By John Helmer in Moscow
A secret meeting in the middle of the night in the presidential palace in the Guinean capital of Conakry, requested by the Russian aluminium oligarch Oleg Deripaska, has triggered a Guinean court ruling and a tax investigation of claims amounting to $700 million. The claims catapult the Guinean government and its leader, Army Captain Moussa Dadis Camara, to the head of the table of international creditors seeking more than $8 billion from the insolvent Russian aluminium monopoly, United Company Rusal.
Guinean government officials say that Deripaska, who is chief executive and controlling shareholder of Rusal, made the arrangement to meet Camara through an intermediary, Raoul Delaware. A British passport-holder from Mauritius, he is well-known in Conakry from his involvement in international business deals during the 25-year rule of President Lansana Conte. Conte died last December. He has been replaced by the Guinean Army.
But Guinean officials say they now suspect the man whom Delaware introduced as Deripaska at their August 6 meeting did not match the physical characteristics of Deripaska’s photographs. Camara then ordered his presidential audit committee, which has been reviewing Rusal’s bauxite mining and alumina operations in Guinea, to proceed in court with a request for a ruling on whether the company has violated Guinean law and its concession agreements in the operation of the Friguia alumina refinery. On September 10, the court ruled that Rusal was in violation of the sale and purchase agreement for the refinery in 2006.
Rusal acknowledges in a website announcement that Deripaska visited Guinea in early August. Vera Kurochkina, the Rusal spokesman, declines to say whether Deripaska or his representatives had been in contact with Camara, or had met him on August 6. Mahmoud Thiam, Guinea’s Minister of Mining, Energy and Hydraulics, said in interview: “we suspect a double. We cannot say for sure.”
Thiam was named the new Guinean minister in charge of the resource sector in January. Before that, the US, France, and Belgium-educated banker had worked at Merrill Lynch and UBS. Thiam said his ministry’s inspector-general, alongside the presidential audit committee, and forensic accountants in the government, have been reviewing the terms of Rusal’s concessions in Guinea to mine bauxite and produce alumina, both for export. The reviews have been under way since January. Minor problems were uncovered at Rusal’s operation of the Kindia bauxite mine. “We saw some issues and argued with Rusal, but decided they were minor. We did not want to appear as targetting Rusal, so we put them aside.” However, Thiam said, “there have been clear and flagrant violations with Friguia.”
Prime Minister Kabiné Komara wrote a letter to Deripaska in June, inviting him to Guinea for negotiations over the results of the review. “We invited the company to rectify the problems”, Thiam said. “We view concessions as legally binding, and we intend to respect them. We are not undertaking a process of blanket questioning of all concession agreements. What we found, and what concerns us, is systemic evasion [of agreements] or non-compliance.”
Deripaska replied to the Guinean letter, saying he was too busy, and suggested the Guinean officials come to Moscow. The terms of the reply were interpreted as insulting, and a refusal to negotiate. Guinean court action then followed in July.
Thiam reveals that at 1 in the morning of August 6, when Camara heard out the man who claimed to be Deripaska, he understood that Rusal was offering to negotiate in good faith, and was requesting the government to slow down the legal sanctions it was seeking in court. Camara agreed, and ordered the presidential audit committee to delay the Friguia court process.
However, when Camara and his government suspected they might have been duped by a Deripaska double, Camara rescinded the request, and the government moved for the court ruling. This was issued on September 10, becoming international news because of the importance of Guinean raw materials for Rusal’s aluminium smelters, and Deripaska’s importance as Russia’s largest debtor.
Rusal has since issued statements claiming it had “purchased Friguia in full compliance with Guinean legislation and we consider the plant to be our legitimate property.” In Moscow, Rusal has claimed it will apply for an international arbitration tribunal in Paris to overturn the Guinean court.
Rusal acquired the Friguia refinery for a privatization transfer price of around $20 million. The company claims it has invested $400 million in its mining and refining operations in Guinea.
According to Thiam, forensic analysis of the company’s production, accounting, and export declarations reveals fraudulent over-charging of costs, so as to reduce Friguia’s profit line, and cut taxes. The evidence gathered by the government, and submitted to the court, exposes “a gap that is staggering and difficult to justify” Thiam said. Government estimates have already identified tax and other revenues claimed by the government from Rusal to be between $600 million and $700 million.
Thiam added “there remains an area of doubt” to be discussed with Rusal over the operation of the Kindia bauxite concession, the second largest producer of bauxite in the country, and key supplier to Rusal’s aluminium production chain in the Ukraine and Russia. Rusal also holds a concession to develop a new mine at Dian-Dian, but its compliance with its concession agreement there is still under review, Thiam said.
The Guinean government charges of tax minimization have also been hinted at by the Russian state auditor, the Accounting Chamber, in past investigations of Rusal; these have been kept secret in Moscow, where no action has been taken. Although the Russian Foreign Ministry has said it is following the Guinean process closely, Senator Mikhail Margelov, the Kremlin’s troubleshooter for Africa and chairman of the Federation Council International Affairs Committee, has said there is no Russian state interest at stake in Deripaska’s troubles in Conakry. He was “not surprised”, Margelov said, that conflicts would arise “for young Russian entrepreneurs who picked up their habits of privatisation in Russia [in the 1990s]. We want to have friendly relations with the African countries. The Russian national interest is to settle the scandal.”
The Guinean court ruling, and Thiam’s revelations, challenge Deripaska’s ongoing bid to find a strategic investor to relieve Rusal of its enormous debt burden, and the company’s unfinished debt and default negotiations with a group of more than 70 international banks. These are led by the French state-linked institutions, Societe Generale, Calyon, and Natixis.