Diamond Mining Company Octea Facing Claims It Owes Money to Sierra Leone Town and New York Jeweller Tiffany

[mo...@aol.com]

http://www.independent.co.uk/news/world/africa/diamond-mining-company-octea-facing-claims-it-owes-money-to-sierra-leone-town-and-new-york-jeweller-a6747481.html

Diamond mining company Octea facing claims it owes money to Sierra Leone town and New York jeweller Tiffany

Tiffany has announced it has deferred payment of $50m of loans it made to Octea to develop the mine in Koidu, where the town council now claims it will take legal action over £400,000 in unpaid property taxes

• David Connett
• Tuesday 24 November 2015
• 5 comments
  

Diamond prospectors filter earth from a river in Koidu, where diamonds were discovered in 1930

Diamond mining company Octea facing claims it owes money to Sierra Leone town and New York jeweller Tiffany

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Tiffany has announced it has deferred payment of $50m of loans it made to Octea to develop the mine in Koidu, where the town council now claims it will take legal action over £400,000 in unpaid property taxes

At a glance, the economically stricken town of Koidu in Sierra Leone has little in common with the plush elegance of New York’s premier jeweler Tiffany. Except that many of the diamonds on sale at Tiffany come from Koidu.

Diamond prospectors filter earth from a river in Koidu, where diamonds were discovered in 1930

Now the two have something else in common. Both say they are owed money by a mining company owned by one of the world’s richest mining magnates.

Israeli billionaire Beny Steinmetz owns Octea, which has a 25-year lease to operate Koidu’s diamond mine.

Despite sitting on some of the world’s most valuable diamonds – the 965-carat Star of Sierra Leone was unearthed there in 1972 – the company has been reported to be in trouble.

Tiffany has announced it has deferred payment of $50m (£33m) of loans it made to Octea to develop the mine while Koidu town council now claims it will take legal action over 2.7bn leones (£400,000) in unpaid property taxes – a peanut by any stretch of imagination.

Sierra Leone’s Mining Minister visited London last week for crisis talks with the company, its bank Standard Chartered, Tiffany and other groups with interests in the diamond mine.

With Sierra Leone reeling from the effects of the Ebola outbreak as well as a collapse in commodity prices, Mines Minister Mikailu Mansaray was eager to discover whether Octea is going to continue mining.

He has complained the company is no longer paying the government statutory social security payments for its employees, according to the newsletter Africa Confidential. In a letter quoted by the newsletter, Mr Mansaray warned he would take “necessary action within our legal rights… to cancel or not renew the existing (licence) and/or secure Octea’s assets in lieu of the company’s outstanding obligations”.

Beny Steinmetz, the billionaire owner of Octea, which has a 25-year lease on the Koidu mine

Octea’s London lawyers, Mishcon de Reya, have protested at any attempt to revoke the operating license. Mr Mansaray’s anxiety over Koidu’s future has been sharpened by the fact that a company led by Hollywood star Jeffrey Wright is champing at the bit to take over.

The star of films including The Hunger Gamesand the James Bond series, Mr Wright is a champion of socially responsible mineral mining. His approach is especially popular in Sierra Leone where revenues from so-called “blood diamonds” fuelled a vicious civil war killing an estimated 50,000 people and forcing tens of thousands more to flee. Mr Wright already runs a mining operation in Sierra Leone called Taia Lion Resources. He and his takeover partners were unavailable for comment on the negotiations.

Actor Jeffrey Wright already runs a mining operation in Sierra Leone

Guernsey-based BSG Resources (BSGR), which wholly owns Octea, denies facing financial difficulties. The company says it has invested $300m since 2004 and now directly employs 900 people. Its website says it was seeking to attract financing partners for the “injection” of between $600m-$1bn for other exploration and development opportunities.

Earlier this month BSGR’s chief executive, Brett Richards, resigned after a secret tape recording of negotiations between the miner and Sierra Leone government officials was leaked. During part of the meeting, Mr Richards recommended the government demand immediate payment of the fees his company owed it and BSGR needed to be “hit with a big stick” to motivate it.

Mr Richards resigned after the recording emerged. BSGR director Dag Cramer was later quoted as saying: “He was supposed to tell them ‘We’re staying, we’re paying.’ He goes down and says something else.”

Those involved in the London crisis meeting refused to comment afterwards but sources said the mining company pointed out the continued “challenging commercial environment” but claimed they remained committed to further investment at the mine. Further talks are expected early next year.

[Ade.Daramy]

An article, last Thursday, from the International Business Times, throws some more light on this matter.

