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Guinea Mining. Exploiting a State on the Brink of Failure

Entitled “Exploiting a State on the Brink of Failure: The Case of Guinea” this paper is excerpt from Part II, Country Case Studies, of J.R. Mailey‘s The Anatomy of the Resource Curse: Predatory Investment in Africa’s Extractive Industries, published by the Africa Center for Strategic Studies. Washington, D.C. Special Report No. 3. May 2015.
The full PDF Report (146 pages) can be downloaded from BlogGuinée’s Documents section.
Tierno S. Bah

"Sam

Guinea is blessed with generous mineral endowments. It is the world’s second largest exporter of bauxite, the key ingredient in aluminum production. However, by virtually any measure, Guinea is one of the poorest countries in the world. Its annual GDP per capita is just $460.
Less than half of Guinea’s population has access to running water and electricity, and a mere 30 percent of the adult population is literate. Almost 15 percent of children born in Guinea will die before reaching the age of 5.

J.R. Mailey
J.R. Mailey

A widely recognized cause of Guinea’s plight is poor governance. Abuse of public office and mismanagement of public resources and institutions have been the norm in Guinea for decades. The country routinely ranks near the bottom of Transparency International’s annual Corruption Perceptions Index. Corruption has crippled the state’s ability to perform basic public services and has created an environment of impunity.
Guinea has been subject to autocratic rule almost since independence in 1958.

Between 1984 and 2008, Guinea was ruled by the notoriously rapacious regime of President Lansana Conté characterized by its opacity, predatory practices, and lack of accountability. He and his associates routinely made cash withdrawals from the country’s central bank in broad daylight 213. Petty corruption was also widespread, as civil servants in the president’s good graces were free to overinvoice, misappropriate funds, and solicit bribes without fear of consequences or investigation.

On the evening of December 22, 2008, President Conté died following a long illness. Six hours after the announcement of Conte’s death, a group of military officers took to the airwaves announcing the formation of a military government calling itself the National Council for Democracy and Development (Conseil National pour la Démocratie et le Développement, CNDD). Their first act was to suspend the constitution and dissolve the National Assembly. The coup was led by Captain Moussa Dadis Camara, a junior officer who headed the army’s fuel supplies unit. On December 24, 2008, it was announced that Camara was President of the CNDD.

On the Brink of Failure : A Desperate and Isolated Regime

The African Union (AU) swiftly condemned the coup. The Economic Community of West African States (ECOWAS) suspended Guinea’s membership. The United States and European Union put on hold some key bilateral assistance programs.

Inheriting a state on the brink of failure, the CNDD promised to undertake widespread reforms. Camara pledged that the junta would organize “free, credible and transparent elections” within 2 years’ time, telling reporters “the council has no ambitions to hold on to power.” 214

The CNDD also vowed to crack down on drug trafficking and corruption. “Anyone who has misappropriated state assets for his benefit, if caught, will be judged and punished before the people,” Camara told an audience of hundreds of public representatives, including trade unionists, politicians, and clergy 215.
The mining sector was to receive particular attention as CNDD officials promised to undertake a review of all existing contracts and renegotiate those that were unfavorable.
The junta’s promises of reform proved empty.
Allies of Camara were granted key posts in government and on the boards of foreign companies operating in Guinea. The junta replaced regional administrators with loyal officers who ran state institutions by fiat. Already decaying public sector institutions slid into irrelevance.
The junta tightly restricted civil liberties and political dissent. Those who criticized the government or tried to oppose the CNDD were intimidated, harassed, or attacked.
Corruption, meanwhile, actually accelerated. When he took office in 2011, President Alpha Condé estimated that the junta spent more during its 2-year tenure than the country had spent in the previous five decades 216.

Mahmoud Thiam
Mahmoud Thiam

Control over the country’s lucrative mining sector was concentrated within the hands of the newly appointed Minister of Mines, Mahmoud Thiam, a former Wall Street banker who held U.S. and Guinean citizenship. Though he spent extensive time abroad even after assuming office, Thiam proved extremely influential. He engineered a shakeup of the mining sector that ushered in several multibillion-dollar deals and prompted audits of several major foreign mining companies’ activities in Guinea. In reality, the changes merely re-engineered long standing patronage networks to suit Guinea’s new rulers.

Frustrations among Guineans steadily mounted.
On September 28, 2009, tens of thousands of Guineans organized by civil society activists gathered at a rally held in Conakry’s main soccer stadium to protest the junta after it became apparent that Camara would not honor his promise to sit out the presidential elections scheduled for January 2010. Shortly after opposition leaders arrived at the protest, an armed contingent of presidential guards, soldiers, police, and militia gathered at the exits of the stadium and fired tear gas at the protestors before charging the stadium and opening fire.
According to Human Rights Watch, the attackers killed 157 protesters, raped dozens of women and girls, and left more than 1,400 wounded in the massacre that ensued 217.
Foreign governments and regional organizations tightened sanctions and called for a speedy transition to civilian rule.

Whereas many investors would shy away from such a turbulent political context because of concerns about political risk and damage to corporate reputation, the Queensway Group saw opportunity.

Every Crook on Earth Shows up in Conakry

To gain access to Guinea’s lucrative mining deposits and exploration rights in its potential offshore oil fields, the Queensway Group made contact with the junta soon after the December 2008 coup by approaching Guinea’s envoy to China, Ambassador Mamadi Diaré 218.

In early 2009, the Group sent a delegation to Conakry to meet with the junta. The Group’s main contact in Conakry was Mines Minister Mahmoud Thiam. Initially Thiam was skeptical, saying that:

“When a new government comes into power, especially an inexperienced one, there’s one phenomenon that never fails: every crook on earth shows up. And every crook on earth has the biggest promises, has access to billions of dollars of lines of credits, of loans.” 219

However, his concerns subsided after Sonangol CEO, Manuel Vicente, flew to Conakry shortly thereafter 220.

Still, other senior officials in the new government remained skeptical. After all, the Queensway Group was merely one of numerous international investors vying for a slice of Guinea’s resource bounty.
Hoping to separate itself from other contenders, Queensway sponsored a new national airline, Air Guinée International. Queensway hosted a celebration at Conakry International Airport to commemorate the launch of the new airline.
Camara was the guest of honor.
In attendance were Sam Pa and Lo Fong Hung, representing CIF and China Sonangol, the sponsors of the national airline. The Queensway Group was accompanied by a delegation that included François Chazelle, then Airbus Vice President of Sales, Executive & Private Aviation, who had a pre-existing business relationship with Sam Pa from China Sonangol’s purchase of three Airbus jets. Also part of the delegation was Ian Lee, then Regional Director for Africa and the Middle East at International Enterprise Singapore, a government agency that promotes Singaporean business interests abroad 221.

The partnership gained steam the following week, on June 12, 2009, when CIF and the CNDD signed a framework agreement that outlined plans to establish a joint venture company to be used as a vehicle for the Group’s investments in the country. CIF would be the majority partner in the joint venture, holding 85 percent of the company’s shares. (This 85-percent stake was ultimately divided between CIF and China Sonangol.) The Government of Guinea initially would carry a 15-percent stake with the option to purchase an additional 10 percent of the company’s shares from Queensway at a later date.

The framework agreement stipulated that the joint venture company would carry out projects in a broad range of sectors, including “energy, water treatment, electricity, transportation, housing, agriculture, fisheries, or in any other area of common interest.” 222
Indeed, as it had done elsewhere, the Group promised to undertake an ambitious and extravagant set of projects, including a new thermal power station and several large dams, as well as the construction of palatial government office buildings, valued at $650 million.
It would install a trans-Guinean railway to transport minerals from the country’s interior to a port on the coast. The Group promised to ship 100 buses to Conakry within 45 days of signing the agreement. The recently inaugurated airline, Air Guinée International, was also part of the package 223.

 Lo Fong Hung (front left) and Sam Pa (front right) sit in the front row of the airline inauguration ceremony in Conakry. The audience also includes François Chazelle (third row, far left), Mahmoud Thiam (far right), and Ian Lee (second row, far left).
Lo Fong Hung (front left) and Sam Pa (front right) sit in the front row of the airline inauguration ceremony in Conakry. The audience also includes François Chazelle (third row, far left), Mahmoud Thiam (far right), and Ian Lee (second row, far left).

As in Angola, CIF committed to financing the projects and would be in charge of design and implementation. The Guinean government, in turn, would facilitate CIF’s ability to obtain all necessary permits and approvals, and “applicable exemptions.”
Importantly, the framework agreement specified that during a period of 12 months (“the exclusivity period”), the joint venture company would have exclusive rights to undertake projects in all of the specified sectors. Indeed, the government agreed “not to undertake at any time during the exclusivity period, discussions, negotiations or enter into contracts or agreements with a third party on competing projects.” 224
Importantly also, a confidentiality clause stipulated that “all information exchanged between [the parties of the deal] in connection with this Framework Agreement and all documents, materials and other information … under this Framework Agreement and on negotiations related thereto … will remain strictly confidential to the parties, both during the performance and at the end of the Project.” 225

As sweeping as it was, the framework agreement was just that, the framework for a partnership. Many of the details of the partnership’s setup and operations still needed to be ironed out. The Queensway Group sent two envoys, Jack Cheung Chun Fai, a senior aide to Sam Pa, and Adrian Lian, to represent its interests in Conakry. For the Guinean side, Camara created a “steering committee” to coordinate CIF and China Sonangol’s investments in the country. Mahmoud Thiam served as one of the steering committee’s vice presidents 226.

