiton's $US1 million payment made in September 2006 has gone.''

Cambodia's New War

July 12,2009
By Katrin Redfern
News Blaze (USA)

"Cambodia is a democracy on paper but in reality a dictatorship. Our party activists are murdered because they fight for justice-life is still cheap in Cambodia."

A new American president, many Cambodians hope, might change all that. Sochua Mu, an opposition leader and founder of the women's movement in Cambodia, recently returned to the U.S., lobbying Secretary of State Hillary Clinton to take a firmer line on democracy and human rights in her long-suffering country. "I needed to see the people in the new administration to urge them to re-assess U.S. foreign policy," says Sochua in an interview with The Daily Beast. "Cambodia is a democracy on paper but in reality a dictatorship. Our party activists are murdered because they fight for justice-life is still cheap in Cambodia. Human trafficking, drug trafficking, land grabbing, and forced evictions are all carried out under the nose of the government."

Sochua Mu's story is uniquely Cambodian. Forced to flee for her life at 18 in the early 1970s as the Vietnam War spilled over the border, she left behind her parents, who vanished, as did one-quarter of the country's population during the Khmer Rouge's reign of terror. Sochua wound up in America, won a scholarship to the University of California at Berkeley, and worked as a counselor and translator for the Cambodian refugees who began to trickle over. She eventually became a U.S. citizen.

During the 1980s, she returned to Southeast Asia, organizing schooling for children and social services for women in the refugee camps set up by the U.N. on the border between Thailand and Cambodia. In 1989, she was finally allowed to re-enter her homeland, "a country in ruins." "I would take my young children on walks in streets where I learned to bike, where I wandered with my childhood friends, where I went to school, all the years of joy, of happiness, of deep feelings of comfort came back to me," she says. "I came back to help rebuild a nation. The war and genocide also changed my people. They have lost their sense of trust for each other; they have become hard inside and desperate for just daily survival."

Sochua started the first women's organization in Cambodia, Khemera, designed to help poor urban women earn a better living. She campaigned to include women's rights and concerns into the country's new constitution, drafted in 1993, and became involved in efforts to rescue girls caught in Cambodia's thriving sex trade. In 1998, Sochua ran for election and won a seat in parliament, taking over the women's affairs ministry, which had previously been run by men. In a country that considers women inferior, Sochua mobilized 25,000 female candidates to run for commune elections in 2002. It was a first for Cambodia, and 900 of them were elected.

She negotiated an agreement with Thailand that allowed Cambodian women trafficked as sex workers to return to their home country instead of being jailed. She pioneered the use of TV commercials to spread the word about trafficking to vulnerable populations. Her work in Cambodia also supports campaigns to end domestic violence and the spread of HIV/AIDS, as well as women's workplace conditions. In 2005, she was nominated for a Nobel Peace Prize for her work against sex trafficking of women.

Her position in high government put her in direct conflict with Cambodia's long-ruling prime minister; Hun Sen. Rather than participate in the corruption she saw around her, Sochua Mu renounced the leadership and joined the primary opposition party in parliament. Last week, Sochua announced that she is considering legal action against the prime minister for allegedly using derogatory and threatening language against her in a speech he made last month during a visit to her parliamentary district. The speech, widely reported on Cambodian TV and other media, warned villagers not to seek help from members of the opposition party, but to approach the ruling Cambodian People's Party, and allegedly referred to Sochua using a Khmer term cheung kland-a gangster or unruly person, which has an especially insulting connation for women.

Her most frequent public disagreement with Hun Sen surrounds what she sees as a failure to prevent people in her district from suffering loss of property and livelihoods at the hands of powerful investors, often with the backing of local authorities and the military. Most Cambodians still depend on small-scale agriculture, forest exploitation, and fishing for their livelihoods but, because of the country's turbulent recent history, land ownership is generally undocumented and often contested. As a result, it is easy for the powerful to acquire land to develop. More than 150,000 Cambodians, according to Sochua, were victims of forced evictions and land-grabbing in 2007 alone. Studies have estimated that such concessions cover as much as one-third of the entire area of Cambodia.

