South African Firm, Waymark, Continues to Fuel Misgivings about Guinea’s Legislative Elections

SA firm focus of Guinea poll misgivings

16 Aug 2013 12:18 Liesl Louw-Vaudran

A UN-brokered deal has won over the opposition but there are still misgivings about the voters’ roll.

Opposition leaders in Guinea fear that the long-awaited legislative elections in the country, planned for next month, will once again be ­postponed.

They accuse Waymark, the South African company hired to draw up the voters’ role, of colluding with the national electoral commission (known by its French acronym Ceni) to rig the elections. They also question the price tag for the operation and object to Waymark getting the contract to replace the French company, Sagem, without going through a tender process.

Violent protests in which 51 people were killed broke out over Waymark and its local partner, Sabari, late last year and the elections have had to be postponed twice.

Waymark’s managing director, Pikie Monaheng, who flew to Guinea this week, denies allegations that the voter’s role was inflated with supporters of President Alpha Condé. According to Monaheng, Waymark’s system is foolproof and the delays have been caused by political wrangling between political parties in Guinea.

He said the cost of organising the elections to print six million ID cards had risen to “between $35-million and $36-million” because of inefficiency on the part of the government and the Ceni. In June, the government demanded that a plane be chartered from South Africa to get electoral material to the country for an election on June 30 that was again postponed.

The bitter acrimony and violence that erupted in the run-up to these elections date back to suspicions over the hotly contested 2010 presidential elections. Condé only managed to get 18% of the votes in the first round but, in the second round, managed to beat his opponent, Cellou Dalein Diallo, by a narrow margin. Since then, serious ethnic clashes have erupted and the economic revival promised by Condé in his campaign has not been forthcoming, eroding his support. Allegations of corruption involving large state tenders have further tarnished his image.

On July 3, the opposition agreed to lift its boycott of the upcoming elections, now slated for September 24, following a United Nations-mediated agreement. It was agreed that Waymark could go ahead with revising the electoral list on condition that the United Nations Development Programme (UNDP) and the International Francophone Organisation (OIF) verify the process. Waymark has also been excluded from the tallying process and the electoral commission has agreed to find another election operator for the 2015 presidential elections.

Opposition spokesperson Abou­bacar Sylla said this week it was imperative for legislative elections to be held because the country had been without a parliament since a coup d’état in 2008 and the opposition had been excluded from playing a role in the country’s politics.

“We are extremely worried,” he told the Mail & Guardian. “We agreed to go ahead with the election and to keep Waymark-Sabari in Guinea but there are still many problems with the voters’ roll.”

One of the country’s leading opposition politicians, Sidya Touré, who lost in the 2010 presidential elections, said the country was misled about who would pay for Waymark’s contract.

“The president told us this is a gift from President [Jacob] Zuma but then we were told Guinea has to pay,” Touré said.

South Africa granted the resource-rich Guinea development aid of $30-million in 2011. At least part of it was said would be used to fund the legislative elections. Experts say supporting South African businesses like Waymark is part of South Africa’s foreign policy strategy to combat French influence in Francophone Africa. Condé is seen to be one of the few strong supporters of South Africa in the region and Guinea could be very lucrative for South African mining companies, some of whom are already present in the country.

Monaheng said he was open about his relationship with the South African government and that it had supported Waymark’s work in Guinea and elsewhere in Africa.

“Surely there is nothing that stops the South African ambassador in Tanzania from calling up the government when they are looking for a company to do this work? This is what the Americans and the Europeans do,” he said. “There’s no secret that Alpha Condé looks at South Africans to assist Guinea. He wants to put an end to this thing of Europeans first and Africans last.”

Waymark first got involved before the 2010 presidential elections in Guinea when it won the tender to tally results but, even though software and equipment was shipped to Guinea, it was decided to tally the results manually.

The company was then hired by Condé to register and print ID-cards but, according to Waymark, pressure mounted to hold the elections and the ID cards will only be printed at a later stage. The focus has since been on the voters’ role.

Monaheng said he considered pulling out when the allegations of vote rigging and the violent protests over Waymark started. The government, however, convinced him to stay and agreed open dialogue with the opposition.

In 2012, Waymark agreed to change its encryption system following recommendations by the UNDP and the OIF, who did two separate audits of Waymark’s capabilities.

There were 3.8-million voters on the original voters’ roll that was handed over from Sagem to Waymark. Waymark then started a revision of the list and, through an elaborate process conducted around the country, added 1.9-million voters. About 300 000 names were scrapped from the original list during the process, which, according to the opposition, were fraudulently added. But they accuse Waymark and the Ceni of colluding to add additional voters from the Haute-Guinee province, Condé’s stronghold.

Opposition parties were again given the opportunity to verify the list during two weeks in July but Sylla says there were huge logistical problems with this process.

