June 1, 2011

OZ denies Cambodia blunder

[The Sydney Morning Herald]

OZ MINERALS and the Cambodian government have been forced to deny allegations of impropriety over reports that a transaction by Oz Minerals in 2009 led to hundreds of thousands of dollars being paid to the relatives of government officials.

The news comes as the US Securities and Exchange Commission continues investigations into Cambodian bribery allegations involving BHP Billiton.

BHP has yet to confirm - or deny - that the investigations relate to a $US1 million payment by the company to the Cambodian government in 2006 to secure bauxite leases.

According to yesterday's The Cambodia Daily, Oz Minerals bought out its partner in a Cambodian gold mine in 2009, Shin Ha.

More than $A1 million of the proceeds went to three women on the partner's board who were reportedly closely related to officials from government departments including the Ministry of Industry, Mines and Energy (MIME).

According to the newspaper's investigative reporter, Douglas Gillison, the trio were appointed in 2006, just before Shin Ha concluding a joint venture agreement with the Owen Hegarty-lead Oxiana.

The company was later named Oz Minerals following a merger with Zinifex.

Oz Minerals spokesman Natalie Worley told BusinessDay an investigation by the company did not find any evidence of wrongdoing.

''Wherever we operate, we act in accordance with local regulations and with international standards.

''We deny any allegations of inappropriate business practices,'' Ms Worley said.

According to the report, Cambodian Minister Suy Sem said no ministry officials had received any payments and the ministry had strictly observed the law.

Government officials are not allowed to have business interests and must declare assets, but this disclosure does not extend to relatives.

Oz Minerals has only recently put another controversy behind it.

Last month it paid $60 million to settle two lawsuits which claimed shareholders lost hundreds of millions of dollars when the miner failed to disclose its true debt position during the global financial crisis.

OZ Minerals was forced to sell all its operating mines, except Prominent Hill, to China Minmetals in June 2009 for $US1.39 billion after it could not reach an agreement with banks to pay back this debt.

It survived only after Wayne Swan blocked the sale of Prominent Hill - a copper and gold mine in South Australia.

Oz Minerals also retained the gold exploration rights in Cambodia, which could provide more disappointment. In April, the company said it was reviewing its gold exploration in the country after exploration efforts failed to find a large enough resource base to justify the commencement of production.

Meanwhile, BHP said yesterday that its internal investigation into the Cambodia bribery allegations was continuing and that it had passed on to US authorities ''evidence that it has uncovered regarding possible violations of applicable anti-corruption laws involving interactions with government officials''.

''The group is continuing to co-operate with the relevant authorities. It is not possible at this time to predict the scope or duration of the investigation or its likely outcomes,'' BHP said.

BHP chief executive Marius Kloppers effectively pre-empted the findings of two investigations in April last year by saying he expected only modest fallout for the company.

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