"It is now common practice for powerful corporations and government officials to utilize armed forces to push citizens off their rightfully and legally held land," says Sochua. "These evictions are often violent, with soldiers wielding guns, tear gas and Tasers and burning houses to the ground, while citizens are beaten, maimed and arrested."

Cambodia's economy relies on three principal sources of income: tourism, agriculture, and textiles. The United States is the largest overseas market for the latter. As former U.S. Ambassador to Cambodia Joseph Mussomeli put it, "Levi Strauss or the Gap could destroy this country on a whim."

George W. Bush's policy, as Sochua saw it, focused on military and security-centered aid. According to the U.S. Agency for International Development, the U.S. provided Cambodia $54 million last year and $700 million total since the agency opened an office in the country in 1992. Other international donors, meanwhile, have done little better in holding the Cambodian government accountable on human rights, preferring "closed-door diplomacy," as she calls it, to public criticism. "This practice has yielded next to no reforms," she says, "and donors continue to be satisfied with token actions taken by the government to give a façade to democracy and social justice."

Even that oversight is at risk. Chevron discovered oil offshore several years ago, and the Cambodian government says it hopes to begin pumping oil in 2011. The IMF estimated last year that the country could earn as much as $1.7 billion from oil within 10 years of the date that pumping begins-a big deal for this poor country, which relies on donors for half of its annual budget, but also more money that won't carry any accountability.

Some aid agencies have called for a moratorium on aid until basic governance and transparency frameworks are in place. Sochua says that won't happen until there's a new regime. "That can only happen when we have a real election that is free and fair," she says. "The West should insist on that, otherwise all the aid they have poured into Cambodia will not work".

Katrin Redfern is a writer and editor at The Indypendent in New York City.

Robert Petit to ship out ... Surya Subedi lands in

Canadian prosecutor quits tribunal

PHNOM PENH, Cambodia, June 26 (UPI) -- As one international legal expert packs his bags to leave Cambodia, another unpacks his on a first trip to a country coming to grips with its tragic and ongoing human-rights issues.

Canadian Robert Petit has announced he will step down as co-prosecutor of the tribunal charged with bringing to justice members of the feared former rulers Khmer Rouge who killed more than 1.6 million people during their brutal rule between 1975 and 1979.

At a news conference in the capital Phnom Penh, Petit cited personal reasons back in Canada for his decision to leave on Sept. 1. He will likely return to the capital Ottawa to take up a government job, he said.

Meanwhile, Surya Subedi, the new U.N. special envoy for human rights to Cambodia and law professor from Nepal, held a news conference at the end of a two-week trip. He met many government officials, he said, including Hun Sen, the one-eyed controversial political -- and also former Khmer Rouge -- leader.

As prime minister since taking control in a bloody coup in 1997, the reputed chess player and chain-smoking Sen has been dogged by claims of corruption in his administration. The last U.N. special envoy for human rights, Yash Ghai, a lawyer from Kenya, quit in September 2008 after falling out with 56-year-old Sen, claiming the prime minister would not meet him.

Subedi, who until recently was a professor of international and human rights law at Leeds University in the United Kingdom, said he would adopt a "constructive approach" in helping the country improve its human rights.

Subedi said that the independence of the judiciary and unlawful evictions of people from their homes would be a focus of his work.

Relief agencies and anti human-trafficking groups have repeatedly pointed out that one of the country's biggest human-rights issues is prostitution and alleged government connivance that enslaves tens of thousands of women, many underage girls.

Subedi will report to the U.N. Human Rights Council.

Petit, who will continue to work on the tribunal, has denied rumors that he was leaving over allegations of corruption and mismanagement of the tribunal, set up in 2006. But Petit, who has served on genocide tribunals in Sierra Leone and Rwanda, did tell local media that the government should put to rest the corruption issue as soon as possible. The tribunal court is also underfunded, he said.

The court, consisting of five Cambodian judges plus four international experts such as Petit, started hearing its first case this year. Kaing Guek Eav, now 66, was known as Duch when he was running the torture and execution camp Tuol Sleng prison in Phnom Penh. Around 15,000 prisoners are said to have died.