“We’ve written to the president of the Ceni about this but we still haven’t had a response,” he said.

Once all the parties approve the roll, voters’ cards need to be printed and dispatched.

Waymark says that its system is foolproof. It uses 10 fingers to register a voter, which excludes the possibility of people registering twice.

But Monaheng admits that the fact that people do not yet have their ID cards is a huge problem.

The South African government did not respond to questions by the M&G‘s deadline.

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“High Noon at the Guinea Corral,” by David Gleason: Are Steinmetz and Soros at Each Other’s Throats? Did South African Backers Help Conde Steal 2010 Election? Did Rio Tinto Pay $700M Bribe to Guinea to Hold on to So. Simandou?

by David Gleason
IF THERE was a sliver of doubt, there cannot be any longer — George Soros and Beny Steinmetz are at each other’s throats and this isn’t going to end happily for one of them.

Of the two, Soros is better known. A multibillionaire (I’ve seen numbers like $30bn), he rose to international fame (and infamy in Britain) as the man who shorted more than $10bn in sterling, triggering the UK’s withdrawal from the European Exchange Rate Mechanism, prompting a devaluation of the pound and earning himself $1.1bn. A Hungarian nonpractising Jew, Soros, 83, has been married twice and is currently courting Tamiko Bolton, 40, a New York pharmacist.

Beny Steinmetz, 56, allegedly Israel’s richest man, is said to be worth about $6bn. He inherited the Geneva-based Steinmetz Diamond Group from his father and later formed Beny Steinmetz Group Resources, also Geneva-based but managed out of London.

The Steinmetz Diamond Group continues to be diamond giant De Beers’s largest sightholder.

Steinmetz is a commercial hurricane. He rarely stays in one place for long. He’s a legendary deal-maker and I’m sure he has been burnt frequently.

Of course, buying, polishing and selling diamonds isn’t at all the same as developing a major mining operation. I am not at all certain as to what it was that persuaded Steinmetz to shift gear so dramatically.

A long article in The New Yorker (July 8) quotes Paul Collier of the Centre for the Study of African Economies at Oxford as taking “a dim view of businessmen like Steinmetz who have secured rights to natural resources they may not actually have the expertise to develop.”

That’s such a crappy observation I cannot believe an adviser to UK Prime Minister David Cameron would make it. I can think offhand of many men who did exactly that — Cecil John Rhodes, Ernest Oppenheimer and others. The issue revolves around the Simandou iron ore deposits in south-central Guinea, a large area containing what may be the largest high-grade undeveloped continuous iron-ore body in the world.

It is where most miners would not want it to be. Guinea is grossly undeveloped, its peoples mired in poverty, probably worse off now than when its first president, the irrational Sekou Touré, gave the French the boot and then proceeded to lock away in concentration camps and murder all those he thought might oppose him.

Touré died in 1984 but nothing got any better.

Meanwhile, along came mining house Rio Tinto, which qualifies in Collier’s book as able to develop a project. Rio secured the mining rights to Simandou north and south in 1997. It did nothing with them, and probably deep-froze them to hold off competitors while it developed its operations in the Western Australian Pilbara.

Steinmetz was given two unconnected areas, one north of Simandou, the other south.

The northern site wasn’t worth persevering with, but the south revealed an entirely new deposit, henceforth called Zogota.

When Touré’s successor Lansana Conté died in 2008, a military junta led by Moussa Dadis Camara, an army captain, took power. Dadis brought technocrats into the cabinet, one of them Mahmoud Thiam, to serve as minister of mines.

Thiam and his sister were smuggled out of Guinea during Touré’s reign — his father died in one of Touré’s concentration camps. Thiam was educated in the US, obtained an economics degree from Cornell University and went on to work for Merrill Lynch and UBS.

Accused in The New Yorker of being a Steinmetz champion, it was Thiam who told Rio Tinto it wasn’t complying with the terms of its mining leases. He stripped the company of its northern Simandou licence and awarded it to Beny Steinmetz Group Resources on the grounds that it had discovered the Zogota deposit.

Predictably enough, Rio Tinto was enraged. It claims it invested heavily in Simandou, but the time frame belies that — it doesn’t take nearly 12 years to start developing an iron-ore deposit, or begin rebuilding a railway line, or begin developing a deep-water port, at least some of which would be undertaken with international financing.

A number of things then transpired. Not in any order, the Guineans finally held an allegedly open, free, election. Alpha Condé, 72, who had lived outside Guinea for 50 years, won 18% in the first round. His principal opponent Dalein Diallo won more than 45%. In the delayed second round, Condé suddenly appeared with 53% and Diallo with 47% — an about-term in fortunes that invites deep suspicion.

