Australian companies embroiled in bribery scandals in Sri Lanka and Congo
Posted on August 25th, 2016

Australian Broadcasting Corporation

Broadcast: 24/08/2016

Reporter: By Nick McKenzie and Emmanuel Freudenthal

Two Australian companies are being investigated over alleged bribery scandals linked to the presidents of Sri Lanka and the Congo, after the firms sought to secure multi-million dollar contracts in those countries.

Transcript

LEIGH SALES, PRESENTER: Tonight: 7.30 can reveal explosive new cases of Australian companies involved in suspected foreign corruption and bribery.

The allegations extend as high as the presidents of Sri Lanka and the Republic of Congo.

Already this year, we have heard allegations that the gaming giant Tabcorp and the off-shore arm of Leighton Holdings, paid bribes to relatives and intermediaries connected to foreign politicians.

The Turnbull Government’s beefed up the Federal Police’s anticorruption teams and flagged new laws to allow companies to avoid prosecution if they admit corruption and aid police, but even so there are questions about whether that’s enough.

Nick McKenzie has this special investigation.

NICK MCKENZIE, REPORTER: In July 2006, two men working for the ASX listed Australian mining company, Sundance Resources, travelled to the capital of the Republic of Congo on a secret mission. At stake was access to billions of dollars worth of Congo’s iron ore.

To clinch the deal, they had to impress the country’s most important man – Denis Sassou Nguesso and his family.

Nguesso is a despot who has ruled for three decades, a time in which he and members of his family have faced corruption allegations.

In a confidential report obtained by 7.30, the men describe a clandestine meeting at a luxury villa.

SUNDANCE AGENT: We met with Rodrigue Nguesso and Denis Sassou Nguesso, both nephew and son of the head of state.

NICK MCKENZIE: The meeting went well, but it was a risky venture.

The agents put an offer on the table an offer for members of Nguesso’s family. An offer that may well have put the company in breach of Australia’s bribery laws.

The Australian Federal Police warned companies against such practises.

PETER CROZIER, AFP COMMANDER: The AFP and certainly myself, I don’t accept it’s, it’s a needs of doing business and I don’t accept that it provides an opportunity for Australian companies.

It’s just not on. We shouldn’t be doing it.

NICK MCKENZIE: The Sundance agents report obtained by 7.30 reveals the agents offered the president’s son and nephew shares in the Sundance-controlled Congo mining company.

But the president’s son demanded a bigger stake.

SUNDANCE AGENT: Denis Sassou Nguesso was delighted by the project but clearly had a problem with the shareholder standing that was proposed to the Congolese side in this deal.

DAVID CHAIKIN, INTERNATIONAL CORRUPTION LAW EXPERT, SYDNEY UNIVERSITY: It’s just public knowledge, and well-known, both in the business community and the political community that corruption is a huge problem, going right up to the top of the Government.

So they must have been well aware of the corruption risk.

NICK MCKENZIE: The Sundance documents show that in 2006 and ’07, senior Sundance figures in Australia and Africa brokered share deals benefitting the president’s son and nephew to the tune of millions of dollars.

EXTRACT FROM SUNDANCE DOCUMENT: The Congo Party will be issued 15 million SDL shares upon grant of exclusive permits over the exploration areas to Congo iron.

NICK MCKENZIE: In August 2007, the President Nguesso signed off on exclusive mining permits for Sundance.

DAVID CHAIKIN: It would suggest that the company is relying upon a payment which is not legitimately due, in order to influence a public official in the course of their duties. And if that is, what is proved, well that would clearly amount to a criminal offence of foreign bribery under Australian law.

PETER CROZIER: We have received information in relation to Sundance and we’re doing an evaluation in relation to that information. So, Nick, I’m pretty restricted on what I can say.

But, you know, like anything, like all the investigations I have spoken about, the AFP takes these allegations very seriously.

NICK MCKENZIE: It was 7.30 who told the AFP in June this year about evidence suggesting that Sundance may have bribed the Congo’s president by giving some of his family members shares.

Ten years after that share deal, Sundance is still seeking finance hoping to build its Congo mine.

In response to these claims, the company told 7.30 today it was launching an independent inquiry. Activists are demanding answers.

SARAH WYKES, FORMER ‘GLOBAL WITNESS’: And those people in Congo would say that there is no rule of law and there is impunity including for corrupt behaviour.

