(Minews) - The U.S. Securities and Exchange Commission slapped Australian mining company BHP Billiton with a $25 million fine for practices tied to gifts offered to foreign government officials during the 2008 Summer Olympic Games in Beijing.
BHP agreed to pay the fine to settle the charges, the SEC said.
The mining company invited 176 government officials and employees of state-owned enterprises to attend the Beijing Games at BHP’s expense, the SEC said in its complaint. The sponsored guests were primarily from countries in Africa and Asia and received hospitality packages, which included event tickets and hotel accommodations, that were valued at $12,000 to $16,000 a package, the commission said.
The SEC said BHP failed to provide employees with specific training on how to evaluate the bribery risks of an invitation or how to complete a hospitality application form for officials invited to the Olympics. It didn’t have procedures to ensure meaningful preparation, review and approval of the requests, the commission said, in violation of the internal-controls provisions of the U.S. Foreign Corrupt Practices Act.
BHP, which neither admitted nor denied the findings, said it was addressing the SEC’s findings, including a new independent compliance group. The company, whose American depositary shares are traded on the New York Stock Exchange, said the SEC came up with “no findings of bribery or corrupt intent.”
“We have taken the appropriate remedial actions and developed a world-class compliance process,” BHP Chief Executive Andrew Mackenzie said in a news release. BHP has “learned from this experience and is better and stronger as a result,” he said.
BHP was an official sponsor of the 2008 Games and supplied the raw materials used to make the gold, silver and bronze medals awarded at the Games. Its sponsorship gave it rights to use the Olympic trademark in public announcements and advertisements as well as priority access to tickets and hospitality suites during the games, the SEC said. BHP has said in the past it believed its Olympics activities complied with the law.
Allegations that BHP used its access to woo government officials have dogged the company for years.
“BHP Billiton footed the bill for foreign government officials to attend the Olympics while they were in a position to help the company with its business or regulatory endeavors,” said SEC enforcement chief Andrew Ceresney.
BHP said a U.S. Justice Department probe into the matter was closed. Justice Department officials didn’t immediately respond to a request for comment. BHP said it was cooperating with a separate investigation by federal police in Australia.
As a result of BHP’s allegedly substandard oversight requirements, the SEC said the company repeatedly extended Olympic invitations to government officials connected to pending contract negotiations or regulatory dealings such as the company’s efforts to obtain access rights.
For instance, in 2007 BHP submitted an internal request to invite the governor of the Katanga province in the Democratic Republic of Congo and his spouse to the Olympics, including airfare, the SEC said. In response to a question from BHP’s ethics panel about whether the invitation involved a state-owned mining investment entity known as Gecamines—which BHP was then negotiating with about a copper deal—BHP said the governor “will have no influence in these dealings.”
Later in the year, BHP officials, after holding several meetings with the governor, said that having him as the mining company’s ally “could be a key to unlock a successful entry in a deal with Gecamines,” according to the SEC order. The governor, after accepting the invitation in January 2008, canceled before the Olympics began, the SEC said.
The SEC’s order also detailed Foreign Corrupt Practices Act compliance failings at BHP related to government officials in Burundi, the Philippines and Guinea. The settlement requires BHP to report to the SEC on the operation of its Foreign Corrupt Practices Act compliance program for a one-year period.
