Sonali Paul and Lucy Hornby Melbourne and Beijing
The US government was investigating BHP Billiton for possible corrupt practices, the company confirmed yesterday, after media reports said it was being probed for its sponsorship of the 2008 Beijing Olympics.
Australia’s Fairfax Media reported that the US Department of Justice and the Australian Federal Police were probing allegations that the mining company had provided inducements, hospitality and gifts to Chinese and other officials.
The US Justice Department told Fairfax on Tuesday, in response to a freedom of information request, that it was conducting “law enforcement proceedings” involving BHP Billiton, which supplied the materials for gold, silver and bronze medals used in Beijing.
Australian police confirmed that they had been working with foreign counterparts and local regulators on Australian aspects of the US investigation.
The company said it had been co-operating with “relevant authorities”, and said it believed it had complied with all applicable laws in regards to its Olympics sponsorship.
“BHP Billiton is fully committed to operating with integrity and the group’s policies specifically prohibit engaging in bribery in all its forms,” the biggest mining company said.
BHP Billiton has been under investigation for possible corrupt practices since at least 2009, disclosing in 2010 that it had uncovered possible violations of anti-corruption laws.
Fairfax reported that between 2000 and 2008, BHP Billiton spent millions of dollars on a major Olympics sponsorship deal and hospitality package.
This involved more than 170 VIPs, including senior government officials and Chinese steel and mineral company chief executives, according to a former employee in China.
Unlike most consumer-focused sponsors, BHP Billiton’s involvement at the 2008 Beijing Olympics was targeted mostly at its close circle of Chinese buyers and employees.
“Most sponsorships focus on media buys and advertising. We’ve done almost none,” Maria McCarthy, the head of its Olympic sponsorship team, said in March 2008. “Instead, we are focusing on community leveraging, stakeholder leveraging that involves governments and customers, and our staff.”
A former BHP Billiton staffer involved in the event arrangements told Reuters that the company went out of its way to comply with Australian rules and compiled extensive documentation on its activities.
Fairfax said the officials entertained by BHP Billiton included the head of state-owned Chinese aluminium producer Chinalco and the secretary-general of the China Iron and Steel Association.
“The long-standing enforcement practice of the US Department of Justice has been to treat executives of state-owned enterprises as government officials for purposes of the anti-bribery provisions,” said Nathan Bush, an attorney at O’Melveny & Myers in Beijing.
An employee from China’s flagship steel maker, Baosteel, said BHP Billiton had held a roundtable for its iron ore clients during the Games, where they had discussed the steel industry outlook. He said lower-ranking staff attended.
“It was all part of their sponsorship, there was nothing out of the ordinary,” he said, adding that BHP Billiton gave participants Olympics tickets from its sponsorship package.
At the time, BHP Billiton was championing market pricing for iron ore instead of annual contracts, drawing an angry response from Chinese steel mills forced to pay much more for raw materials.
The mining firm was not an elite partner, but a local sponsor, as it had been for the Sydney Games in 2000. It paid Beijing organisers an undisclosed sum and provided materials for the 6 000 or so medals required for the Olympics and Paralympics. – Reuters