The “Contract of the Century”

On October 10, 2009, just 2 weeks after the September 28 massacre, representatives from the Queensway Group and the Guinean junta signed a shareholders agreement to finalize the terms of their partnership. Vicente and Cheung signed the agreement on behalf of Queensway. Two representatives from the CNDD—Minister of Finance Mamadou Sandé, and Minister of Justice Siba Nolamou—signed the agreement for the junta.
Thiam called the shareholders agreement “the contract of the century.” Although the documents governing the partnership were not released to the public, Thiam provided the press with an overview of the agreement, likening the deal to the partnership between the Queensway Group and Angola:

The $7 billion will be financed by the CIF through the same mechanisms used for the $11 billion invested by the Chinese in Angola since 2005: a combination of their own funds, private and Chinese state banks’ credit lines, and by international banks upon their signature 227.

Sam Pa with an assistant, Conakry, June 2010
Sam Pa with an assistant, Conakry, June 2010

The shareholders agreement formally created a joint venture between the Queensway Group and the Guinean state called Africa Development Corporation (ADC).
Singapore-registered subsidiaries of China Sonangol and CIF were each to hold a 42.5-percent stake in the deal, and the Government of Guinea would carry the remaining 15 percent 228. The agreement stipulated that ADC would have several subsidiary companies for various business sectors operating under the label “Guinea Development Corporation” (GDC). ADC would own 85 percent of each subsidiary, and the Guinean state would control the remaining 15 percent. These companies included:

  • GDC Mining Oil & Gas
  • GDC Commercial & Logistics
  • GDC Water & Energy
  • GDC Transport.

Upon inspection, the terms of the deal were flagrantly unfavorable to the Guinean people. The agreement effectively provided ADC and the GDCs with exclusive rights to projects in a wide variety of sectors. Two clauses illustrate the scope of the deal:

The parties propose that ADC and the GDCs should be used as their joint venture vehicle to inter alia

  1. construct and/or provide services in the following sectors: water, electricity (including power generators, power plant, hydorelectric [sic] dams), housing, port, fisheries, telecommunication, airport, airline, logistics, road, railway and all such transportation, infrastructure and other utilities projects
  2. invest and operate diamond, iron, bauxite, gold, oil and gas and minerals concessions
  3. such other projects as may be agreed by the Parties from time to time (the ‘Projects’), in the Republic of Guinea….

Subject to the laws and regulations in force, The Republic of Guinea shall give full exclusivity to ADC and the GDCs in respect of the sectors identified and approved by the Parties, as set out in the proposed Projects to be undertaken by the GDCs in this Agreement and the Master Agreement (‘Projects Sectors’) … 229

In essence, the shareholders agreement granted ADC control of the country’s entire economy for as long as the junta saw fit.

The composition of ADC’s three-member board of directors provides a second example of the extremely disadvantageous terms. According to the shareholders agreement, the board would consist of three members, two nominated by CIF and China Sonangol and the third nominated by the Guinean government.
According to Africa-Asia Confidential, the three initial board members were Adrian Lian, Jack Cheung, and Thiam. Requiring only a simple majority for key investment decisions, this board structure guaranteed that the Queensway Group would permanently control all key investment decision making for the company (and country) 230.

The ADC’s shareholders agreement contained a confidentiality clause that each party “shall treat as confidential and not disclose or use any information of a confidential nature relating to ADC and the GDCs or the other Parties received or obtained as a result of entering into this Agreement.”
The junta had entered into an agreement that would have major implications for nearly every sector of the country’s economy yet it would be unable to discuss any specifics with its citizens about the investments or parties with whom it made this deal.
According to The Economist, the Queensway Group was “so pleased that it reportedly gave Guinea’s military ruler a helicopter as a present.” 231

Sam Pa (far left) meets with Prime Minister Doré (center right) and Minister of Mines Thiam (far right) in June 2010. (Source: Guinea 24.)]
Sam Pa (far left) meets with Prime Minister Doré (center right) and Minister of Mines Thiam (far right) in June 2010. (Source: Guinea 24.)]

The Queensway Group also helped alleviate the junta’s short-term financial woes. Media reports claim that in late October 2009, CIF’s Singapore-registered subsidiary transferred $100 million from an account in Hong Kong to the Central Bank of Guinea.
Thiam requested to use $50 million from this transfer for “emergency budgetary support” to keep the cash-strapped government afloat 232.
Correspondence between China Sonangol and the Central Bank of Guinea links Sam Pa to this bank transfer. A July 21, 2010 letter from Alhassane Barry, then Governor of the Central Bank of Guinea, to “Mr. Antonio Famtosonghiu Sampo Menezes”—a known alias of Sam Pa—confirmed that at least one $45 million bank transfer did occur from a Bank of China (Hong Kong) account under the same alias.

International criticism of the Group’s deals in Guinea came swiftly.

  • The U.S. House of Representatives passed a resolution condemning the deal and calling for its cancellation.
  • UK Minister for Europe, David Lidington, followed suit, criticizing the deals in an explanatory memorandum.
  • An analysis published by Chatham House stated that CIF “does not seem to regard the instability of military rule as a brake on its ambition. Far from it, the company seized on the coup to strike deals potentially giving it overwhelming control over the economy.” 233

Given the glaring deficiencies in the deal, the “contract of the century” was looking to be an economic debacle for Guineans.

Criticism Suppressed or Ignored

On October 8, 2009, several days before the deal was announced, Guinea’s Council of Ministers met to discuss “the various documents which were to govern the contractual relationship” with the Queensway Group. During this meeting, which was led by then Prime Minister Kabiné Komara, the Council of Ministers provided substantive feedback and raised several concerns about the draft shareholders agreement. However, upon review of the final version, Prime Minister Komara observed that the guidance of the Council of Ministers had largely been ignored and that “new provisions that [went] far beyond the mandate given to the Steering Committee of the Council … also emerged.” Prime Minister Komara then wrote to the steering committee responsible for coordinating investments by CIF and China Sonangol on November 4, 2009, urging that the Minister of Mines should renegotiate “certain clauses that were rather unbalanced for the Guinean side.234

Kabiné Komara
Kabiné Komara

When concerns expressed in the Prime Minister’s first letter went unaddressed, he wrote a second letter to the president of the steering committee.
On December 2, 2009, copies were also sent to the Minister of Mines as well as to the Ministers of Justice and Economy. Attached to the second letter was a six-page memorandum that provided a detailed analysis of the deficiencies of the shareholders agreement and guidelines to “facilitate and expedite the revision and renegotiation” 235 of the contract. The memo stated that the Council of Ministers specifically had decided during its October 8 meeting that exclusivity should not be granted to ADC or the GDCs, though it did recognize that CIF and China Sonangol could serve jointly as a strategic partner. “Priority would be given to the strategic partner,” Prime Minister Komara wrote, “under the condition that the prices it offers are more profitable and that its competence and reputation in the sectors concerned are proven.236

Furthermore, the Prime Minister contended that exclusivity should be granted to ADC only for a fixed term of no more than 12 months and that such status should only apply to projects agreed upon when the framework agreement was negotiated.

The memo reveals that the Council of Ministers was unaware that the steering committee planned to create a national mining company with CIF:

The Council of Ministers did not…discuss the issue of [the creation of] a national mining company. Moreover, it is unacceptable to promise now that a foreign investor will be a shareholder in such a company, as it would give it ipso facto ownership of all present and future wealth of the country 237.

The Prime Minister questioned the entire premise and validity of the arrangement. “The Government will not grant concessions in return for investment,” the memo stated bluntly before advising the steering committee, “this clause should be dropped altogether.” Moreover, Prime Minister Komara contended that the shareholders agreement could not be considered final, stating that “the document cannot be legally binding in the current context of the transition as the areas and subjects covered are sensitive, diverse and strategic.” 238

While few Guineans were privy to the details about the partnership with the Group, at least one activist faced consequences for speaking out against the deals.

Abdoulaye Yéro Baldé
Abdoulaye Yéro Baldé

Yéro Baldé, then Director of Project Financing at Guinea Alumina Corporation, lost his job after vocalizing concerns about the deals that the junta had negotiated with the Queensway Group.
On February 27, 2010, Baldé appeared on national television and criticized the deal. “There was something seriously wrong,” he later recalled. “The government had just raped women and killed innocent civilians, all investors were going away and yet this group stayed and signed. It’s hard to know what’s truly in it for Guinea in this contract.” 239

After Baldé’s appearance on national television, Thiam requested Guinea Alumina Corporation’s managers deal with their outspoken employee.
Baldé was fired shortly thereafter 240.

The CNDD’s Witch Hunt in the Oil and Mining Sector

As if exclusive rights to all of Guinea’s unclaimed petroleum and mineral deposits were not enough, Queensway also helped to expedite the CNDD’s shakeup of the oil and mining sector by underwriting audits of oil and mining firms already operating in the country.
Moscow-based United Company RUSAL Plc, the world’s largest aluminum company and a major player in Guinea’s mining sector, was the first subject of the audits.
One of RUSAL’s most lucrative assets in Guinea, the Friguia bauxite and alumina complex, was the main target of the CNDD’s mining sector review. RUSAL had purchased the Friguia complex in 2006 from the Conté government.
In May 2009, Thiam claimed to reporters that the Conté government had sold the complex to RUSAL for only $20 million dollars—a fraction of Friguia’s true worth—justifying the government’s legal proceedings to rectify the situation.