Eav is one of five prisoners being held under the tribunal's remit. But arguments have arisen between the Cambodian and international judges over just how far down into Cambodian society the tribunal should drill seeking evidence on former Khmer Rouge cadres and leaders.

The issue is sensitive, not least because Sen himself was a former Khmer Rouge member during the terrible years of Pol Pot's regime, whose mass murders became infamous as the "killing fields."

But Sen eventually fled Cambodia for Vietnam, where he joined troops opposed to the Khmer Rouge and who also had the backing of Vietnam's fledgling communist government. When Vietnam invaded and installed a new government in Cambodia in 1979, Sen was made minister of foreign affairs.

Earlier this month Sen was reported to have hit out at non-government organizations, warning them against spreading "nonsense" about the government and its policies.

Hun Sen's regime lame excuse: We admit corruption exists, but...

Cambodia rejects US corruption claims

June 8, 2009
ABC Radio Australia

Cambodian officials admit corruption exists within Cambodia, but they say damning assessments made by the US embassy are biased and unfounded.

US ambassador Carol Rodley said recently Cambodia loses five hundred million U.S dollars every year to corruption. Cambodia's foreign ministry has rejected the claims, calling the statement "politically motivated and unsubstantiated".

Presenter: Desmond Ang
Speakers: Donald Bowser, Chief of Party for PACT Cambodia. Lao Mong Hay, senior researcher with the Asian Human Rights Commission

Click to listen to the audio program (Windows Media)

Angered by the ox, Hun Sen’s henchmen start to beat the cart ("Kheung Ko Veay Rotess" or more appropriately "Kheung Lok Srey Kaing Veay Khmer")

Hun Sen’s henchmen summon those involved with the Clean Hand Forum for questioning

06 June 2009
Kampuchea Thmei newspaper
Translated from Khmer by Heng Soy

4 civil society organization representatives involved in the Clean Hand (anti-corruption) Forum were summoned by the Phnom Penh City Hall to clarify their use of this public forum to attack the government, contrary to what they promised.

A source indicated that the Phnom Penh City Hall summoned officials representing associations that organized the Clean Hand concert held on 30 May 2009 for questioning on a number of incidents that took place. These incidents affect the honor of Cambodia as a whole. The source added that the city hall summoned 4 persons for questioning, including Khieu Sansana, a well known CTN TV station presenter, simply because she acted as a presenter during the Clean Hand concert.

Chan Soveth, an investigator for the Adhoc human rights group, told Kampuchea Thmei over the phone on 04 June, that civil society representatives summoned by the city hall included 3 representatives of Pact Cambodia which was in charge of organizing the concert, one representative of PDP, as well as a lawyer.

Chan Soveth added that Ms. Khieu Sansana, a CTN TV station presenter, did not show up. However, Chan Soveth did not reveal the names of the civil society representatives who went to provide clarification to the city hall, he said that those representatives do not want to reveal their names.

Regarding this affair, Kampuchea Thmei was not yet able to obtain comments from Kep Chuktema, Phnom Penh city governor, as of 04 June. However, a source revealed that these civil society representatives went in to provide their clarifications on the organization of the Clean Hand concert held on 30 May at the Olympic Stadium. The source also indicated that he does not know the names of all the civil society representatives present, but one of whom is named Yang Kim Eng and he represents the PDP NGO.

We could not obtain comment from Mr. Yang Kim Eng regarding the clarifications provided to the city hall. He told us to contact Mr. Sek Borisoth instead, however, we could not reach the latter.

Regarding the city hall summon, Chan Soveth indicated that it was the city hall rights to issue these summons because a promise was made not to attack the government during this concert. However, Chan Soveth said that the opinions or the declarations made during this concert are the rights of each institution participating in the event, and it is also the rights of the US ambassador to express her own opinion as well.

Chan Soveth added that he supports any action or concert against corruption, and Adhoc also participated in the event, however, Adhoc did not make any declaration. Chan Soveth said that the government should instead resolve the corruption issue so that foreigners would stop criticizing it. Furthermore, Chan Soveth said that the government should fight corruption rather than fighting those who denounce corruption.

