22/11/2023
Sam Posted The Full Article
Australian miner’s plan to pour millions into pocket of Congo middleman
An Australian company offered to pay up to $US6 million ($9 million) to a middleman as part of a plan to win backing from an African spymaster, president, first lady and other high-ranking foreign officials in a fierce battle with Chinese interests over one of the world’s biggest lithium deposits.
The backroom efforts of ASX-listed AVZ Minerals to secure the support in the notoriously corrupt Democratic Republic of Congo are detailed in confidential company files obtained by this masthead.
Marius Mihigo (L) with President Felix Tshisekedi.
In one company briefing, AVZ chief executive Nigel Ferguson highlighted the influence of the middleman, Marius Mihigo, by stating it was “expected” he would become the DRC’s prime minister “at some stage”.
In another file, Ferguson defended wiring Mihigo an urgent $US1 million upfront payment without board approval by explaining how Mihigo could impose “his will” on unnamed Congolese figures involved in the Australian company’s fight to win the rights to mine lithium at the highly prospective Manono tenement.
The leaked company files suggest Ferguson offered to pay Mihigo a total of up to $US6 million, including a $US5 million success fee, without adequate due diligence or anti-corruption controls.
The success fee was never paid after the AVZ board amended Mihigo’s deal on advice from lawyers that it could expose the company to potential breaches of corporations laws. The company’s lawyers, DLA Piper, warned it was not clear that reasonable and appropriate due diligence was done during AVZ’s initial dealings with Mihigo.
DLA Piper’s lawyers also directed AVZ to “immediately adopt” a strengthened anti-corruption policy and to make sure Mihigo did the same.
Ferguson declined an interview request, while the company insisted it had conducted appropriate due diligence and reviews had identified no material probity issues.
The leaked files separately open a rare window into the fierce struggle between western and Chinese companies to control potentially the world’s largest untapped deposit of lithium, a critical mineral that has stoked tensions between Beijing and Washington.
Since May 2022, when AVZ was suspended from trading over disclosure concerns, more than 20,000 Australian retail investors have held shares with a paper value of nearly $2.7 billion. AVZ is due to hold its annual shareholder meeting in Perth on Thursday, where the company will be under intense scrutiny.
Transparency International’s Clancy Moore said AVZ’s arrangements with Mihigo were “absolutely shocking”.
AVZ managing director Nigel Ferguson.
CREDIT:YOUTUBE
Moore noted that negligible due diligence was initially done by AVZ when it made the $US1 million payment and that AVZ’s advisers confidentially told the company that a “top-notch” lobbying firm could have been hired in the DRC for around $100,000.
“Given the scale of the monies offered to the middleman, we would expect regulators to review this matter without delay,” Moore said.
This masthead is not suggesting Ferguson or Mihigo paid any bribes, only that the company’s conduct created a major corruption risk, given the inadequate due diligence that occurred. It is also not suggested that any benefits were paid to DRC officials who met Mihigo.
Ferguson detailed his decision to pay Mihigo in confidential briefing notes he sent his fellow AVZ board members in June 2022.
Ferguson noted that he had met Mihigo to workshop how to get things “done for us” in mid-2022 by “using contacts between MM… and PR05 [the DRC President Felix Tshisekedi] and PW05 [the first lady].”
Ferguson also wrote that in addition to the DRC president and his wife, Mihigo was to help obtain the backing of other “key players for us moving forward with the power to assist”, before listing those players as the chief of the DRC’s domestic spy agency and the minister of finance.
In another note describing a second meeting with Mihigo, Ferguson described his “detailed plan of attack”. It involved Mihigo attending “meetings with PR05 [President Tshisekedi]” as well as the country’s intelligence chief, finance minister and the president’s brother.
Next, Ferguson said he planned to personally brief the president, spy chief and finance minister in a “one-hour meeting with each”.
The town of Manono in the Democratic Republic of Congo.
CREDIT:WIKICOMMONS
This would enable Ferguson to “appraise of them of the misinformation circulating” from AVZ’s Chinese rivals, whom AVZ blamed for blocking its access to top DRC officials while sabotaging its African operations. It would allow the company to convince the president of “the clear and professional intentions of AVZ”, Ferguson wrote.
Ferguson planned to stay in the DRC for at least three more days “to allow for several potential follow-up meetings with [the president]” and other officials “to provide more comfort to officials around our intentions for the project and the country.”
A leaked letter written by Mihigo to AVZ states the “president requested specifically to keep confidential the conversation” he had with the Australian firm’s middleman.
Ferguson told his fellow directors he had already instructed AVZ to wire a “once off signature fee/retainer of US$1 million” to Mihigo.
“This is to include all expenses, travel, accommodation and personnel (up to 10) he requires to complete the tasks” over 12 months, Ferguson wrote.
If Mihigo delivered to AVZ the mining project and other government support, “a bonus of US$5m has been agreed to be paid in a mixture of cash and shares and only paid in stages”.
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The leaked documents reveal Mihigo’s hiring caused a furious response from director Peter Huljich, with the board ordering an urgent investigation by US private investigation firm Veracity.
Veracity’s inquiry not only warned of the bribery risks faced by AVZ from operating in the DRC but that Mihigo “appears to be receiving a fee that is well above market rate for his services”.
“While research has uncovered no clear indications of Mihigo’s involvement in corrupt dealings, it would not be unusual in the Congolese context for some portion of his fee to be used for bribes,” Veracity wrote. It also noted that Mihigo had “ties” to a former DRC presidential adviser “arrested on corruption charges” and a second former official “currently on trial for involvement in an alleged coup plot”.
Ferguson defended the upfront payment to Mihigo, saying he had already intervened to protect AVZ’s interests in a matter involving the DRC’s “national security” agency.
“That’s directly as a result of Marius [Mihigo] calling the people in question and imposing his will,” Ferguson wrote, adding: “We are confident that this [paying Mihigo] will produce results.”
At this time, the Australian miner was contesting not only Chinese companies it accused of acting corruptly, but lobbying from Chinese Communist Party officials.
One memo details how President Tshisekedi had discussed the intervention of “the ambassador of China” to “convince” him to side with AVZ’s Chinese commercial rivals.
A leaked strategy plan describes how AVZ sought to counter this with “US political assistance” and by using “3rd party assistance to promote project to US state [United States] as a critical project for Battery Minerals Supply Chain”.
AVZ’s lawyers, DLA Piper, told the board that if it had not redrawn the agreement with Mihigo and updated its anti-bribery and corruption policy, there would have been “unavoidable questions” about breaches of officeholder duties.
The firm said it was “critical” that the refashioned agreement and new anti-bribery and corruption policy were adopted and enforced by the board.
Transparency International’s Moore said AVZ’s dealings in Congo without appropriate care cast a dark shadow over the company.
“[Congo] is one of the world’s most corrupt countries and its mining sector is possibly the most corrupt prone globally,” he said.
“For an ASX-listed company to hand over a million dollars to a connected middleman [without appropriate controls] is absolutely shocking conduct.”
He said geopolitical competition for critical minerals like lithium was creating increased corruption risks.
In a statement, AVZ Minerals claimed Mihigo had proposed the bonus fee, which the board “unanimously rejected”.
The company also insisted it had conducted appropriate due diligence into Mihigo, including asking the Australian embassy in Zimbabwe about him.
“The company does not agree with your characterisation of the conduct of the company and its officers and employees,” it said.
“The company has never committed any act of bribery or corruption and has taken all practicable steps to ensure that its personnel and advisers/consultants have at all times abided by its anti-bribery and anti-corruption policy and applicable anti-bribery and anti-corruption laws.”