In early September 2009, a Guinean court determined that the 2006 sale of the Friguia complex was null and void.

According to Momo Sacko, a legal advisor to the Presidency at the time, this meant “that from now on, the [Friguia complex] is 100 percent owned by Guinea.” 241

On October 14, 2009, 6 weeks after the court decision voiding RUSAL’s ownership of Friguia and just days after the signing of the ADC shareholders agreement, the junta entered into a loan agreement with the Queensway Group. The agreement stipulated that CIF’s Singapore-registered subsidiary would extend a loan of up to $3.3 million to be used exclusively for the purpose of engaging Alex Stewart International, an international consultancy, “to perform an audit on specific mining operations in the Republic of Guinea, including RUSAL.” 242
The loan agreement was signed by Thiam, who insisted that CIF “was the only place where [the Government of Guinea] could get that money.” 243
In signing the agreement, Thiam also committed the Guinean state to pay CIF 2 percent of all funds that the junta recovered from Alex Stewart’s audit of the Russian mining giant as a “success fee entitlement.”

On January 13, 2010, Alex Stewart reported to the government that it was entitled to seek some $860 million in damages from RUSAL 244.

This meant that CIF could claim a success fee of potentially $19.2 million, a figure almost six times the original loan.
Additionally, per the ADC shareholders agreement, ADC was poised to receive exclusive rights to the Friguia complex seized from RUSAL.
RUSAL was only one of several investors targeted by the CNDD’s review of oil and mining contracts.
Houston-based oil company Hyperdynamics Corporation similarly became embroiled in a dispute with the junta that led to the forfeiture of approximately 70 percent of its offshore oil acreage. According to Africa-Asia Confidential, this holding fell directly into the hands of China Sonangol 245.

Ousmane Kaba, head of the CNDD’s audit committee, told reporters at a news conference that the audits should not be seen as “a witch hunt.” The audits, according to Kaba, were an attempt to understand how and by whom key decisions had been made previously. “If we do not try to know how our country was managed yesterday,” he continued, “we cannot claim to bequeath to our children a prosperous Guinea.” 246

The role of the Queensway Group—a potential competitor of RUSAL—in financing the audit was clearly a conflict of interest which undermined the integrity of the contract review process.
Another problematic aspect of the audit of Friguia (and the restructuring of the mining sector more broadly) were reports that Minister of Mines Thiam, Queensway’s key ally in Conakry, may have been rewarded financially for ensuring that CIF and China Sonangol benefited from the shakeup 247.

Thiam was implicated in another corruption scandal involving a major foreign investor that benefited from the mining sector review. Several reports claim that Thiam served as interlocutor for BSG Resources Ltd, a mining company controlled by Israeli billionaire Benny Steinmetz, to pay bribes to senior officials in the military. Thiam’s alleged role in these transactions subsequently became the subject of an FBI probe 248.

Queensway’s Changing Allegiances in Conakry

On December 3, 2009, the commander of the presidential guard shot and seriously wounded Captain Camara, the leader of Guinea’s junta. The following day, Camara was flown to Morocco for medical treatment.
General Sékouba Konaté, the CNDD’s Vice President and Defense Minister, stepped in to run the government.
Although many feared that the assassination attempt would send Guinea deeper into a crisis, leaders from the region worked in tandem with Konaté to hasten the country’s transition to civilian rule.

In January 2010, Konaté vowed that elections would be held within 6 months and, importantly, there would be no candidate from Guinea’s armed forces. Soon thereafter, Jean-Marie Doré, an opposition leader involved in organizing the September 28 protests, became interim Prime Minister and spearheaded preparations for presidential elections.

Although several of the Queensway Group’s key allies temporarily maintained their posts in Conakry, it became clear that major changes to the political landscape in Guinea were imminent. The Group sought to forge new relationships that would ensure that its presence in Guinea outlived the CNDD.

In late June 2010, the director of the communications unit for the interim Prime Minister dispatched a press release announcing a declaration of commitment between CIF and the interim government. The dispatch explained that Sam Pa and Thiam (still Minister of Mines) had come to meet with interim Prime Minister Doré. During the meeting, Sam Pa apparently touted China as an example of an economic model for African countries and extolled the value of the Queensway Group’s investments elsewhere on the continent.

“What China has achieved, Africa can do it too,” Sam Pa told Doré.

In a slideshow presentation, Sam Pa showcased the Queensway Group’s claimed accomplishments in Angola in an effort to demonstrate CIF’s “power and reliability.” 249 Sam Pa was reported to have suggested to the interim Prime Minister that the projects in Guinea could quickly get moving with the proper determination. Doré was quoted reciprocating Sam Pa’s enthusiasm by saying, “we want to express our commitment to working with China and, in particular, with you.” 250

Sam Pa’s courtship of the Prime Minister’s office contrasted sharply with the Queensway Group’s tense relationship with the Central Bank of Guinea during this time period. Shortly after Sam Pa met with interim Prime Minister Doré, the Queensway Group took steps to reclaim the funds it had transferred to the Central Bank of Guinea in November 2009 in the final months of the Camara junta 251.

In a series of letters in July 2010, Jack Cheung, Queensway’s representative in Conakry, wrote to the governor of Guinea’s central bank demanding that the remaining balance of the $45 million loan provided to the bank as “emergency budgetary support,” be transferred back to China Sonangol. Cheung threatened that there would be “serious political and legal consequences” if the government did not address China Sonangol’s concerns 252.

In his final demand letter, Cheung explained that the company’s auditor was “not satisfied with the controllability of the money deposited in the Central Bank of Guinea.… It is very important to transfer the money immediately…. Otherwise, our auditor and the department of finance of our group will lose confidence in investing in Guinea.” 253

Meanwhile, as Guinea’s political transition progressed, the Queensway Group heavily courted the two leading candidates in the country’s highly anticipated presidential elections.

According to Africa Confidential, the Queensway Group nominated one candidate’s wife, Mrs. Halimatou Diallo, to the board of Air Guinée International 254.

After Alpha Condé won the November 2010 presidential election, Queensway’s efforts to woo him intensified.
Just over a month after his inauguration, Condé travelled to Angola for a state visit. In addition to meeting privately with President dos Santos, President Condé was given a tour of several CIF and GRN project sites.
Angola’s Foreign Minister, George Chikoty, accompanied President Condé to the Novo Centradidade do Kilamba, the controversial public housing project linked to CIF on the outskirts of Luanda. Later he was escorted to Queensway’s cement plant located on the outskirts of the capital city 255.

Partnership with Bellzone

Hedging its risks, in May 2010, CIF also forged a partnership with Bellzone Mining, a relatively unknown firm predominantly owned by Australian investors. The company’s managing director and largest shareholder was an Australian national, Nikolajs Zuks, who held a 31.5-percent stake. CIF signed a series of agreements with Bellzone to jointly undertake projects in Guinea’s mining and infrastructure construction sectors on August 4, 2010.

The contract for the Bellzone deal was countersigned by Mines Minister Mahmoud Thiam and Minister of Economy and Finance Kerfalla Yansanetwo holdover representatives from Guinea’s junta.

Upon finalizing the agreement, Bellzone’s managing director called CIF “a highly regarded group of companies with a proven track record of developing large infrastructure projects in Africa.” 256
Listing the advantages of partnering with CIF, Graham Fyfe, Bellzone’s chief operating officer, highlighted the firm’s deep pockets, stating that “from a cash point of view, yes, they do have a lot of cash.”
Speaking at a mining conference in September 2011, Fyfe also cited the Queensway Group’s “intimate relationship with Sinopec” (one of China’s largest state-owned oil companies) and said that the firm likely has “relationships at the highest levels in China.”
The official referred to CIF’s legal and commercial team as “a challenging bunch of guys” willing to engage in “tough negotiating,” but said that overall Bellzone found that CIF was “easy to do business with.” 257
CIF and Bellzone agreed to jointly explore for iron ore at two sites in Guinea, Kalia and Forécariah. CIF agreed to finance the Kalia Iron Project, which would cost approximately $4.45 billion, in return for rights to purchase all of the mine’s output at market price.

