Backroom Deals Threate n American Interests (NAPSA)—Billionsof dollars in mining assets belonging to compa- i. nies like Alcoa, BHP Billiton, Rio Tinto, American oil company Hyperdynamics Corporation and their shareholders could be handed off to middlemen thanks to a secret deal struck by the government of Guinea. Not long after the Obama administration lifted sanctions against Guinea, a new mining code was passed that gives 15 percent of every mine in Guinea to the state mining companyfree of charge, including another 20 percent at market rates. This law will cost billions of dollars in current assets to U.S. and European freemarket busines and their shareholders. The agreement, which may be in violation of the Foreign Corrupt Practices Act and the Dodd-Frank Act, has taken place between Guinea and a well-known businman known for trading diamonds in Angola and the Democratic Republic of the Congo named Walter Hennig, whois based out of South Africa. The deal could prove an embarrassing election year misstep for the Obama administration, which restored the country to privileged trade partner status last October. The deal, which putsbillions of dollars of U.S. investments at risk, was made between Mvelaphanda Holdings, whose founderis listed in the United Nations report on illegal transactions under the Oilfor-Food Program, and the U.S.based firm Och-Ziff. Och-Ziff’s billionaire CEO has given hundreds of thousands of dollars to U.S. politicians and PACs and continues to provide support for candidates in the upcomingelections. The Palladino agreement was signed l than a month after Hennig signed a memorandum of understanding under which anothervehicle, Floras Bell, would become a “partner” with the government in the mining industry. Recently, a new law gave 15 per- cent of every mine in Guinea to Guinea has the world’s largest reserve of bauxite and is home to Simandou, a huge undeveloped iron ore deposit. These resources are vital to U.S. busin and the state mining company,free of national security interests. paniesbillions of dollars. protest the asset seizure tactics charge. This could cost U.S. com- Widely documented media reports published recently show that last April, five months before the code became law, Mohamed Lamine Fofana, the mining minister, agreed to a $25m loan with Palladino Capital, an investment vehicle registered in the British Virgin Islands. The deal was signed by Fofana, Kerfalla Yansane, the finance minister, and Samuel Mebiane, listed as “proxy holder” for Palladino. Hennig set up Palladino Holdings in 2003 as a vehicle for “mining, energy and other assets in Africa.” The company is close partners with U.S. investment company Och-Ziff. As reported in London’s Sunday Times recently, the terms of the loan are rumored to include a provision that if the cash-strapped government defaults, Palladino can convert the debt into a 30 percent stake in the operationsof the national mining company. This would potentially be worth billions. Simandou alone—owned by Rio Tinto, China’s state giant Chinaleo, resources tycoon Beny Steinmetz and Vale, a Brazilian iron ore group—is worth at least $10 billion. Some people have begun to and the government has recently said publicly that it would repay the money, but so far Western governments appear, for the most part, unconcerned over the backroom deal. American oil company Hyperdynamics Corporation, Aleoa, BHP Billiton, steel group ArcelorMittal and Rusal, the Russian aluminum producer, all have assets in the country affected by the new code and each standsto lose billions. Manyindividuals, somepoliticians in the States and Europe, and some entities like the World Bank have beencalling on political oversight committees and watchdog groups to further look into the recent Guinea laws and those involved. The United States may be forced to intervene, having previously signed an investment guarantee agreement with Guinea that offers political risk insurance to American investors through the Overseas Private Investment Corporation (OPIC). If this occurs, then the issue may not only gain the attention of legal oversight, but could very well become an issue for both Obama and Congr to contend with.
