Obama administration’s Guinea mining deal hurts American businesses

A secret business deal between the government of Guinea and a multinational firm with a U.S. partner aided by the Obama administration’s wrongheaded foreign policy could cost American businesses billions.  Congress ought to investigate to protect American investors, expose any political shenanigans and prosecute the guilty.

The London Sunday Times first cracked the story June 3 of the secret $25 million loan between an offshore company, Palladino Capital 2, and the cash-strapped West African country.  The funds, according to the loan agreement, were to finance the start-up of Guinea’s state mining company, Heritage, but the cash allegedly disappeared and the terms of the loan include a default clause which gives the lender a juicy 30 percent stake of Guinea’s mushrooming mining assets.

A thirty percent share is especially significant given Guinea’s new mining code engineered by advisors billionaire trader George Soros and Palladino’s South African owner Walter Hennig.  The 2011 code gives 15 percent of all mining assets to Heritage, including another 20 percent at market rates.  That means foreign mining operators forfeit billions of dollars in assets and profits atop an 8 percent customs tax.

Further, the $25 million loaned by Hennig’s Palladino, according to former Guinean mines minister Mahmoud Thiam who spoke with South Africa’s Mail & Guardian, was a quid pro quo — a bribe — in return for Guinea President Alpha Conde’s campaign support.

Perhaps word the money was for a political payoff prompted Palladino’s May 24 loan recall.  Or the recall could be part of the secret deal to cash in on the loan by claiming a 30 percent share of Heritage, but now the cat is out of the bag.

Mohamed Fofana, the current minister of mines and the official who signed the 2011 loan with Palladino, rejects the allegations.  He claims the money went to Heritage Company, not Guinea’s government coffers and it is in the bank waiting to be invested.  He also rejects the allegation he ever agreed to “a $25 million loan in exchange for a third of our mineral resources.”

Fofana has a problem with the truth, however.  His rejection is refuted by the signed and sealed “Credit Agreement,” a copy of which Human Events acquired.   The April 12, 2011 document is between the Republic of Guinea and Palladino Capital 2 Limited.  Page 3 reads Guinea “solicited the lender” seeking $25 million to finance the creation of Heritage Company and page 9, paragraph 11.1 states the “lender may take” 30 percent of the shares of the “Heritage Company” if Guinea defaults “after a formal notice” and “within sixty (60) working days of the request by the Lender.”

This case warrants U.S. Congressional investigation to identify American interests and to protect our foreign investments.  Congress should ask the following questions.

First, was the $25 million loan a violation of U.S. law?  The answer depends on the true purpose of the loan and whether a U.S. entity was involved in the transaction.

The U.S. Foreign Corrupt Practices Act makes it an offense to offer money to a foreign official to influence that official in his official capacity.  Clearly, Guinea’s former mines minister Thiam alleges the money is a bribe to the nation’s president in exchange for a 30 percent share of Guinea’s mining concessions.

Thiam further alleges the president’s son Mohamed Conde and Palladino’s Samuel Mebiame, who signed the $25 million loan for the lender, tried to raise campaign funds in return for access to state mineral assets, according to the Mail & Guardian.

There is also a U.S. entity connected to the lender.  Hennig’s Palladino partners with U.S. investment fund managers Och-Ziff Capital Management in African Global Capital.  They formed the joint venture in 2008 “as a platform to invest in both private and public markets across Africa, with a bias towards natural resources and related businesses,” the partners said in a joint statement.

Second, is there a relationship between the $25 million loan and Guinea’s new mining code?  That is important because it would demonstrate Palladino’s motivation for making the loan, to wit insider information about Guinea’s plans to nationalize mining assets.  Mining receipts account for 70 percent of Guinea’s income.

In March 2011 President Conde invited financier George Soros and former British Prime Minister Tony Blair to advise him on how to best manage Guinea’s mining assets.  They recommended rewriting the mining code, seizing a portion of foreign company assets and renegotiating unfavorable provisions in existing contracts.

Palladino also consulted with Guinea officials regarding the new mining code.  In fact, Palladino’s consultations regarding its interest in Guinean mineral assets culminated in a signed agreement with Guinea in March 2011 just before the $25 million loan was executed.  The new mining code was published in September, six months after the loan that includes the default 30 percent proviso.

Third, is there a relationship between the Obama administration’s decision to reinstate favorable trade relations with Guinea and the $25 million loan?  That is important because it addresses factors that may influence the administration’s foreign policy decisions that potentially enrich some parties at the expense of other American businesses.