Following the signing of the CIF-Bellzone agreement, Acting President Konaté signed a decree that gave Bellzone “an exclusive corridor” to construct railway and port facilities in order to export iron ore production from Kalia.” 258
As part of its agreement with Bellzone, CIF agreed to finance and develop the needed infrastructure.
At the same time, CIF and Bellzone formed a joint venture “to undertake the accelerated exploration and development program at CIF’s Forécariah iron permits that lie between 30 and 80 kilometres from the Guinea coast.” 259
Even after securing two productive mining concessions in partnership with Bellzone, the Queensway Group continued its attempts to wrest control of mining opportunities from rival firms.
During a September 2011 meeting with officials from the Government of Guinea, officials from the CIF-Bellzone team attempted to persuade the Condé government to grant it the rights to the Simandou iron ore mine, the lucrative concession run by Rio Tinto 260.
When The Sunday Times (UK) asked if his company indeed was trying to gain control of Simandou away from the rival mining giant, Zuks simply responded, “What’s wrong with that?” 261

Sorting through the Mess

After numerous campaign promises and public statements in the weeks following his inauguration in December 2010, President Condé took concrete steps to reform the mining sector. The newly elected president enlisted the services of billionaire philanthropist George Soros, founder of the Open Society Institute, to assist with a mining sector review process.
“Guinea is currently experiencing a new era,” Soros told reporters. “Its natural resources have in the past not been used to benefit the people. Guinea now has an opportunity to change this.” 262
The review process began shortly thereafter. In a June 30, 2011 letter of intent to the IMF, the government found that only one loan of $78 million was ever contracted by the Queensway Group over the 2 years of engagement and billions promised 263. Going forward the Government of Guinea promised to “refrain from any non-concessional borrowing or the issuance of guarantees under [the CIF and China Sonangol] contract.” 264

A new mining code developed by the Condé regime was approved on September 9, 2011. International civil society organizations, several of which served as advisors to the Government of Guinea throughout the reform process, lauded the new code, highlighting both the content and the process by which it was crafted.
The mining code mandated the publication of all mining sector contracts and established a formal commitment to the principles of the Extractive Industries Transparency Initiative. It established clear and transparent “procedures for the award, renewal, transfer, and cancellation of mining titles.”
The code required all companies in Guinea’s mining sector to sign a “code of conduct” and develop an anticorruption monitoring plan in coordination with Guinean authorities. Mohamed Lamine Fofana, the Condé government’s Minister of Mines, told reporters that “The new mining code will allow future investors in Guinea to work in transparency.” 265

On January 22, 2012, the Government of Guinea published the terms of reference for the Guinea Contract Review Process that outlined the institutions and procedures involved in the process.
In this way, the terms of reference aimed to: bolster the legitimacy of mining contracts; eliminate unchecked suspicion about contracts; prevent reforms from undermining investor confidence; and reinforce the legal basis of contracts. The document also outlined plans to establish two committees to oversee the process—the technical committee and the strategic committee—and identified the roles for each. In short, a serendipitous turn of events that catalyzed the country’s first democratic election since independence in 1958 brought a window of opportunity for reform in the mining sector.

On February 15, 2013, Guinea’s government published existing mining sector contracts online, making it one of the first African states to make all such documents available to the public 266.
Additionally, the Condé administration recognized the institutional capacity constraints it faced and sought technical and strategic assistance from leading international experts on extractive sector transparency.
Revenue Watch Institute (now the Natural Resource Governance Institute) partnered with the World Bank Institute and Columbia University to set up the Web site where Guinea’s mining contracts were published 267.
The same organization also partnered with the Institut Supérieur de l’Information et de la Communication and the Thomson Reuters Foundation to conduct a 10-day training program for 15 Guinean journalists on reporting on the oil and mining industries 268.

Even after the country’s transition to civilian rule, investigating corruption remained dangerous.

Aissatou Boiro, directrice nationale du Trésor
Aissatou Boiro

In just 8 months as Director of the Treasury, Aissatou Boiro gained a reputation for being a fierce opponent of corruption and had launched official investigations into the disappearance of millions of dollars from Guinea’s state coffers during the tenure of previous regimes.

On November 9, 2012, Boiro was shot and killed by a group of men wearing military uniforms.

Former colleagues believe the assassination was an attempt to thwart an ongoing investigation. “In Guinea all of the cases of large-scale embezzlement happen at the treasury department,” one former treasury official told Reuters. “(Boiro) became inconvenient for certain economic predators who are in the government.” 269

Keeping Pace

While the reform process struggled to maintain momentum, Queensway continued to advance its agenda in Guinea’s mining sector through its partnership with Bellzone.
On March 23, 2012, Bellzone announced that it had begun production and product stockpiling at its Forécariah mine.
On August 9, 2012, Bellzone signed an offtake agreement with Glencore, a Swiss commodities trading firm, for the latter to purchase a 50-percent share of iron ore produced at the Forécariah mine.
Less than a month later, on September 4, 2012, West African Iron Ore Group, also based in Switzerland, announced that it had reached a similar agreement with CIF for the purchase of the other 50-percent share of ore produced at the mine.
China Sonangol’s partnership with Bellzone did not go entirely smoothly, however. Trading at £92 (about US$147) a share in early 2011, Bellzone stock plummeted over the next 4 years to only £0.50 (about US$0.80) a share amid plunging iron ore prices and concerns over the viability of Bellzone’s projects in Guinea. When the company’s ability to finance its operations came into question, Bellzone looked to China Sonangol to provide an urgently needed £4 million (about US$6.4 million) short-term loan in August 2014.
The loan was secured against the entirety of the company’s mineral assets in Guinea and, once finalized, would require Bellzone to transfer an unspecified asset from one of its subsidiaries to another.
However, Bellzone suspended trading of its shares on September 21, 2014, as talks with China Sonangol over the loan facility stalled 270.
Turmoil continued at Bellzone for several months after trading suspended.
On September 5, 2014, Africa Mining Intelligence reported that Bellzone had entered into a “secret loan accord” with Panama-based PRVC S.A., a consulting firm headed by an Angolan businessman named Ezequiel da Cunha. The $860 million loan was not disclosed to the market, violating the rules of the London Stock Exchange 271.

In November 2014, China Sonangol negotiated a 51-percent stake in Bellzone and swiftly replaced the company’s board with its own 272.

By early December 2014, Bellzone had run into trouble with Guinean regulators. The Ministry of Mines warned the company that it had wrongfully dismissed local employees and failed to produce a plan for the safe transport of iron ore 273.
Meanwhile, the government’s new technical committee charged with reviewing Guinea’s mining sector found that Bellzone had engaged in an unapproved transfer of one of its mining licenses to an affiliated company and, on a separate occasion, pledged to sell its mineral rights without approval 274.

In early March 2015, Bellzone and China Sonangol finalized the terms of a multiyear loan to finance the company’s operations in Guinea. When trading of Bellzone’s stock resumed on March 5, 2015—after a 5-month hiatus—the company’s share price jumped 587 percent in one day.

Queensway’s operations in Guinea reveal the lengths to which it would go to preserve its ill-gotten source of wealth from an illegitimate government even after its allies fell from power.

Guinea’s political transition has provided it a chance to become a rare success story among fragile states seeking to install effective systems for management of the extractive sector.
At the same time, Guinea’s experience demonstrates the uphill battle that newly democratizing states face when seeking such reforms. Ultimately, Guinea’s ability to translate its mineral wealth into tangible development outcomes will depend on whether or not the government has the will and capacity to follow through with reforms.

J.R. Mailey
Africa Center for Strategic Studies. Washington, D.C.

Notes
213. Paul Melly, Guinea: Situation Analysis and Outlook, Writenet Report (UK/Geneva: United Nations High Commissioner for Refugees, 2008), 3-11.
214. “Guinea Ministers Submit to Rebels,” BBC, December 26, 2008.
215. Victor Omoregie, “Guinea: Junta Warns Mining Sector,” Vanguard (Nigeria), December 29, 2008.
216. “Guinea bankrupted by junta – President Alpha Conde,” BBC, February 22, 2011.
217. Bloody Monday: The September 28 Massacre and Rapes by Security Forces in Guinea (New York: Human Rights Watch, December 2009), 7-8. “Guinea massacre toll put at 157,” BBC, September 29, 2009.
218. “CIF, Beijing’s stalking horse,” Africa-Asia Confidential 3, no. 7 (May 2010).
219. Murray et al.
220. Ibid.
221. Author interviews, April 2012 and May 2012.
222. Framework Agreement between the Republic of Guinea and China International Fund, June 2009. Copy on file with the author.
223. “Blood and money in the streets,” Africa-Asia Confidential 2, no. 12 (October 2009).
224. Framework Agreement between the Republic of Guinea and China International Fund, June 2009.
225. Ibid.
226. Africa-Asia Confidential (October 2009).
227. Ibid.
228. Importantly, CIF Singapore is wholly owned by China Sonangol International (S), which is, in turn, owned by a BVI shell company called Newtech Holdings Limited.
229. Shareholders Agreement between the Republic of Guinea and China International Fund, October 10, 2009. Copy on file with the author.
230. Africa-Asia Confidential (October 2009).
231. The Economist.
232. Murray et al.
233. Daniel Balint-Kurti, “Guinea: Bought by Beijing,” Chatham House, March 2, 2010.
234. Kabiné Komara, “Directives relatives aux amendements et à la renegociation du Pacte d’Actionnaires entre la République de Guinée, CIF Singapour, et China Sonangol International,” memorandum, December 2, 2009. Copy on file with the author.
235. Ibid.
236. Ibid.
237. Ibid.
238. Ibid.
239. Murray et al.
240. “Who’s Who: Abdoulaye Yéro Baldé,” Africa Mining Intelligence No. 223 (March 2010).
241. Saliou Samb “Guinea court reclaims Friguia from RUSAL,” Reuters, September 10, 2009.
242. Loan Agreement between CIF Singapore and Alex Stewart International, October 14, 2009. Copy on file with the author.
243. Murray et al.
244. Tom Burgis, “Behind the Wrangle for Guinea’s Minerals,” Financial Times, June 5, 2010.
245. “The junta rewards new friends,” Africa-Asia Confidential 3, no. 1 (November 2009).
246. Alpha Camara and Antony Sguazzin, “Guinea Asks Rusal to Return Friguia Alumina Complex,” Bloomberg, September 10, 2009.
247. The Economist. Murray et al.
248. Jesse Riseborough and Franz Wild, “Late Guinea President Wife Said to Assist Steinmetz Probe,” Bloomberg, April 19, 2013.
249. “Le Patron de la China international Fund chez le Premier ministre: des beaux jours qui s’annoncent pour les secteurs énergétique et minier guinéens,” Guinee 24, June 19, 2010.
250. Ibid.
251. Correspondence between the Central Bank of Guinea and China Sonangol indicates that the “Deposit Agreement” for the transfer of $45,000,000 to the Central Bank of Guinea was signed on November 24, 2009. Copy on file with the author.
252. Jack Cheung letter to Central Bank of Guinea dated July 21, 2010. Copy on file with the author.
253. Jack Cheung letter to Central Bank of Guinea dated July 27, 2010. Copy on file with the author.
254. “Minister Thiam covers his bases,” Africa Confidential 51, no. 14 (July 2010).
255. “Guinea Conakry’s leader visits new Luanda’s city centres,” Agência Angola Press, January 28, 2011.
256. “Binding MOU reached with China International Fund,” Bellzone Mining PLC press release, May 24, 2010.
257. Graham Fyfe, “Bellzone’s Guinea Projects” (presentation to the 82nd Minesite Mining Forum, London, United Kingdom, September 15, 2011).
258. “Kalia Rail and Port Infrastructure Update,” Bellzone Mining Plc press release, July 4, 2011.
259. “Forecariah Offtake Agreement with Glencore,” Bellzone Mining Plc press release, August 9, 2012.
260. Danny Fortson, “Chinese eye Rio’s African jewel,” The Sunday Times (UK), May 6, 2012.
261. Ibid.
262. “New Guinean Mining Code to Tackle Corruption,” Natural Resource Governance Institute, March 3, 2011.
263. Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding from the Government of Guinea to the International Monetary Fund, dated June 30, 2011, 13.
264. Ibid.
265. Code Minier de la République de Guinée (Conakry: Ministère des mines et de la géologie, Septembre 9, 2011), 72-73.
266. Saliou Samb, “Guinea adopts new mining code boosting state share,” Reuters, September 10, 2011.
267. On February 15, 2013, the Technical Committee in charge of reviewing mining titles and contracts, Comité Technique de Revue des Titres et Conventions Miniers (CTRTCM), announced the official launch of its web site .
268. Emma Tarrant Tayou, “Training for Journalists Begins in Guinea,” Revenue Resource Governance Institute blog, November 26, 2012.
269. Boubacar Diallo, “Official: Guinea treasury chief assassinated,” Associated Press, November 10, 2012.
270. Tom Burgis, “Bellzone trading halted in fight over loan terms,” Financial Times, September 22, 2014.
271. “A secret loan accord for Bellzone Mining,” Africa Mining Intelligence No. 327 (September 2014).
272. “Chinese Directors Take The Top Jobs At Bellzone, Along With James Leahy,” Minesite, November 19, 2014.
273. “Government hits out at China International Fund,” Africa Mining Intelligence No. 334 (December 2014).
274. Ibid.