It was at this juncture that stories began to emerge that South Africa had provided financial support (said to be about $18m) to Condé, used to help finance a South African company, Waymark Infotech, which provided election management. Stories circulated that Soros and South African companies were providing “advice” and, in one case (Palladino) $25m to Condé’s new government and that organisations financed by Soros had become prominent.

The latest twist in a story that is fast providing a slew of plots for thriller novelists is that Steinmetz’s group allegedly prevailed on Mamadie Touré, the fourth wife of the dying previous president, Lansana Conté, to procure the mining licence for Simandou. They allegedly provided her with money, diamonds and a guaranteed 5% stake in Simandou. She revealed all this to a curiously and conveniently unnamed cabinet minister.

A wire worn by Mamadie Touré recorded a damaging discussion in Jacksonville, Florida, between her and Frédéric Cilins, said to have orchestrated the bribes, and to have been close to Steinmetz. The FBI was listening. Cilins was arrested and released on $15m bail.

Meanwhile, Rio Tinto sold a portion of its southern Simandou licence to the Aluminium Company of China for $1.7bn and then paid $700m to the Guinean government in return for a guarantee that no further action would be taken against it.

What will happen now? Did Condé steal the election with help from backers in South Africa? Did Beny Steinmetz Group Resources bribe Guineans to get the licence? Did Rio Tinto pay an effective $700m bribe to hold on to southern Simandou? There’s lots more — but no space.

Who is your money on — Soros or Steinmetz?

Rogue State Headlines: Guinea Gov’t Says Security Forces Not Carrying Guns During March, Arrest of UFDG Opposition Youth Leader, Bailo Diallo, and South African Miner Eyeing Simandou Iron Ore Project

Government Denies Responsibility for March Shootings

The Security Minister said today that the government is not responsible for shooting opposition demonstrators because security forces were not carrying guns during the march. Six people were shot with live rounds on April 25, one died, Boubacar Diallo, 16. Note that several march participants said that police in civilian clothes infiltrated the march.

Security Minister Cisse said and later echoed by Governor of Conakry, Sekou “Resco” Camara, the government is bringing in a ballistics expert from the international area to determine the origin of the live rounds. The Guinean government has already exhibited its ability to swindle things of an international nature. UN representative, Said Djinnit found this out when the Guinean government passed off its pick for international dialogue facilitator as someone who was approved all parties . . .not. A shameless government, like Conde’s, does not announce bringing in an international ballistics expert only to have it point to its security services as the culprits.

Actually,Conde has a smorgasbord of state-sponsored forces at his disposal which he has spent a lot of time building up just for moments like opposition demonstrations. The opposition should demand that the investigation into the origin of live rounds be extended beyond the security services into Conde’s increasingly vast “irregular forces.”

Conde increasingly uses mercenaries and ethnic militias (Malinkes) trained in Angola to supplement security forces. During the march, opposition demonstrators reported that RPG Malinke militia members were evident along the perimeter of the march. A few of the injuries to opposition participants included stabbings, a preferred mode of attack by Donzos,or hunters, from the Forest region of Guinea. Before the government forces can be cleared of culpability, they have a large number of mercenaries and militiamen to check out.

UFDG Youth Leader, Bailo Diallo, Arrested

Bailo Diallo was pulled out of a taxi three days ago and taken to a police station in Matam. His condition and circumstances are not apparent. What was he arrested for? In Conde’s Guinea, being with the opposition and being a Peul, is sufficient.

South African Mining Magnate Eyes Simandou Iron Ore Project

After all the focus on BSRG for its shenanigans during the presidency of Lansana Conte to acquire mining rights associated with the Simandou iron ore project, it looks like a South African miner, Patrice Motsepe, owner of South African Rainbow Minerals likes what he sees at Simandou. Motsepe, South Africa’s first black billionaire has been in discussions with Guinean officials and states that, in addition to iron ore, he is interested in building infrastructure to go with it.

One day, we will know more about Conde’s South African connections, especially about Waymark, promises to Jacob Zuma, and the real reasons behind the Simandou drama that might lead to Motsepe’s making a move into Guinea’s world of lucrative mining. For full article: Motsepe eyes Guinea’s iron ore industry

Alpha Conde: Stealing Elections and the Guinean People’s Money in a Jaw-Dropping 90-Page Investigative Report (EN-FR)

Further below are links to both English and French versions of a report from the website Guinee 58 which, in meticulous fashion, documents the broad conspiracy mounted by Alpha Conde and his international backers to steal the 2010 presidential election. In addition, he uses his presidency to steal amazing amounts of the people’s money to repay backers and to increase his own wealth enormously.

