Canada: RCMP searches Ivanhoe Mines Vancouver office in hunt for documents on Swiss bank account transfers

GEOFFREY YORK, AFRICA BUREAU CHIEF, JOHANNESBURG

PUBLISHED DECEMBER 15, 2022

The RCMP has searched the Vancouver office of Ivanhoe Mines Ltd. to seek information on $2.7-million in bank transfers from Ivanhoe to a Swiss bank account in connection with contracts for its Congolese mining operations, The Globe and Mail has learned.

The RCMP obtained the search warrant after saying it had reasonable grounds to believe that Ivanhoe violated Canada’s Criminal Code and Corruption of Foreign Public Officials Act between 2014 and 2018, according to a brief disclosure by Ivanhoe in an annual information form.

Ivanhoe co-operated in the search of its Vancouver office in November, 2021, and no charges have been laid against the company or its directors or employees, Ivanhoe said in the disclosure earlier this year.

British Columbia court documents in the case – obtained by The Sentry, a U.S.-based investigative organization, and shared with The Globe – contain a six-page list of documents and computer equipment that the RCMP was authorized to seize from Ivanhoe’s office. Some of the documents authorized for seizure were related to three bank transfers from Ivanhoe to the Swiss bank account of a company called Stucky Technologies from 2015 to 2018.

Ivanhoe retained Stucky Ltd., a well-known Swiss engineering firm, to work with Congo’s state electricity company on hydropower supplies for Ivanhoe’s giant Kamoa-Kakula copper project in the Democratic Republic of the Congo (DRC).

Stucky Technologies, however, is a separate company registered in the British Virgin Islands, according to documents obtained by The Sentry and shared with The Globe. The relationship between the two companies is unclear.

In response to questions from The Globe, Ivanhoe said it cannot comment in detail on the RCMP search because there is a continuing police investigation. It confirmed, however, that the search warrant authorized the seizure of documents relating to Stucky Ltd. and Stucky Technologies, as well as the DRC’s state-owned power company.

“Ivanhoe has worked co-operatively with the authorities in respect of the seized material, including in developing a process for the review of privileged materials, which is ongoing,” the company said Wednesday.

Ivanhoe’s stock price dropped by about 11 per cent on the TSE on Thursday after The Globe reported the RCMP search. Ivanhoe said on Thursday that it is planning “a formal response” to The Globe’s report and a separate report by The Sentry on the company’s license dealings in Congo. It said there were numerous inaccuracies, misrepresentations and misunderstandings in the reporting, but did not specify what they were. There was no official indication of when the response will be issued.

The mining project in Congo is a joint venture in which the biggest partners are Ivanhoe and the Chinese company Zijin Mining Group, each of which owns almost 40 per cent of the project. The Congolese government has a 20-per-cent stake. Ivanhoe says the mine will be the world’s third-biggest copper mining complex by 2024.

The RCMP search is an example of how Ivanhoe is increasingly under scrutiny for its operations in Congo, a vast impoverished country with huge mineral wealth. Congo’s murky governance and the dubious dealings between some Congolese officials and international companies have been exposed in several recent corruption cases involving commodities giant Glencore and others.

A new 48-page investigative report by The Sentry, published on Thursday, alleges that Ivanhoe received preferential treatment when Congolese authorities extended its exploration licences beyond the legal limit of 15 years, with some of these extensions gaining approval far more speedily than the average processing time for other applicants.

Around the time in 2018 when the first licences were due to expire, the report said, Ivanhoe created a company in which a minority ownership stake was allocated to the politically connected Congolese businessman Théophas Mahuku, a close friend of the family of Joseph Kabila, Congo’s president from 2001 to 2019.

In addition to other family connections, Mr. Mahuku was also a business partner of Mr. Kabila’s brother, Zoé Kabila, in several corporations in the mining sector and elsewhere, including at least one company that did business with Ivanhoe, The Sentry said.

It also reported that Mr. Mahuku gained a stake in another company established by Ivanhoe executives in 2020. Both of these Ivanhoe-created companies ended up in possession of exploration licences that should have expired, since the company was legally required to surrender them 15 years after they were obtained in 2003 and 2005, the report said.