It appears under the headline: Between The Lines Of The Panama Papers: How The Offshore Tax Scandal Robs Developing Countries – and includes these snippets:

 

“..Examples of this abound. The Panama Papers reveal how Octea, an entity based in the British Virgin Islands, was actually owned by Beny Steinmetz Group Resources, a company under investigation for alleged bribery in Guinea. From 2012 to 2015, Octea appeared to have exported rough diamonds from Sierra Leone worth more than $335 million, the African Network of Centers for Investigative Reporting found. In August 2015, for instance, exports from the city of Koidu constituted $7 million out of $9 million Octea's in total exports, yet taxes that it owed Koidu were apparently never documented. 

Octea also allegedly owes Koidu more than $700,000 in property taxes, the mayor, Saa Emerson Lamina, told ANCIR”

“In 2008, none of the major mining companies in Sierra Leone even reported profits, found a report by National Advocacy Coalition on Extractives. Many were registered in overseas tax havens, so even though mining accounted the vast majority of Sierra Leone’s total exports, it constituted less than 5 percent of total export values in 2007. Overall, shortfalls in taxes “could have funded many areas of essential needs met via public services,” the report concluded.”

http://www.ibtimes.com/between-lines-panama-papers-how-offshore-tax-scandal-robs-developing-countries-2349510

 

 

 

 

 

Ade Daramy

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[mo...@aol.com]

Ade,

Thank you for this very important update on the topical matter of OCTEA's seemingly shady dealings in regard to significant amounts of diamonds belonging to the people of SL. As I mentioned yesterday here on our serious SALONEDiscussion forum in reply to our patriotic friend, Sahr Sam Fanday, "[i]t is clear that this OCTEA saga is yet another example of the legendary lack of diligence of the current Sierra Leone government."

Accordingly, it deserves great scrutiny by the people of SL no less than the other similar catastrophically harmful instances of Pres. Ernest Koroma's seemingly limitless lack of diligence. Those instances include the largely avoidable deaths of at least 3.500 people in SL due to Pres. Koroma's unconscionable lack of diligence, and the disappearance under the same Pres. Koroma's administration of at least $8 million in donations intended to save innocent Sierra Leoneans from Ebola.

Among the questions that need to be urgently answered by an independent Special Prosecutor in SL, whose appointment I hereby respectfully call upon the government of SL to immediately make, are:

1.    Who in the SL govt. failed to collect the millions of dollars owed by OCTEA to the government of SL?

2.    Did the person(s) who failed to collect the millions of dollars owed by OCTEA to the SL govt. receive anything of value in exchange for failing to collect the taxes owed to the people of SL?

        (a)    If so, what was the nature, amount and timing of the bribe(s) that were paid to the person(s)?

3.    Who in the SL govt. was responsible for monitoring the valuation of diamonds by OCTEA upon which taxes owed to the SL govt. are determined?

4.    Did the person(s) in the SL govt. who failed to ensure that OCTEA did not undervalue its exports of diamonds mined in SL receive anything of value in exchange for failing to ensure that OCTEA correctly valued those exports?

        (a)    If so, what was the nature, amount and timing of the bribe(s) that were paid to the person(s)?

5.    Was President Ernest Koroma aware of the failure of OCTEA to correctly value Sierra Leone's diamonds?

        (a)     If so:

                    (1)    When and how did Pres. Koroma become aware of OCTEA's undervaluing of SL's diamonds it had mined?

                    (2)    Did Pres. Koroma take any action to address the undervaluing of SL's diamonds by OCTEA?

                                (A)    If so, what was the nature and timing of such action?

                                (B)   If not, did Pres. Koroma receive anything of value in exchange for failing to stop the undervaluing of Sierra Leone's diamonds by OCTEA?

                                         (1)    If so, what was the nature, amount and timing of the bribe that Pres. Koroma received from OCTEA in exchange for failing to act to stop OCTEA from undervaluing Sierra Leone's diamonds so that it would avoid paying the correct amount of taxes owed to the SL govt.?

6.    Did the suspension of the democratically elected Mayor of Koidu New Sembehun City Council (KNSCC), Mr. Saa Emmerson Lamina, in February 2016 by the government of SL headed by Pres. Koroma have anything to do with the insistence by Mayor Lamina that OCTEA pay taxes due to the Koidu New Sembehun City?

In closing, I hereby reiterate my respectful request that Pres. Ernest Koroma urgently appoint an independent and competent Special Prosecutor to investigate the above and other matters relating to the very serious allegations of corruption against OCTEA involving its mining activities in Sierra Leone.

Sincerely,

Moh'm Jalloh

     
                                


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