In October 2011 Obama restored privileged U.S. trade partner status under the African Growth and Opportunity Act (AGOA) with Guinea after revoking them following Guinea’s 2008 coup.  The published criteria for that decision include hosting free and fair elections, establishment of the rule of law and combating corruption.

Restoring AGOA status is desirable for Guinea because the U.S. Government restores trade preferences and other benefits such as political risk insurance to American firms through the Overseas Private Investment Corporation.  Guinea understandably wants the jobs that come with AGOA status and the protection OPIC offers because it incentivizes American businesses by mitigating risk in Guinea’s volatile markets.

But granting Guinea favorable trade status was a bad decision based on the published criteria.  Even though Guinea’s 2010 election was largely free and fair, the country still suffers from numerous problems.  Human Rights Watch cautioned that Guinea has seen new security force abuses, including killings, a concentration of power in the executive, weak implementation of the rule of law, and rising ethnic tensions.  Further, Guinea is creating regional insecurity, particularly in its role as a hub for transnational narcotics trade.

It is possible political lobbying and donations trumped what should have been an unfavorable trade status decision possibly due to its nexus with the $25 million loan.  Specifically, Och-Ziff Capital Management which is partnered with Palladino, the $25 million lender and possible big winner in the case of loan default, had a financial incentive to encourage restoration of favorable trade status with Guinea.  Further, it had the opportunity to influence the administration’s decision.

Public records indicate Och-Ziff uses the services of Washington lobbyists Fierce, Isakowitz & Blalock to promote its interests with the U.S. Government, which included five reported meetings with White House staff in 2011.  Also, Daniel Och and Dirk Ziff and their families, according to public records, are big donors to Democrat Party campaigns and especially Obama, which argue for additional clout.

Congress should determine whether Och-Ziff or other parties unduly influenced the administration’s Guinea trade status decision and whether that decision has any direct or indirect impact on Guinean mining operations.

Congress must ask these tough questions to determine the truth.  Clearly, the secret deal could hurt American mining businesses, exposes the administration’s wrongheaded foreign policy, and may violate our foreign corruption laws.

Source: Human Events

Alpha Conde in Paris: When You Steal an Election, the Opposition is Everywhere

Alpha Conde just finished a whirlwind tour of Brazil, Thailand and Malaysia. Before he returns to Guinea, he will make one more stop,in France, which perhaps will be his most important, and most tricky, visit yet. Conde hopes, and needs, to be received by France’s new president, Francois Hollande, but as of today, there is no such visit planned. Conde sent a message to congratulate Hollande for winning the election and, falling back on his “socialist” moniker, that is, if it ever applied, referenced their days as comrades and promised continued solidarity. It is unclear if Conde ever met Hollande.

Conde’s only political cheerleader in France is the former foreign minister, Bernard Kouchner, who has been a close friend of his since they met in school. The successful theft of the Guinea presidency can be attributed to many, but none more than Bernard Kouchner, who managed the process, from soup to nuts, to install Alpha Conde at Sekoutoureya Palace.

Conde lived in France for 59 years and it appears that most Guineans are still not clear about his education and the line of work he pursued there. He is called “Professor,” but is this a legitimately acquired appellation? Regardless, one thing Guineans do know is that Conde cannot legitimately be called “President.”

After you steal an election, you get hit between the eyes with the fact that you don’t have a mandate to govern. Without a legislature, you rule by decree and the arrogance of your arbitrary decisions builds resentment among the people. Those that didn’t vote for you and who know you stole the election, know that, for the people of Guinea, it is best if you leave office. You dig in your heels and, when not churning out decrees, you busy yourself by ordering human rights abuses, including extra-judicial killings and illegal detentions. Your violations of the constitution mount, as do claims that you are a traitor, and the people begin to call for your immediate ouster. But this is what the big armies, the ethnic militias, and assorted security forces are for, right? When the number of people who want you ousted balloons and you wake up to a huge march, such as the one on May 10, with 80,000+ opposition supporters in the streets, you have no other card to play, but to send in the security forces and repress the marchers. You do your best to play down the significance of the march, but the pictures and videos correct your lies. There’s only one thing left, to ban political marches altogether, as happened a few weeks ago. The opposition counters by saying you cannot ban freedom of speech and assembly and that it does not recognize the ban. The final chapter is a dangerous scenario in which the opposition will march in Conakry and it will be met with any one, a combination, or all of the following: military, police, ethnic militias, Donzos, the RPG arc-en-ciel, and foreign mercenaries. The more you do to repel the opposition, the more people will demand your removal. So, Mr. Conde, you are in a repeating, downward spiral and now you find yourself in Paris at Kouchner’s dining table waiting for a call from the Elysee Palace. Regardless of what happens in France, you have a mess on your hands at home.