The Clean Hand concert was organized by Pact Cambodia at the Olympic Stadium starting at 8AM on 30 May. During the evening, a concert was also held. Several organizations including Carol Rodley, the US ambassador to Cambodia, joined the event. Khieu Sansana was hired as the presenter for the concert.

During the event, Carol Rodley raised the issue of corruption in Cambodia, and she indicated that Cambodia lost $500 million in revenue per year from corruption. Her statement met with sharp reactions from Hun Sen’s government, and on 02 June, Om Yentieng, a personal advisor of Hun Sen, held a press conference to try to deflect the US ambassador’s accusation. A diplomatic note was also sent from Hun Sen’s regime to the US ambassador, however, Carol Rodley did not provide any reply yet.

Cambodia's oil resources: Blessing or curse?

Feb 26th 2009
The Economist
PHNOM PENH

Waiting for the oil (and money) to flow

MANY countries have been afflicted by a “resource curse”. Discoveries of oil or other mineral deposits are hailed as offering a way out of poverty. But hopes are dashed as corrupt officials pocket the money or squander it on grandiose projects. Cambodia, giddy at the prospect of an oil boom, hopes not to go the same way.

A recent report, called “Country for Sale”, by a London-based NGO, Global Witness, points out that amendments to a 1991 law had the effect of placing the Cambodian National Petroleum Authority (CNPA), the body administering oil contracts, under the direct control of Hun Sen, the prime minister, and Sok An, his deputy. It alleges that millions of dollars paid to the government to secure oil concessions do not show up in the official annual revenue reports. Meanwhile, unrestrained mining exploration has seen thousands forcibly evicted from their land in the north, and has damaged six of the country’s 23 protected wildlife areas.

The discovery of oil and other minerals was a godsend to Cambodia. Despite foreign-aid donors’ constant pleas for restraint, logging companies have largely exhausted the country’s once abundant forests. Chevron, a California-based oil giant, at first estimated its 2005 oil discovery in the Gulf of Thailand at 400m barrels, enough to earn about $1.7 billion a year, against the government’s budget last year of $1.2 billion. Chevron was awarded the largest exploration contract in the block thought to be most productive. But it has found that the oil is scattered in pockets and hard to extract. Despite the recent fall in the oil price, the government still hopes production will start in 2012.

It will be very welcome: aid still makes up half of the government’s budget, despite a decade of stalling on anti-corruption legislation that donors want to see. The World Bank consistently ranks Cambodia in the bottom 10% of all countries for controlling corruption. Michael McWalter of the Asian Development Bank, who advises the Cambodian government on oil, argues that the CNPA is underfinanced and ill-equipped to deal with the complexities of the oil business.

In March last year the United Nations Development Programme and the Norwegian government jointly organised a conference to discuss what the government should do. The advice included the creation of an independent, transparent oil fund. This however, was largely based on the experience of Norway, which has an effective system of checks and balances.

Cambodia does not, and Mr Hun Sen and Mr Sok An have still not come up with a coherent plan for managing the oil revenues. According to Global Witness, the government decided at a meeting with donors in October not to join the Extractive Industries Transparency Initiative (EITI), an international coalition that would require full disclosure of oil, gas and mining revenues. Rather, it agreed to endorse only the principles underpinning the EITI, making its rules non-binding.

Government officials have responded to the allegations by lashing out at NGOs. At a conference in February, Mr Hun Sen called NGOs’ criticism of his oil policies “crazy”. And he has already alluded to the prospect that oil revenues may diminish the influence of aid donors—though he denies they have much anyway, since Cambodia can always turn to China, a generous donor, which, he says, despite its might, treats its partners with respect.

Hun Sen calling Global Witness report “crazy”

When everybody around you is "crazy," except yourself, isn't this a symptom of "dementia"?

16 Feb 2009
By Huy Vannak
Radio Free Asia
Translated from Khmer by Heng Soy
Click here to read the article in Khmer

On Monday, Hun Sen publicly reacted for the first time to the Global Witness report titled “Country for Sale,” calling it “crazy.”