NICK MCKENZIE: Sarah started investigating the Denis Nguesso Junior’s off-shore spending habits in 2005.

SARAH WYKES: There is actually an open investigation alleging that the president and his family had benefited from misappropriating a large part of the country’s oil revenues.

NICK MCKENZIE: Her report was publicly available when Sundance wanted the president’s backing for its mine project. A problem for the Australian Government is that Sundance may not be the only company with the staff who may have agreed to pay bribes.

7.30 has uncovered more evidence implicating another firm and another country’s president.

The Snowy Mountain Hydro Electric Scheme is an Australian engineering wonder.

ARCHIVAL FOOTAGE: This scheme goes to the two vital needs of Australia.

NICK MCKENZIE: The company that built it, Snowy Mountain Engineering Company, also known as SMEC is now privatised, has grown into a major international engineering firm.

In 2008, SMEC sought to win part of a large dam project in Sri Lanka, funded by the World Bank.

ANTHONY WHEALY, QC, CHAIR, TRANSPARENCY INTERNATIONAL: Well, Sri Lanka, I think, has always had a reputation for what might be described as petty corruption but the real risks, the most serious risks, are corruption at a top bureaucratic level where monies are paid by companies, often overseas companies, to secure very valuable contracts.

NICK MCKENZIE: Again, there was one person’s support needed to make it happen, the Minister for Agriculture, Maithripala Sirisena, who is now Sri Lanka’s president.

2009, emails between SMEC staff leaked to 7.30 suggest the Sirisena requested a private meeting with the company.

SMEC SRI LANKA MANAGER: He’s the secretary of the ruling party, a powerful man in the present administration.

NICK MCKENZIE: The SMEC manager said that the powerful man wanted a favour.

SMEC SRI LANKA MANAGER: The minister wants to know whether SMEC could make a donation for the elections?

NICK MCKENZIE: The SMEC email suggested Sirisena and one of his advisors wanted the Australian company to bank roll Sirisena’s ruling Freedom Party before signing the cabinet papers for the World Bank funded dam project.

SMEC SRI LANKA MANAGER: Sirisena’s coordinating secretary said this is the way it goes prior to signing the cabinet papers. He wants us to propose an amount or percentage on the contract value.

NICK MCKENZIE: The president did not respond to questions from 7.30 including whether he was aware of or authorised such a request.

ANTHONY WHEALY: Well, I mean it’s pretty obvious that if an Australian country goes into a foreign jurisdiction and there’s a suggestion made that they could make a political donation when they’re on the lookout for a very valuable contract, well, anyone would know that’s most likely to be corruption at that high level.

NICK MCKENZIE: SMEC’s email showed that the company’s Sri Lankan manager agreed to pay a kickback of $27,000 to secure the dam contract.

SMEC says it’s internal investigation uncovered a request for a political donation but that no donation was made. Company records showed that $27,000 was withdrawn in cash by SMEC Sri Lankan office and paid to a consultant.

The Australian Federal Police is evaluating emails about SMEC and the Sri Lankan president.

Separately the AFP has launched a major investigation to allegations that SMEC’s overseas staff paid bribes to secure a second Sri Lankan contract as well as a contract in Bangladesh.

For the Australian Federal Police, suspected foreign bribery is tough to investigate and even harder to prosecute.

But after repeated scandals and an extra $15 million from the Federal Government, the AFP says it’s ramping up inquiries and pushing companies to dob themselves in before they get caught.

PETER CROZIER: For any company to think that this is just the cost of doing business, then they are going to, in due course, face the full effect of the law because it’s not legitimate, it’s, there, the companies themselves and their CEOs, they both have a legal responsibility, but they have a moral and ethical responsibility here to show some integrity in their business processes.

NICK MCKENZIE: Around 20 Australian companies, including some household names, are the subject of current AFP investigations – one which has been going for seven years.

PETER CROZIER: When you recognise that some people may not have access to proper healthcare and they may not have access to proper education and may miss out on the opportunities that you and I take for granted, then I think we should be passionate about these issues.

And if there’s an Australian entity involved in that occurring, then we should pursue it to the nth degree in relation to the legislation but also we got a moral obligation here.

LEIGH SALES: That report by Nick McKenzie.

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