Simandou, justice et rancoeur vaine

Publiés sur Aminata.com un certain Ibrahima Sory Touré a tenu des propos désobligeants et discourtois, qui dénotent la rancoeur, la mesquinerie, la perfidie, la méchanceté et l’ingratitude. En effet, dans le malheur, il se désolidarise, rejette et condamne sa demi-soeur, Mamadie Touré, qui fut la compagne du Général-Président Lansana Conté. Ce faisant, il apporte de l’eau au moulin de Beny Steinmez dans le scanndale des contrats miniers du Simandou.
Lire également Conférence de presse surréaliste de BSGR
En effet le patron de BSGR avait, lui aussi, jeté un doute sur la relation conjugale entre Mme Mamadie et le défunt dictateur.

Mais la sorte verbale de M. Touré est tardive et vaine.

Et c’est dommage que Le Populaire — le journal de Conakry à la source de l’interview de M. Touré — n’ait pas cherché à vérifier les accusations auprès de sources tierces. Cela lui aurait permis  d’étoffer l’article et d’éclairer les lecteurs sur les querelles de famille et l’hostilité du sieur Sory contre sa parente.

Le journal aurait dû aussi corriger le titre en conjuguant le verbe au passé, car il ne saurait y avoir de mariage entre une personne morte et un être vivant. La relation conjugale prit fin à l’instant même du décès du vieux Général.

Ibrahima Sory semble évoluer en vase clos. Ainsi, il ne mentionne guère l’intervention de gouvernements étrangers visant à dénouer l’écheveau d’intrigues et de corruption entourant le dossier du Simandou, de 2008 à 2010.

Ainsi, par exemple, la justice de la Confédération Helvétique a ouvert une enquête à Genève.

Et les autorités fédérales américaines n’y sont pas allé de main morte. Dès que le FBI a constaté la violation de la loi dénommée Foreign Corrupt Practice Act, qui réprime la corruption étrangère sur le territoire US, les branches exécutive et judiciaires sont entrées en action. Depuis 2012, le scandale du Simandou a reçu l’attention qu’il mérite. Grâce à la diligence de la justice, les choses se sont précipitées et précisées ici aux Etats-Unis.
En conséquence, l’un des principaux acteurs impliqués dans l’affaire, le Français Frédéric Cilins, purge une peine de prison depuis l’année dernière.

[Lire Frenchman Cilins Gets Two Years ]

De même, les autorités fédérales ont procédé à la saisie des biens de Mme. Mamadie Touré en Floride. Elle a accepté aussi de coopérer avec le FBI dans la poursuite de l’enquête.

[Lire Florida Homes of Lansana Conté’s Wife Seized]

De son côté, flairant les risques pour ses activités, Beny Steinmetz a embauché des personnalités de poids comme consultants. Il s’agit de :

  1. Joe Liberman, ancien sénateur à la retraite de l’Etat du Connecticut et ancien candidat à la vice-présidence ; il fut le co-listier du candidat démocrate Albert Gore à la Maison Blanche en 2000,
  2. Louis Freeh, ancien directeur du FBI.

Du côté guinéen qu’a fait la justice  ? Que peut-elle faire aujourd’hui ?  Qu’envisage-t-elle de faire ? Réponse :  trois fois rien vraisemblablement.

Au lieu d’imiter le professionalisme et la probité des institutions étrangères, le régime du Président Alpha Condé — empêtré dans l’incompétence —  a fini par libérer M. Touré et ne semble plus s’interesser aux racines et ramification locales du contentieux. Ceal permet à Ibrahima Sory de se livrer à toutes sortes d’insinuations.
Mais ses déclarations n’atténueront pas et n’effaceront pas sa implication présumée dans le scandale.
D’une part, il semble croire que l’énormité de l’escroquerie se ramène à des conflits de personnes et de famille. D’autre part, il évoque le rôle d’Alpha Condé. A propos de ce dernier, M. Touré divague sottement lorsqu’il suggère que l’actuel président aurait pu être le parrain du mariage de Lansana Conté et de sa demi-soeur !! La démarche est gauche, désespéré et stupide, car M. Condé n’était pas au pouvoir en 2007-2008.

Ibrahima Sory devrait se livrer à un examen de conscience. Il devrait  se repentir pour son rôle —si minime soit-il— dans le vol du 21e siècle que furent les tractations et transactions autour du Simandou.

Hélas, non. Il se complait dans une innocence qui reste à prouver. Et il diabolise sa demi-soeur, aujourd’hui acculée ici en Amérique.

A mon avis, il devrait plutôt la respecter et la soutenir en ces temps d’épreuve et de vaches maigres. Ne serait-ce qu’en reconnaissance pour les avantages qu’il tira de leur consanguinité aux beaux jours et durant les années grasses de BSGR-Guinée.

De toutes les façons, l’Histoire l’a déjà condamné à travers le milliardaire soudanais, Mohamed ‘Mo’ Ibrahim, qui déclara en 2011, à juste titre,  que les Guinéens qui participèrent à la signature du contrat minier du Simandou au profit de BSGR, sont “soit des  idiots, soit des criminels, ou les deux”.
Les Guinéens empochèrent des miettes, certes. En l’occurrence quelques dizanes millions de dollars dispensés par BSGR. Mais peu après le diamantaire Israélien vendit 51% de parts d’investissements au géant brésilien Vale en échange de US $2.5 milliards. Il reçut immédiatement un chèque de US$ 500 millions.

[Lire Mining And Corruption. Crying Foul In Guinea ]

M. Touré a beau jeu de nier aujourd’hui qu’il fut un beau-frère de Lansana Conté.  Il n’en fit probablement pas moins partie du groupe dénoncé par Mo Ibrahim. L’opinion de celui-ci fit le tour de la planète sur Internet. Frappante et adéquate, sa formule résume éloquemment la faillite guinéenne.

Qu’Ibrahima Sory Touré en soit conscient ou pas, peu importe.

Les mots de “Mo’’ sonnent comme un verdict. Et ils pourraient  coller à la face et au dos de M. Touré, et lui convenir comme une paire de gants — ou de menottes.

Tierno S. Bah

Mining and corruption. Crying foul in Guinea

Africa’s largest iron-ore mining project has been bedeviled by dust-ups and delays.

“An emblematic tragedy” is how Sir Paul Collier, an adviser to the British government, describes the situation in Guinea—referring not to the Ebola outbreak (awful though he considers that to be) but the saga of Simandou, a mining project mired in allegations of corruption, expropriation and corporate espionage.

