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POSTCARD FROM GUINEA – DERIPASKA MAKES SECRET DEAL WITH PRESIDENT CONDE

By John Helmer, Moscow

Oleg Deripaska has reached an agreement with President Alpha Conde to end the claims of the Guinean Government against United Company Rusal, Guinean sources report from Conakry. The terms of settlement remain secret; some of them are expected to be announced publicly soon.

The claims amounting to more than a billion dollars in tax and customs duties, penalties for transfer pricing, plus interest, along with threatened revocation of Rusal’s bauxite mining concessions in the west African republic, were initiated in court action in Conakry, the Guinean capital, in September of 2009 [1]. The court ruled in favour of the government; Rusal has been challenging the judgement and the jurisdiction of the Guinean courts to regulate disputes over its Guinean mine concessions ever since.

The Guinean government’s claims were then expanded in a report commissioned from a Washington, DC-based consultant, Alex Stewart International (ASI). That report, dated January 13, 2010, charged Rusal with violating its operating and mine concession agreements with the Guinean Government, underpaying for its assets, breaking conservation regulations, failing to pay mine lease fees, violating mine production targets, and “illegal possession and sale” of bauxite. The ASI report summary can be read here [2].

ASI estimated that Rusal had generated $830 million in gross proceeds between 2006 and 2010 when it was acting unlawfully at its Friguia mine. The failure to pay for mine leases amounted, ASI auditors claimed, to $10 million. The production contract violation cost another $120 million. And the environmental damage was assessed at “hundreds of millions of dollars”. According to ASI, the minimum liability owed by Rusal to the Guinean Government should be “from US$960 million…to possibly more than $1 billion.”

Rusal’s responses over the past two years, as the conflict with the Guineans, led by then Mining Minister Mahmoud Thiam, escalated, has been chronicled here [3]. Before Thiam retired and returned to his home in the US last January, and then in April of this year, the newly elected President Conde announced publicly that he intended to pursue Rusal for violation of the conditions of its Dian-Dian bauxite mine concession agreement [4].

American legal advisors to Conde, engaged and paid for by George Soros, appeared to substantiate the earlier claims; they began laying the groundwork for retrocession of a number of mining rights issued to international companies by earlier Guinean governments and auctioning them anew in an international bidding contest.

Very recently, however, Conakry sources claim that Conde has authorized an agreement with Rusal at a fraction of the loss, penalty and damage assessment of the ASI report.

The innuendo has been launched in Conakry that the 2010 ASI report had been procured corruptly by Chinese interests seeking to oust Rusal from Friguia and Dian-Dian, and substitute themselves. London and African media have been running reports charging the Chinese with corrupting the Guineans to a degree never heard of before, when the French, Russians, British and Americans ruled the roost in Conakry.

New mine concession agreements which Thiam and his government had negotiated for iron-ore with Vale (Brazil), Beny Steinmetz (Israel), Bellzone (Australia) and China International Fund (CIF) have been threatened. An agreement for Rio Tinto to compensate the Guinean Government with $780 million has been suspended, the money so far unpaid. The South African Minister of Human Settlements and mine entrepreneur Tokyo Sexwale has been identified as seeking business through joint ventures with members of the Conde circle and family.

These are the claims of the postcards. No official corroboration or announcement has been issued by either the Conde administration or by Rusal.

Rusal’s last official announcement from Conakry unveiled a scholarship programme for Guinean university students, on which the company says it plans to spend $5.5 million over five years, starting next month, when the first of 2,700 Guinean applicants will start their studies. “Conakry, 26 May 2011 — UC RUSAL, the world’s largest aluminium producer, is pleased to announce the launch of a unique education programme the “RUSAL Scholarship-2011”. The RUSAL Scholarship will provide 100 talented young Guineans aged between 18 and 25 the opportunity to be educated in Russia’s best universities. All accommodation, transportation costs and tuition fees will be covered by UC RUSAL. The “RUSAL Scholarship-2011” program aims to educate highly-qualified staff for the Republic of Guinea and to strengthen the ties of friendship between the Russian Federation and Guinea. Guinean students will be able to study for degrees in mining, railroad operations, economics, building and construction, agriculture, water supply, medicine and human resources. After graduation, there is the opportunity for many of the students to work for RUSAL in their subsidiaries in Guinea.