Ivanhoe, in response to The Globe’s questions, denied receiving any preferential treatment and emphasized that it had followed all national and international laws. Processing times can vary substantially in different cases, it said. “In our case, we do expect that given our track record of discovery, development and job creation in the DRC, that we are considered a highly credible applicant, a factor that we expect any government would take into consideration in processing these types of applications.”

Asked about Mr. Mahuku’s ownership stake, Ivanhoe said the new DRC mining code in 2018 required that Congolese nationals must own 10 per cent of the share capital of Congolese companies holding an exploitation permit. “Mr. Mahuku holds the required 10-per-cent shareholding in two entities that hold exploration permits that are in the process of being converted into exploitation permits,” it said.

Ivanhoe also told The Globe that it is legally permitted to apply again for a new exploration permit when the old one expires, as long as it is the first to submit an application. It said it has sometimes followed this procedure to reapply for expiring permits.

In the past, Ivanhoe has publicly acknowledged that there could be questions about how it obtained some of its mineral rights in the DRC. In the “Risk Factors” section of its annual information forms, Ivanhoe warns investors that its title to mineral rights in the DRC could be subject to claims resulting from “irregularities” in the granting of its licences – or from “the use of administrative processes not specifically contemplated by the DRC Mining Code” when the licences were obtained.

The exploration licences were first granted in 2003 and 2005 to Ivanhoe’s predecessor company, African Minerals Corp., in the Western Foreland project area, near Ivanhoe’s main copper mine. Ivanhoe has often touted the Western Foreland area as having “tremendous” and “unparalleled” potential, although it is still undeveloped today.

After transferring ownership stakes to Mr. Mahuku in the companies that took control of the licences, Ivanhoe continued to tell investors publicly that it had 100-per-cent ownership of the licences, The Sentry’s report said. Ivanhoe, asked about this, told The Globe that it adheres to all securities laws in disclosures to shareholders on the nature of its permit holdings.

The Sentry report called for an investigation by the Congolese government, an independent internal investigation by Ivanhoe, and reviews by the Canadian and U.S. governments and financial institutions.

If the company had surrendered its exploration licences after 15 years as it was legally required to do, other investors could have developed the properties, creating jobs and benefits for Congo, it said. It called for official investigations of the issues relating to the licences.

“The people of the DRC deserve a government that puts poverty alleviation before the interests of insiders and power brokers,” The Sentry’s senior investigator, Douglas Gillison, said. “But in this case, the evidence suggests that, with a lot of money at stake, the law didn’t seem to apply to a top operator with high-level connections.”

In an earlier published report, Ivanhoe again came under scrutiny for its alleged dealmaking with politically connected insiders in Congo. The report, published in September by the Organized Crime and Corruption Reporting Project (OCCRP), an independent global investigative organization, was based on hidden-camera recordings of comments last July by Vidiye Tshimanga, who was then a close adviser to Congolese President Félix Tshisekedi.

In the video recordings, Mr. Tshimanga claimed to hold 20 per cent of an unidentified Ivanhoe mining subsidiary. He told unidentified people, whom he believed to be investors, that he could help them to receive mining licences and cut through bureaucratic obstacles in Congo in exchange for a stake in a joint-venture project. He later denied that these comments were true, saying that he had been entrapped into them. He resigned from his post and faces possible criminal charges in Congo after being briefly detained.

Ivanhoe, responding to The Globe’s questions, said it had “entered a term sheet with a Congolese entity beneficially owned by Mr. Vidiye Tshimanga” for a joint venture on certain exploration licences in early 2021. The entity later “reneged on the commercial terms of this agreement” and Ivanhoe launched international arbitration proceedings, which are still continuing, Ivanhoe said.

SOURCE: https://www.theglobeandmail.com/business/article-rcmp-obtains-search-warrant-for-ivanhoe-mines-office-in-hunt-for/

SEE ALSO: “Accumulation by Dispossession” by the Global Extractive Industry: The Case of Canada

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s