From Siem Reap, Hun Sen added that the Global Witness report was published with the intention of attacking the royal government of Cambodia.

Hun Sen said: “Before, I called them (using the derogative “vea” to designate Global Witness) stupid, it was too light, I have to call them (using derogative “Ah Neung”) “crazy,” that would be more befitting. First, I want to reply to them with some rude words, it’s when a group of “crazy” people talked about corruption from oil, when all the oil money is still at the bottom of the sea. Can you all believe that the royal government can be corrupt when there is no money yet? What do you think this is? Is it a political destruction activity or is it an expression of opinion? At the end, they lose their own credibility through this nonsense and crazy report. So I am justified to say that they are “crazy” now.”

In its report, “Country for Sale,” Global Witness, a UK- and Washington-based human rights and environment protection NGO, commented that, currently, Cambodia has been carved up for sale to foreign countries by powerful people in Cambodia so that they can amass a large amount of wealth for themselves, just like what was done in the case of Cambodia’s deforestation and the appropriation of other natural resources, including fish, islands, beaches for tourist resorts, minerals, oil and gas, etc…

Global Witness added that, in the past 15 years, 45% of the total area of Cambodia was carved out for sale to investors with the collusion of Cambodian rulers.

On 12 Feb, opposition leader Sam Rainsy sent a letter to Hun Sen, asking the latter to conduct an investigation into the allegations raised by Global Witness and to report the findings back to the National Assembly as soon as possible.

However, Hun Sen rejected the above Global Witness report saying: “The [Cambodian] ambassador in the UK [Hor Nambora] lives there [in England], and Global Witness is from the UK, it (using derogatory “Ah Neung”) put curses on Cambodia nonstop. So much so that a number of “crazy” politicians in Cambodia are also using this issue to oppose the royal government as well.”

Hun Sen added: “How can there be any corruption when the oil is still under the sea, even the actual amount, we don’t know yet. Who receive corruption money? The bauxite ore is underground, the iron ore is all underground, who can be corrupt on these issues? This is not the time to talk about spending money, it is the time to look for money. I asked both the IMF and the ADB, and foreign experts who expressed their concerns, I asked them to help me find a way to make a lot of money, to help me so that the oil contracts with various foreign companies will bring the maximum revenues to Cambodia, can they help?”

Hor 5 Bora sent to the rescue of Hun Sen’s regime against Global Witness

Hor 5 Bora, Hor 5 Hong's son and Cambodian ambassador to the UK, an ardent defender of the Hun Sen's regime

Government reply to Global Witness

27 Nov 2008
By Nhim Sophal
Cambodge Soir Hebdo
Translated from French by Luc Sâr
Click here to read the article in French

The Cambodian ambassador to the UK talked about “provocation” after a NGO appealed to donor countries by raising issues about the management of oil revenue.

The Global Witness communiqué warning donor countries about the use of natural gas and oil resource is a “villain campaign to discredit the image of Cambodia,” the Cambodian embassy in London said in its communiqué issued on Tuesday 25 November.

“It is naive from Global Witness to think Cambodia's international donors do not well aware of their ill-intentioned purpose of damaging Cambodia’ past and recent economic developments.” the Cambodian embassy communiqué added.

According to Global Witness, Cambodia almost did not keep up with any of its promises regarding the fight against corruption, the management of natural resources and human rights. According to Global Witness, “Cambodia is on the verge of a petroleum and minerals windfall, but both sectors are already exhibiting early warning signs of the corruption, nepotism and state capture…”

The Cambodian embassy in London retorted by quoting a recent speech given by vice-PM Sok An who said “We do not want to be mere spectators in our petroleum industry,” and that he was involved in the setting up of efficient legal mechanism for the management of the oil sector.

The Cambodian embassy also warned donor countries against Global Witness, in particular it addressed its message to the Netherland, Canadian and Irish Ministry of Foreign Affairs, as well as the Swedish International Development Co-operation Agency (Sida) “to ask for an urgent review of Global Witness’ program of activities and policies and, a strict control to poor management and leadership of Global Witness.”