Simandou, a mountainous area in southern Guinea (pictured), has been called the El Dorado of iron ore. It is the world’s largest known untapped deposit of the stuff, with enough ore to sustain annual production of 200m tonnes—7% of global iron-ore output—for more than a quarter of a century. Better still, the ore there has unusually high iron content. The potential project cost for the mine, and the railway and port that would be needed to get ore on to ships, is $20 billion, making it Africa’s largest ever proposed mining venture. Guinea could do with the investment: it ranks 179th out of 187 countries in the UN’s human-development index. Wags, alas, have taken to calling Simandou “Simandon’t”. Exploration rights were first granted in the 1990s, yet the earliest anyone expects production to begin is 2019.

The saga oozes intrigue. Among its cast of characters:

  • Two of the world’s biggest mining groups
  • The Anglo-Australian Rio Tinto and Vale of Brazil
  • Beny Steinmetz, an Israeli diamond tycoon
  • George Soros, a billionaire philanthropist
  • Mark Malloch-Brown, a former deputy head of the UN
  • The wife of Guinea’s former leader
  • And, possibly, members of South Africa’s elite and security services.

It is, as one lawyer involved in the case wryly puts it, “a slightly Hollywood story”.

The opening chapter was the awarding of exploration licences for four blocks at Simandou to Rio Tinto in 1997. The northern two blocks were snatched back from the company in 2008, as the then dictator, Lansana Conté, lay on his deathbed. The ostensible reason was that Rio was not developing the site quickly enough. Months later the rights to these blocks were assigned to BSG Resources (BSGR), a firm indirectly owned by a Steinmetz family trust. With no upfront payment required, the deal appeared to be very attractive for BSGR.

Guinea iron ore mines
Mo Ibrahim, an African billionaire, asked whether the Guinean officials who agreed to it were “idiots, or criminals, or both”. After Conté’s death, BSGR sold 51% of its interest to Vale for $2.5 billion, $500m of which was paid immediately.

A new government, led by Alpha Condé, took power in 2010, after Guinea’s first democratic elections, and set up a committee to review past contracts. This concluded that BSGR got its blocks through bribery. As a result, the firm was stripped of its concession earlier this year. The government signed a new deal with Rio and its Chinese partner, Chinalco, to develop the two southern blocks they had held onto.

This involved Rio having to pay $700m, part of which was upfront taxes.

This wrangling has generated lots of work for lawyers.
Rio has filed a racketeering suit in New York against BSGR and Vale, claiming they conspired to steal the northern blocks.
BSGR has an arbitration suit against Guinea; Vale has one against BSGR.
The latter is sealed but understood to argue that BSGR duped Vale into buying an asset that was presented as legitimate but had been corruptly obtained. (Vale never paid the remaining $2 billion to BSGR, but says it spent a further $700m on Simandou.)
In an interview with Piaui, a Brazilian magazine, Vale’s former boss, Roger Agnelli, said of the union with BSGR:

“A guy can marry a former hooker and only discover years later that his wife used to be a prostitute.”

On top of these actions, BSGR sued Global Witness last year. The firm claims that the group violated Mr Steinmetz’s privacy by publishing “personal” data in its investigative reports on the case, arguing that since Global Witness is not a bona fide journalistic outfit, but an advocacy group, it needs to comply with higher data-protection standards. Global Witness denies this. The case, which is before Britain’s information commissioner and the High Court, could break new legal ground on the free-speech rights of lobby groups.

Last year a related case was settled out of court when Mr Steinmetz received a portion of his costs—but no admission of fault—from Lord Malloch-Brown (a former employee of this newspaper) and FTI Consulting, the public-relations firm of which he was a regional chairman. The tycoon had sued for breach of contract and defamation, accusing Lord Malloch-Brown of persuading FTI to cancel a contract to represent BSGR, in response to pressure from Mr Soros (an associate, and a patron of Global Witness).

And then there are government investigations into Simandou, in America, Britain and elsewhere.
Last week a court in Florida allowed prosecutors to seize property owned by Mamadie Touré, the widow of Conté, the late dictator, including restaurant equipment and houses, which the prosecutors believe was bought with the proceeds of corruption.
The firm alleged to have given the bribes in the American government’s complaint is not named, but it is unmistakably BSGR.

The next legal development, expected any day, will be a ruling by a judge in New York on a motion by defendants to have Rio’s racketeering suit moved to London, where the bar for proving its allegations would be higher.

Rio’s legal complaint is spicy stuff. It alleges that BSGR doled out $100m in bribes and that Frédéric Cilins, an associate of Mr Steinmetz, befriended staff at the business centre of the Novotel hotel in Conakry, the Guinean capital, to obtain copies of faxes detailing Rio’s plans at Simandou. The complaint also claims that Vale feigned interest in buying assets from Rio, months after the Brazilian group had begun secret negotiations with BSGR, in order to hoodwink Rio into showing it confidential information about Simandou’s geology. Seeing an opportunity to wrest control of part of the site from its rival “on the cheap”, Vale shared this data with BSGR in violation of a confidentiality agreement, Rio alleges.

Testimony and surveillance transcripts from an FBI investigation, made public by the Guinean investigating committee, are particularly illuminating. Ms Touré (who has turned co-operating witness) says BSGR offered her millions of dollars, jewellery, two Toyota Land Cruisers and a 5% stake in the project to persuade her dying husband to sign over the Simandou rights. Some of her allegations are supported by photocopies of cheques. In one transcript, Mr Cilins, having flown to Florida to meet her, urges her to destroy apparently corrupt contracts: “You have to destroy everything, urgently, urgently, urgently.” He promises more money if she does, saying the message comes “directly from the number 1”. When she asks who that is, he whispers “Beny”. In March Mr Cilins pleaded guilty to obstruction of justice and received a two-year prison sentence.

BSGR denies wrongdoing. The company says the seemingly damning documents were “fabricated” and plays down its relationship with Mr Cilins, saying he never signed a formal contract to represent the firm. The Guinean committee was established “to provide a pretext to illegally seize our assets in Guinea”, the company states. BSGR says it “looks forward to testing the evidence” at a forthcoming arbitration tribunal.

As for Rio’s racketeering claims, a lawyer for BSGR describes them as “amazingly fictitious”. Nevertheless, the trust that controls BSGR is said to have hired Joe Lieberman, a former United States senator, and Louis Freeh, former head of the FBI, to conduct an internal probe of the bribery allegations—though the firm will not say whether they have begun their work.

Spooky

The narrative being pushed by BSGR became clearer when it filed its defence in the Rio suit and a request for arbitration. It alleges that the election that brought Mr Condé to power was rigged with help from South African interests. These provided Mr Condé with financial and other support—including altering voter registers—in return for a promised stake in the nation’s mining assets, including the blocks snatched from BSGR, its arbitration filing states.
In another document it names 83 individuals and companies, including South African politicians, businessmen and spies, who could have “discoverable information” that might support its claims.

A spokesman for Guinea’s government says of the alleged election-rigging:
— BSGR has never provided Guinea with any evidence to back its allegations.
A spokesman for the Rainbow Coalition, of which Mr Condé’s party is a member, says:
— The suggestion that an outsider like Alpha Condé rigged the elections against a military insider [Cellou Diallo] beggars belief.
Guinea’s supreme court certified the poll result, and the Carter Centre, which promotes democracy worldwide, said the electoral process was “broadly consistent with the country’s…obligations for genuine democratic elections.”

Mr Condé has insisted he is cleaning up government after many years of corrupt dictatorship.

But some of the regime’s dealings with business raise questions about its judgment.

In May, for instance, the Common Court of Justice and Arbitration, the highest tribunal of a west African body overseeing commercial law, ruled that the government acted illegally in tearing up a container-terminal management contract with Getma International, a French company, in 2011 and handing it shortly afterwards to Bolloré, another French firm. The panel awarded Getma $49m in damages.

Guinea scored just 25 out of 100 in Transparency International’s latest corruption-perceptions index, placing it below Ukraine.

The closest thing the drama has to a central character is Mr Steinmetz. But seen from another angle, the colourful individuals, and even BSGR, are a sideshow. The big-picture story is a titanic battle between the giants of iron-ore mining—a business in which BSGR is a minnow—for control of the world’s richest deposits.

Some analysts think Rio’s intention all along was to go slow with Simandou, holding it as a defensive play to frustrate global competitors.

The company may have grown less inclined to mine the site: the iron-ore price has fallen by 60% from record highs in 2011. But it is probably also loath to let it fall into the hands of a rival that could reap rewards once the price rebounds. Tellingly, Mr Agnelli said of the joint venture with BSGR:
—It was strategically important for Vale not to leave Rio Tinto alone with all that ore.
So important, in fact, that some of the contract terms with BSGR were rushed (or even agreed only verbally), leading to much executive disquiet at Vale.

Rio says it is committed to developing its two remaining blocks. It is less clear how keen it is to regain the other two. The firm has said it no longer wants to increase its exposure to Guinea, but not everyone believes that. If the government were to auction them off—it is preparing a tender—interest could come from, among others, Vale, ArcelorMittal and Glencore.

But prospective investors will have to weigh up the risks. One is the outstanding legal challenge from BSGR. Bigger ones are political uncertainty—a presidential election is due to be held next year—and Ebola.

Tunnel vision

Company accountants worry more about the project’s steep costs. Simandou sits in a thickly forested mountain range—difficult terrain that greatly raises the cost of building the 650km railway (with 35 bridges and 24km of tunnels) to the coast. I
t doesn’t help that Mr Condé has insisted the tracks run through Guinea to a domestic port, rather than taking a shorter, easier route through Liberia (see map).