But, wait, many of your countrymen are in Paris ready to rally in support of you. In fact, the rumor is that $250,000 was allotted to make sure that Guineans are on the streets to cheer you and that others will be sent to provoke a conflict with another group of Guineans — those who didn’t vote for you, who know you stole the election, who know you will use ethnic hatred to try to destroy them and who plainly wish you would just stay in Paris, drinking wine with your buddy, Bernard.

Whether your supporters are successful in provoking an incident or not tomorrow, the story will be told through their placards saying you are a usurper, a thief, a liar, a killer, an all-purpose human rights abuser and an embezzler, and with pictures and videos of it, the world will be informed.

Enjoy your visit in France and, in case you miss the protest by your political opposition, Guinea Oye will make sure to cover it, pictures and all.

Opposition supporters will be protesting Conde in front of France’s National Assembly on Saturday, June 30, from 2:00 – 6:00 PM.

Source: Guinea Oye

Alpha Conde accused of having sold Guinean mining interests in favor of South African ... for $ 25 million

The Sunday Times wrote that Alpha Condé has signed an agreement with a certain Walter Hennig, a wealthy white businessman from South Africa is among other things specializes in diamond mining in Angola and Congo.

Mining is the economic powerhouse of Guinea with more than 70 percent of state revenues. In September, Guinea adopted a new mining code. A committee was also established to "review mining contracts" signed by the previous regimes and that the new government elected in 2010 estimates not be in favor of Guinea. Mining companies have criticized the new code and argued that several clauses will discourage mining investment in Guinea.

The Sunday Times wrote that he had access to documents which indicate that already in April last year - or months before the Code was adopted by the National Council of Transition the body that takes the place of the Parliament- Mines Minister Mohamed Lamine Fofana has agreed a loan of $ 25 million with Palladino Capital, a company controlled by Hennig and registered in the British Virgin Islands, a tax haven known. Hennig created in 2003 the firm Palladino Holdings as a vehicle for "mining, energy and other assets in Africa."

The loan of $ 25 million was never publicly revealed Guineans, initialed in the margin or in the national budget although the President Alpha Conde has said that "contracts which commit Guinea will be published on the Internet." Sources told the Guinéenews © Minister of Mines executed an order of Alpha Condé, whose son Mohamed Conde would deal with Paladino, Mvellapenda (group Tokyo Sexwale) and Och Ziff, an investment fund. The agreement was initialed by the Guinean side Mohamed Fofana and Kerfalla Yansané, the Minister of Finance and the South African side by a certain Samuel Mebiane, listed as "agent" for Palladino.

One of the clauses is controversial is the provision which states that if the Guinean government can not repay the loan, the company will convert the debt to a 30 percent in the operations of the Guinean national mining company SOGUIPAMI that was created by presidential decree adopted by the NTC in August 2011. However, under the tutelage of the IMF is, because research HIPC expenditures Guinea are controlled by the Bretton Woods institutions and it is very probable that the repayment of $ 25 million to a billionaire may be seen from askance by the mandarins of Washington announce the fight against poverty in Guinea and most want to know how the 25 million was spent.

Potentially - observers note - 25 million loan that will bring billions of dollars to Henning for participation in the project Guinean Simandou iron mine only - owned by Rio Tinto, Chinalco, and Vale Beny Steinmetz - is at least 10 billion. Guinea also options for investments in mining projects with mining giants such as BHP Billiton, Arcelor Mittal and Rusal.

But more importantly, note sources contacted by Guinéenews © This type of agreement is in flagrant violation of the Mining Code, which stipulates in Article 150 that "The State reserves the right to sell all or part of its interest in cash, without pre-emptive rights of the other shareholders of the mining title holder, through a bidding process open and transparent. " In addition it was found that the president's son would have a direct or indirect, that would be another violation of the Guinean Constitution, which stipulates in Article 39 that: "During his tenure, the President may, by itself, for a member of his family and even others, buy or lease a property in the area belongs to the State, without the consent of the Constitutional Court under the conditions set by law. '

The agreement was signed with Palladino less than a month after qu'Hennig has signed a Memorandum of Understanding under which another vehicle, Flores Bell, would become a "partner" with the government in the mining industry.

The British newspaper concludes that this revelation may become an embarrassment to Tony Blair, former British Prime Minister who is supposed to advise Conde for better governance through its NGO "Africa Governance Initiative."]

Source: Guinéenews

also see Commission for Africa