UK Serious Fraud Office runs after Presidential Candidate: australian Miner Iluka Resources Reveals African Bribery Scandal

Since the discovery of the African Bribery Scandal that hit the public domain and the acceptance of the Australian Miner Iluka Resources of bribery scandal involving John Borno Sesay, who over the past months and date has been fighting vigorously to become the official flag bearer of the APC party; the international exposé of his alleged involvement has sent him into dilemma. Issuing out press releases to the gullible Sierra Leonean public with threats of legal action against the local media has not stopped the UK Serious Fraud Office from pursuing the task of investigating the allege crime. In a telephone conversation with the UK Serious Fraud Office, the caller indicated the seriousness of the investigation and confirmed that they are in touch with the Sierra Leone’s Anti Corruption Commission and its officials have assured them of their fullest cooperation in proving the allegation. The caller claimed that the Company, Australian Miner Iluka Resources; although accepted that it conducted due diligence prior to the merger of buyout, however accepted that bribery of some key official did take place which the UK Serious Fraud Office is digging deep to ascertain the validity of the allegation. John Borno Sesay’s, weak, fragile and dysfunctional public relation team has claimed in its press release that their boss was not interviewed by either the Morning Herald of Australia that broke the scandalous news or officials of the mining Company and even the local media. Australian miner Iluka Resources uncovered that the firm it acquired last year engaged in bribery with senior government officials, The Sydney Morning Herald has reported. Since the Anti Corruption Commission wants to continue maintaining close ties with the UK Serious Fraud Office, sources say the Commission will bring in all those officials whose names have been mentioned in the bribery scandal and may go further by some key past and present staff of the Sierra Rutile
In December, Iluka Resources acquired London-listed Sierra Rutile Ltd for AUD$375 million (US$ 294 million). A post-acquisition investigation conducted by Iluka Resources revealed that Sierra Rutile’s former chief executive John Sisay oversaw bribe payments to senior government officials to secure mining licenses. Iluka Resources found evidence that Sisay, who is one of the most powerful men in West Africa and is vying to become Sierra Leone’s next president, approved a AUD$110,000 (US$ 86,000) bribe payment funneled via a West African logistics company, Imatrix 101 Ltd. “Although these licenses did not have value attributed to them during the acquisition process, and while the outcome of the re-application is not financially material to Iluka, the company considers it is vitally important to be ‘walking the talk’ in relation to expected standards of conduct,” Iluka’s chairman Greg Martin said. The inquiry further revealed that Sierra Rutile spent more than AUD$ 50,000 (US$ 39,000) on Sierra Leone cabinet minister Diana Konomanyi’s international flights. Iluka Resources said Wednesday that the bribery scandal involving Sierra Rutile was unlikely to have a material impact on the company.
However, despite Iluka Resource’s initiative to notify international authorities of Sierra Rutile’s impropriety, the firm could face prosecution, fines, a broken relationship with senior government figures in Sierra Leone and possible shareholder legal action, Sydney Morning Herald reported. The failure to impose lighter measures on companies that self-report corruption is seen as a shortcoming in Australia’s system. If the bribery was disclosed in the US, by contrast, Iluka might stand a greater chance to mitigate sanctions or prosecution. Shareholders in Sierra Rutile will meet in London on Sept 1 to vote on Iluka’s £215M offer for the Sierra Leone-focused industrial minerals producer. In addition to the 36p offer per share, Iluka will assume about $US60M of SRL debts. Subject to 50% shareholder approval, the takeover is expected to become effective on Sept 9. Perth-based mineral sands miner with mining and processing operations in Sierra Leone Australia and USA. Freetown-based mineral sands company producing titanium feedstock industrial minerals (rutile with some ilmenite) as well as zircon in SW Sierra Leone
The sands of opportunity
Both onshore and offshore law firms celebrate August achievement as an AUS 375 million Sierra Leonean acquisition closes. Australian mining corporation Iluka Resources has agreed to acquire Sierra Rutile, a British Virgin Islands-registered mineral sands mining company for AUD 375 million (GBP 217 million), bringing with it significant Sierra Leonean mining operations. Iluka was advised on the deal by its regular legal counsel, international firm Ashurst, while Sierra Rutile was represented by Herbert Smith Freehills (HSF). Offshore law firms Ogier and Conyers Dill & Pearman were also involved. Listed on the London Stock Exchange’s Alternative Investment Market (AIM) Sierra Rutile has significant mineral sands mining operations in Sierra Leone, while Iluka is a leading participant in the global mineral sands industry, with a current market capitalization of approximately AUD 3 billion. Iluka’s operations are located in Australia and it has several potential mineral sands developments at various stages of evaluation in Australia, the US, Sri Lanka and Brazil and the deal marks a progressive move into Africa.
While the Australian natural resources industry is facing considerable challenges, thanks to depressed prices for commodities owing to China’s economic slow-down, Iluka’s move for Sierra Rutile is rooted in that company’s historically strong position in high grade chloride feedstock markets, making what is a counter-cyclical investment seem both logical and complimentary for both businesses. Sierra Rutile has operated in Sierra Leone for approximately 50 years. The country has one of largest natural rutile deposits in the world. That substance is used as a titanium feedstock, predominantly used in the manufacture of white pigment utilized in the global paint, plastics and paper industries. The deal is subject to German competition law approval.
In a statement, Ashurst’s lead partner Roger Davies said that the “significant” transaction represented “a major milestone in Iluka’s continuing strength as a leading producer of mineral sands”, calling the deal “challenging and truly cross-border deal, with [Sierra Rutile] being a BVI incorporated company, listed on AIM with all of its operations in Sierra Leone”. Davies was assisted by a team of lawyers in London, Australia and Germany, with partner support provided by Michael Robins, Nick Williamson in the corporate department, competition law partners Bill Reid and Ute Zinsmeister, finance partner Jamie Ng and disputes partner Angela Pearson advising on bilateral investment treaty issues, together with associate colleagues.
Ashurst announced the arrival of African resources specialist, Yann Alix, from HSF in May, while Alix’s former firm has been active in Sierra Leone for many years.
Sierra Rutile, normally advised by relationship partner Alan Montgomery, was advised by senior associate Marc Perkins and partners Tom Wozniak and Mark Bardell, in Montgomery’s absence on sabbatical. HSF has worked extensively in Sierra Leone, in particular through Fair Deal Sierra Leone, a pro bono partnership managing inward investment with the Sierra Leone government. As BVI law applied to the transaction, offshore law firms Ogier and Conyers, Dill and Pearman both acted for relevant parties to finalise the deal. Anton Goldstein of Conyers’ BVI office worked alongside Ashurst in advising Iluka on the transaction, while Ogier partner Simon Dinning, the firm’s global head of corporate and commercial, and senior associate Wendy Walker, advised Sierra Rutile. “We have been fortunate enough to advise Sierra Rutile for a number of years,” said Dinning. “We were also pleased to continue our strong relationship with Herbert Smith Freehills.”

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