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investment to shareholders.”

The large-scale nickel laterite mining project continues to be a threat to local livelihoods, and will give little to the community in return.

CAMBODIA: How “tea-money” got BHP-Billiton into hot water

This article was written by Global Witness, http:// www.globalwitness.org

A million dollar payment made by BHP Billiton to the Cambodian Government in 2006 for the right to explore for bauxite in the northeast of the country bought the company far more than it bargained for. Although Global Witness is not accusing BHP Billiton of corruption, the fallout tells of the harsh realities companies face when operating in countries like Cambodia, with entrenched corruption and opaque revenue procedures.

BHP Billiton is one of a number of international companies recently granted exploration rights to Cambodia’s booming extractive industries sector. Their concession was a joint venture with Mitsubishi. Global Witness first came across BHP Billiton’s operations when investigating developments in the country’s extractive industries sector for its 2009 report Country for Sale1. This report exposed how rights to exploit oil and mineral resources had been allocated behind closed doors by a small number of powerbrokers surrounding the prime minister and other senior officials. The beneficiaries of many of these deals are members of the ruling elite or their family members. Meanwhile, evidence suggests that millions of dollars paid by oil and mining companies to secure access to these resources may be missing from the national accounts2. Cambodia – one of the world’s poorest countries – could eventually earn enough from its oil, gas and minerals to become independent of foreign development aid. However, this future is being jeopardised by high-level corruption, nepotism and patronage in the allocation and management of these critical public assets.

According to a Cambodian newspaper report, Cambodia’s Minister for Water Resources told the country’s National Assembly that BHP Billton had paid US$2.5 million to the government to secure a bauxite mining concession3. The Minister described the payment as ‘tea money’, a customary term for an unofficial payment in Cambodia. Global Witness wrote to the company in 2008 to ask about any forms of payment it had made to the Cambodian government or any government officials. The company’s response confirmed it had set up a social development fund of US$2.5 million which was “designed to improve the general health, education culture and welfare of the people of Cambodia”4. BHP Billiton also confirmed that an additional payment of US$1 million was made by the company to the government to secure access to the mineral concession. However, the company rejected any assertion that the payment under the minerals exploration agreement was inappropriate.

Global Witness has obtained government figures which provide information on annual income to the Cambodian state in 2006. According to these, non-tax revenue from mining concessions was US$443,866.5 If the money from BHP Billiton appears elsewhere in these documents, it is not clear

1 Global Witness is a UK-based organisation which investigates and campaigns to prevent natural resource-related conflict, corruption and associated environmental and human rights abuses. Further information about our work can be found at www.globalwitness.org and Country for Sale: How Cambodia’s elite has captured the country’s extractive industries is available for download at: http://www.globalwitness.org/media_library_detail.php/713/en/country_for_sale

2 The ‘Tableau des Opérations Financières de l'Etat’ of the Cambodian Ministry of Economy and Finance indicates non-tax revenue from the mining sector generated revenues of US$3 million between 2002 and 2008. However, evidence gathered by Global Witness from a variety of confidential, industry sources estimates the total should be closer to US$7 million.

3 The Cambodia Daily, ‘Gov’t gets $2.5 Million for Mine Exploration Contract’, 22 May 2007.

4 Letter from BHP Billiton to Global Witness, 13 November 2008.

5 Ministry of Economy and Finance, ‘Tableau des Opérations Financières de l'Etat’, non-tax revenue from mining concessions, 2006.

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