The government had wanted to take a big stake in the infrastructure but could not afford to. With help from the World Bank’s International Finance Corporation (IFC), Simandou’s managers are now looking to assemble a private consortium to finance, build and operate the railway and port.
Roadshows for potential contractors begin this month. The estimated infrastructure costs are $13 billion. Whether the project is economically viable will depend on the future trajectory of the iron-ore price.

Simandou could do wonders for Guinea’s emaciated economy (GDP per person is a mere $530).

Tom Butler of the IFC, which has a 5% stake in Rio’s project, describes it as “potentially transformational”: even at today’s deflated iron-ore price, it would produce annual revenue for the state of “a multiple of the current annual budget”. It could generate tens of thousands of jobs and, thanks to the railway, make agri-business in the country’s interior competitive for export.
Moreover, success would encourage investment in Guinea’s sizeable deposits of other minerals, such as bauxite, graphite and manganese.

But nothing will come out of the ground for at least five years. It could be closer to ten. A recent presentation by Glencore, seen by Reuters, predicted that Rio will not rush to produce iron ore from Africa because its focus in coming years will be on growth projects in Australia.

Meanwhile, the legal skirmishes will continue. The arbitration cases, for instance, could grind on for up to five years—prolonging this cautionary tale of the ugly recriminations that can follow when the rights to vast mineral riches are handed out in questionable circumstances.

The beleaguered people of Guinea deserve better.

The Economist
Dec 6th 2014

Summit and show. Promises and pitfalls. Part I

Earlier this month Washington, D.C. hosted the US-Africa Summit convened by President Barack Obama and the first lady, Michelle: respectively a direct and distant son and daughter of Africa.
Here are, summarily, my takes on the event.

Lionel Richie performs at the White House State dinner
Lionel Richie performs at the White House State dinner

Actually, the full schedule took five days: from August 1st to 6th. First, the White House organized the Washington Fellowship For Young African Leaders. President Obama quickly changed the name of the first class to the Mandela Washington Fellowship. Then, speaking to the young audience, Michelle Obama declared: “Believe me, the blood of Africa runs through my veins” to thundering applause.

Summit  and “summitis”

From time immemorial, state ceremonies have lavished in heraldry and protocol, titles and insignia, pageantry and pomp, etiquette and decorum. The Washington meetings complied with that tradition.
And, given the top-level functions of the participants from both sides —hosts and guests— the event logically bore the name of summit. However, on the flip side, summits have generated a neologism: summititis.  The word was coined to question the high frequency and low-output of such meetings. Its form includes the use of a suffix found in the name of such diseases and illnesses: encephalitis, meningitis, hepatitis, etc.

Presidents Obama, Kagame with daugher, Michelle Obama
Presidents Obama, Kagame, with daughter Ange Ingabire Kagame, Michelle Obama

On one hand, summits have become budget-intensive and a costly habit. On the other hand, they tend to yield little or nothing. And their aftermath stands way below the expectations expected from them. Hence the summititis nickname with its implicit criticism and open skepticism.

“Say You, Say Me” by Lionel Ritchie.

Does the Washington Summit belong in that category? The answer is, most likely, yes. And, as far as I’m concerned, here is why.

What the show didn’t tell

The Washington Summit was almost fully attended, with the exception, Sudan, Zimbabwe and Western Sahara.
It displayed a great show of state protocol and diplomatic tradition: honor guards, flags, motorcades, music, food, security services, etc. For the Washington Post, U.S.-African Leaders Summit noted that it was “not exactly a state dinner but lots of pomp and circumstance.”
In theory and de jure, the Washington Summit —like the United Nations meetings— brought together leaders who are equal de jure. Contrary to the G8 or G10, however, it was de facto a lopsided gathering between uneven stakeholders, i.e. between representatives of the richest country and those of the poorest continent on earth. No need for a reminder, though, that’s a known fact.

President Macky and first layde Marietou Sall
President Macky and first lady Marietou Sall

Senior cabinet ministers represented the presidents of Liberia and Sierra Leone; they stayed home to monitor the Ebola virus crisis. However, their neighbor, the president of Guinea, chose to minimize the threat. Accompanied by a strong delegation, he participated in the Summit.
Likewise, President Goodluck Jonathan attended in spite of hundreds of high-schools girls still captives following their abduction in the violent campaign waged by the terrorist group Boko Haram.

Soul singer Lionel Richie entertained the official dinner at the White House. Too bad that he was not peered with an African group or artist to underscore the Africa-USA cooperation mood of the Summit.
He could have jammed with a group from the continent. After all many jazz celebrities have done just that. In each of Africa’s five regions one finds court/royal musical traditions rooted in the pre-colonial kingdoms and empires. A a member of the Guinean delegation to the Symposium of the memorable FESTAC ‘77 (Festival of Arts and African Culture, Lagos-Kaduna, 1977), I recall that on opening day, the Nigerian Federal Government hosted a dinner for attending Heads of State and chiefs of delegations. Performed by Sory Kandia Kouyate, live Kora music and medieval Mande songs enlivened the ceremony. This Jeli genius grew up as a court poet in the Fuuta-Jalon (Guinea). He rose to international fame as a mezzo-soprano in the Ballets Africains of Fodeba Keita, himself a descendant of the illustrious Morifidian Diabaté, Samori Toure‘s ultimate companion, in glory and in exile.… Again, bards and praise-singers like Kandia Kouyate are found in Mande society and elsewhere in Africa. Kandia died, unfortunately, in December 1977, while performing. Just like Miriam Makeba in 2008.

Kouyate Sori Kandia, 1935-1977
Kouyate Sori Kandia, 1935-1977

Miram Makeba (1932-2008)
Miram Makeba (1932-2008)

(“Keddo” from Epopée du Manding by Kouyate Sory Kandia. 1968)

“The Click Song”  by Miriam Makeba, 1964

Arguably, the Washington DC Summit was predicated on two claims :

  • Africa is home to some of the world’s fastest growing economies
  • Democracy is gaining ground on the continent

Seriously!

Evidently, such assumptions brim with confidence and optimism. But their advocates are only entitled to their opinions, not to the facts. And, in this case, both proclamations fail Africa’s reality test. They are either thoroughly challenged or simply negated.

Obviously, the first assertion links the mining sector’s activity to economic growth, and possibly to development. Actually, mining is a primary sector investment that is is disjointed from the whole economy. Worse, the words mining and development are contradictory and antithetical.

The second contention may be less tangible, but it’s no less real and onerous. It reminds us democracy’s known prerequisites, among which literacy ranks high.  Let’s review the above pair of presumptions.

Extractive industry and African development: oxymoron and hype

For nearly a decade now, it’s been often said that Africa is the new, or next promise land for investment, growth, and, eventually, development.

For example, in 2012, Pulitzer Prize winner Nicholas Kristof asserted that “Africa is becoming more democratic, more technocratic and more market-friendly.” Read his “Africa on the Rise” paper.

Such claims are based on the propects for increased exports of raw materials: minerals, lumber, industrial crops. They have little to do with such strategic and vital matters as energy output, water management, food production, health care and education investments, research and development, environmental preservation, etc.

The much-vaunted pace of growth of some African economies is exaggerated. It is tied to a sector of the economy that has failed African peoples time and again. For one thing, it perpetuates the 1998 Colonial Pact, which assigned Africa the role of supplier of raw material and the passive market for cheap and overpriced manufactured goods. Colonial powers strictly enforced that rule. And post-colonial African rulers have followed suite. As a result, the continent’s economy has weakened further. Mining fuels corruption and poverty. It increases dependency on foreign aid. It ruins the environment. And, adding to a longstanding “brain drain”,  it pushes out a ceaseless flux of unskilled laborers toward the borders of “Fortress Europe” and America.
Paradoxically, it’s no secret that extractive industries repatriate more profit money than they invest on the continent. Year in, year out!

In essence, the terms African development and extractive industry are antithetical. They may sound somewhat attractive to foreign investors.  But for the majority of Africans, i.e., the rural dwellers, the pair is just a hyped and dubious oxymoron.

Blood DiamondA saying in Nigeria sums it about oil production and export, which led the giant Federation from boom to gloom. That assessment applies to other African countries and the exploitation of their natural resources.

Starring Leonardo DiCaprio and Beninese American Djimon Hounsou, the movie Blood diamond (2006) depicts the ravages and the cruelty of African mining.

In 2012, South Africa police gunned down 34 striking platinum miners in Marikana, near Johannesburg. They had grievances against the low wages paid by the mining conglomerate Lonmin. The tragic shootout was reminiscent of the Sharpeville massacre under the Apartheid regime in 1960.

South Africa. Miners police shootings
South Africa. Marikhana Platinum Mine police shootings. 2012

The Second Congo War (also known as the Great War of Africa) began in 1998. It is still going on at a lower intensity level. Wikipedia calls it “the deadliest war in modern African history, it has directly involved nine African nations, as well as about 20 armed groups. By 2008, the war and its aftermath had killed allegedly 5.4 million people, mostly from disease and starvation, making the Second Congo War the deadliest conflict worldwide since World War II. The war and the conflicts afterwards, including the Kivu conflict and Ituri conflict, were driven by, among other things, the trade in conflict minerals”:  diamonds, cobalt, coltan, gold and other lucrative resources.

