The US government is investigating top global miner BHP Billiton Ltd for possible corrupt practices, the company confirmed, 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 (DOJ) and the Australian Federal Police (AFP) were investigating allegations that BHP provided inducements, hospitality and gifts to Chinese and other foreign officials.
The Justice Department told Fairfax, in response to a freedom of information request, it was conducting “law enforcement proceedings” involving BHP, which supplied the materials for gold, silver and bronze medals used in Beijing.
Australian police confirmed they had been working with foreign counterparts and local regulators on Australian aspects of the US investigation, without providing further details.
BHP said it had been cooperating with “relevant authorities,” and in response to media queries, 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,” BHP said in an e-mailed statement.
The world’s biggest mining company has been under investigation for possible corrupt practices since at least 2009, disclosing in 2010 that it had uncovered possible violations of some anti-corruption laws.
Fairfax reported that between 2000 and 2008, BHP spent millions of dollars on a major Olympics sponsorship deal and hospitality package which, according to a former China staffer, involved more than 170 VIPs, including senior government officials and CEOs of Chinese steel and mineral companies.
Unlike most major consumer-focused sponsors, BHP’s involvement at the 2008 Beijing Olympics was targeted mostly at its close circle of Chinese buyers and employees.
A former BHP employee involved in the Olympics arrangements said BHP went out of its way to comply with Australian rules and compiled extensive documentation on its activities.
Fairfax Media said the officials BHP entertained included the head of state-owned Aluminum Corp of China (Chinalco, 中國鋁業) and the secretary-general of the China Iron and Steel Association, which coordinates industrial policy for China’s steel sector.
“The long-standing enforcement practice of the US DOJ and SEC [Securities and Exchange Commission] has been to treat executives of SOEs [state-owned enterprises] as government officials for purposes of the anti-bribery provisions,” said Nathan Bush, an attorney specializing in anti-corruption regulations with O’Melveny & Myers LLP in Beijing.
An employee from China’s flagship steelmaker, Baosteel (寶鋼), said BHP held a roundtable for its iron ore clients during the Olympic Games, where they discussed the outlook for the steel industry. He said lower-ranking employees attended.
“It was all part of their sponsorship, there was nothing out of the ordinary,” he said, adding that BHP gave participants Olympics T-shirts and tickets from its sponsorship package.
At the time, BHP 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.
In 2010, after receiving questions from the US’ SEC, BHP said it had discovered possible violations of anti-corruption laws mainly related to some exploration projects that it had already terminated at the time.
It said then that the SEC’s requests for information did not relate to any activity in China or any of BHP’s sales and marketing activities.