Last but not the least, surveying the post-colonial history of my home country, Guinea, aka Africa’s “geological scandal”, observers acknowledge that mining and dictatorship have combined to keep a once-promising land among the 10 poorest countries of the world, since it gained independence from France in 1958. Last year saw worldwide press coverage of the licensing scandal of the Simandou’s rich iron ore deposits. The revelations prompted an FBI investigation, under the Foreign Corrupt Practice Act. So far, it has led to the arrest, prosecution, trial, conviction and prison sentencing of Frederic Cilins, a French citizen with ties to diamond billionaire Beny Steinmetz.…

Next, “Democracy and literacy. Dictatorship and illiteracy

Tierno S. Bah

All God’s Children Need Traveling Shoes

Maya Angelou
All God’s Children Need Traveling Shoes
Chapter 5

“A professor went on leave and I moved into his house for three months. When [my son] Guy was released from the hospital he settled into our furnished, if temporary, home.

The community of Black immigrants opened and fitted me into their lives as if they had been saving my place.

The group’s leader, if such a collection of eccentric egos could be led, was Julian. He had three books published in the United States, had acted in a Broadway play, and was a respected American-based intellectual before an encounter with the CIA and the FBI caused him to flee his country for Africa. He was accompanied in flight and supported, in fact, by Ana Livia, who was at least as politically volatile as he.

Sylvia Boone, a young sociologist, had come to Africa first on a church affiliated tour, then returned with sophistication, a second Master’s degree and fluent French to find her place on the Continent. Ted Pointiflet was a painter who argued gently, but persistently that Africa was the inevitable destination of all Black Americans. Lesley Lacy, a sleek graduate student, was an expert on Marxism and Garveyism, while Jim and Annette Lacy, no relation to Lesley, were grade school teachers and quite rare among our group because they listened more than they talked. The somber faced Frank Robinson, a plumber, had a contagious laughter, and a fierce devotion to Nkrumah. Vicki Garvin had been a union organizer, Alice Windom had been trained in sociology. I called the group “Revolutionist Returnees.”

Each person had brought to Africa varying talents, energies, vigor, youth and terrible yearnings to be accepted. On Julian’s side porch during warm black nights, our voices were raised in attempts to best each other in lambasting America and extolling Africa.

We drank gin and ginger ale when we could afford it, and Club beer when our money was short. We did not discuss the open gutters along the streets of Accra, the shacks of corrugated iron in certain neighborhoods, dirty beaches and voracious mosquitoes. And under no circumstances did we mention our disillusionment at being overlooked by the Ghanaians.

We had come home, and if home was not what we had expected, never mind, our need for belonging allowed us to ignore the obvious and to create real places or even illusory places, befitting our imagination.

Doctors were in demand, so Ana Livia had been quickly placed in the Military Hospital and within a year, had set up a woman’s clinic where she and her platoon of nursing sisters treated up to two hundred women daily. Progressive journalists were sought after, so Julian, who wrote articles for American and African journals, also worked for the Ghana Evening News. Frank and his partner Carlos Allston from Los Angeles founded a plumbing and electric company. Their success gave heart to the rest. We had little doubt about our likability. After the Africans got to know us their liking would swiftly follow. We didn’t question if we would be useful. Our people for over three hundred years had been made so useful, a bloody war had been fought and lost, rather than have our usefulness brought to an end. Since we were descendants of African slaves torn from the land, we reasoned  we wouldn’t have to earn the right to return, yet we wouldn’t be so  arrogant as to take anything for granted. We would work and produce, then snuggle down into Africa as a baby nuzzles in a mother’s arms.

I was soon swept into an adoration for Ghana as a young girl falls in love, heedless and with slight chance of finding the emotion requited.

There was an obvious justification for my amorous feelings. Our people had always longed for home. For centuries we had sung about a place not built with hands, where the streets were paved with gold, and were washed with honey and milk. There the saints would march around wearing white robes and jeweled crowns. There, at last, we would study war no more and, more important, no one would wage war against us again.

The old Black deacons, ushers, mothers of the church and junior choirs only partially meant heaven as that desired destination. In the yearning, heaven and Africa were inextricably combined.

And now, less than one hundred years after slavery was abolished, some descendants of those early slaves taken from Africa, returned, weighted with a heavy hope, to a continent which they could not remember, to a home which had shamefully little memory of them.

Which one of us could know that years of bondage, brutalities, the mixture of other bloods, customs and languages had transformed us into an unrecognizable tribe? Of course, we knew that we were mostly unwanted in the land of our birth and saw promise on our ancestral continent.

I was in Ghana by accident, literally, but the other immigrants had chosen the country because of its progressive posture and its brilliant president, Kwame Nkrumah. He had let it be known that American Negroes would be welcome to Ghana. He offered havens for Southern and East African revolutionaries working to end colonialism in their countries.

I admitted that while Ghana’s domestic and foreign policy were stimulating, I was captured by the Ghanaian people. Their skins were the colors of my childhood cravings: peanut butter, licorice, chocolate and caramel. Theirs was the laughter of home, quick and without artifice. The erect and graceful walk of the women reminded me of my Arkansas grandmother, Sunday-hatted, on her way to church. I listened to men talk, and whether or not I understood their meaning, there was a melody as familiar as sweet potato pie, reminding me of my Uncle Tommy Baxter in Santa Monica, California. So I had finally come home. The prodigal child, having strayed, been stolen or sold from the land of her fathers, having squandered her mother’s gifts and having laid down in cruel gutters, had at last arisen and directed herself back to the welcoming arms of the family where she would be bathed, clothed with fine raiment and seated at the welcoming table.

I was one of nearly two hundred Black Americans from St. Louis, New York City, Washington, D.C., Los Angeles, Atlanta, and Dallas who hoped to live out the Biblical story.

Some travelers had arrived at Ghana’s Accra Airport, expecting customs agents to embrace them, porters to shout—“welcome,” and the taxi drivers to ferry them, horns blaring, to the city square where smiling officials would cover them in ribbons and clasp them to their breasts with tearful sincerity. Our arrival had little impact on anyone but us. We ogled the Ghanaians and few of them even noticed. The newcomers hid disappointment in quick repartee, in jokes and clenched jaws.

The citizens were engaged in their own concerns. They were busy adoring their flag, their five-year-old independence from Britain and their president. Journalists, using a beautiful language created by wedding English words to an African syntax, described their leader as “Kwame Nkrumah, man who surpasses man, iron which cuts iron.” Orators, sounding more like Baptist southern preachers than they knew, spoke of Ghana, the jewel of Africa leading the entire continent from colonialism to full independence by the grace of Nkrumah and God, in that order. When Nkrumah ordered the nation to detribalize, the Fanti, Twi, Ashanti, Ga and Ewe clans began busily dismantling formations which had been constructed centuries earlier by their forefathers. Having the responsibility of building a modern country, while worshipping traditional ways and gods, consumed enormous energies.

As the Ghanaians operated an efficient civil service, hotels, huge dams, they were still obliged to be present at customary tribal rituals. City streets and country roads were hosts daily to files of celebrants of mourners, accompanied by drums, en route to funerals, outdoorings (naming ceremonies), marriages or the installations of chiefs, and they celebrated national and religious harvest days. It is small wonder that the entrance of a few Black Americans into that high stepping promenade went largely unnoticed.

The wonder, however, was neither small nor painless to the immigrants. We had come to Africa from our varying starting places and with myriad motives, gaping with hungers, some more ravenous than others, and we had little tolerance for understanding being ignored. At least we wanted someone to embrace us and maybe congratulate us because we had survived. If they felt the urge, they could thank us for having returned.

We, who had been known for laughter, continued to smile. There was a gratifying irony in knowing that the first family of Black Americans in Ghana were the Robert Lees of Virginia, where the first Africans, brought in bondage to the American Colonies in 1619, were deposited. Robert and Sarah Lee were Black dentists who had studied at Lincoln University in Pennsylvania with the young Kwame Nkrumah, and had come in 1957 to Ghana to celebrate its just won independence. They returned a year later with their two sons to become Ghanaian citizens.

The Lees and the presence of W.E.B. Du Bois and Alphaeus Hunton nearly legitimized all of us.

Dr. Du Bois and his wife Shirley Graham had been personally invited by the President to spend the rest of their lives in Ghana. Dr. Hunton  had come from the United States with his wife Dorothy  “to work with Dr. Du Bois on the ambitious Encyclopedia Africana.

The rest of the Black Americans, who buzzed mothlike on the periphery of acceptance, were separated into four distinct groups.

There were over forty families, some with children, who had come simply and as simply moved into the countryside hoping to melt onto the old landscape. They were teachers and farmers.

The second group had come under the aegis of the American government and were viewed with suspicion by Ghanaians, and Black Americans stayed apart from them as well. Too often they mimicked the manners of their former lords and ladies, trying to treat the Africans as Whites had treated them. They socialized with Europeans and White Americans, fawning upon that company with ugly obsequiousness.

There was a minuscule business community which had found a slight but unsure footing in Accra.

Julian’s circle had stupendous ambitions and thought of itself as a cadre of political émigrés. Its members were impassioned and volatile, dedicated to Africa, and Africans at home and abroad. We, for I counted myself in that company, felt that we would be the first accepted and once taken in and truly adopted, we would hold the doors open until all Black Americans could step over our feet, enter through the hallowed portals and come home at last.

Continued…