Most of his backers are from outside Guinea, but were it not for the backing of General Sekouba Konate, Conde would not have succeeded in his quest for the presidency. During the campaign and the election, Konate, served as Guinea’s transitional president, and was the only person capable of moving all the necessary levers to keep Conde’s opponent, Cellou Dalein Diallo, and his UFDG party, in check. For his efforts, Konate received several millions of dollars which Conde acquired from his backers. Konate is as complicit as Conde in stealing the people’s right to a free and fair election.

ENGLISH:

Mafia networks Alpha Conde exposed by a very rich report

Wednesday, March 27, 2013 9:53

How the President Conde took power in Guinea, bears the mark of a Machiavellian plan preconceived set execution once the presidential elections were in sight.

To win the presidential elections from a meager score of 18.3% of the overall vote in the first round, there was a need to: monitor the Independent National Electoral Commission (CENI) gain the support of outgoing President and the Chief state – Staff of the armed forces, and build an alliance with a foreign power in Africa that could support financially and technically to gauge the process.

This is exactly what Alpha Condé, with the help of his son Mohammed and his guard, Aboubacar Sampil made ​​before the 2010 presidential elections. In addition, Alpha Condé has created his regime with financial and technological support of politicians and intelligence people in South Africa, with the help of the interior of the Electoral Commission (CENI) and with the support of President outgoing transitional government, Sekouba Konate. Since he took the reins of government in December 2010, President Conde and his son Mohamed and several of their close associates have been involved in many political and economic scandals, some are related to the desire of the President to allow those who helped him get elected to take a turn and others are designed to feed his personal wealth.

We invite you to read the full report:

ENGLISH VERSION

FRENCH:

Les réseaux mafieux d’Alpha Condé mis à nu par un rapport très riche

Mercredi, 27 Mars 2013 09:53

La manière dont le président Condé a pris le pouvoir en Guinée, porte la marque d’un plan machiavélique préconçu mis en exécution une fois les élections présidentielles étaient en vue.

Pour gagner les élections présidentielles à partir d’un maigre score de 18,3% du vote général au premier tour, il y a eu nécessité de : contrôler la Commission électorale nationale indépendante (CENI); acquérir le soutien du président sortant et le chef d’état-major des forces armées, et de construire une alliance avec un gouvernement étranger puissant en Afrique qui pouvait le soutenir financièrement et techniquement afin de jauger le processus.

C’est exactement ce que Alpha Condé, avec l’aide de son fils Mohamed et de son protège, Aboubacar Sampil, ont fait, avant les élections présidentielles de 2010. En outre, Alpha Condé a créé son régime avec l’aide financière et technologique de politiciens et d’individus du renseignement en Afrique du Sud, avec l’aide de l’intérieur de la Commission Electorale (CENI) et avec le soutien du président sortant du gouvernement de transition, Sekouba Konate. Depuis qu’il a pris les rênes du gouvernement en Décembre 2010, Condé le président, et son fils Mohamed ainsi que plusieurs de leurs proches collaborateurs, ont été Impliques dans maints scandales politiques et économiques, certains sont lies au désir du président de permettre à ceux qui l’ont aidé à se faire élire d’en profiter a leur tour et d’autres visent à nourrir sa richesse personnelle.

Nous vous invitons à lire l’intégralité du rapport :

La version française

David Gleason Article, “South Africans Litter the Pages of Guinea Report”

As set out previously in this column, there is a broad allegation that somehow a South African organisation called Waymark Infotech played a major role in the “theft” of the presidential election held in 2010.

The first round was convincingly won by Dalein Diallo, who collected 43.7% of the vote. His principal opponent, Alpha Condé, won 18.3%. The elections were being managed by a French company, Sagem, funded by the European Union, but in May 2010 the Guinean Central Election Committee appointed Waymark as the technical provider of the electoral registry.

Out went Sagem, and that meant a four-month delay between the first and second round. Condé won the latter with an astonishing 52.5% of the vote. Dalein Diallo won 47.5%. Condé was sworn in as president on December 21 2010.

South Africans litter the pages of Guinea report

by David Gleason, 14 March 2013, 05:37

FROM time to time over the last few months I’ve had cause to write about the goings-on in Guinea, an unhappy country sandwiched between other West African states, all of which have doubtful track records. The big difference is that Guinea is hugely mineral wealthy.

That wealth is the only possible reason for South Africa’s keen interest in it. As set out previously in this column, there is a broad allegation that somehow a South African organisation called Waymark Infotech played a major role in the “theft” of the presidential election held in 2010.

The first round was convincingly won by Dalein Diallo, who collected 43.7% of the vote. His principal opponent, Alpha Condé, won 18.3%. The elections were being managed by a French company, Sagem, funded by the European Union, but in May 2010 the Guinean Central Election Committee appointed Waymark as the technical provider of the electoral registry.

Out went Sagem, and that meant a four-month delay between the first and second round. Condé won the latter with an astonishing 52.5% of the vote. Dalein Diallo won 47.5%. Condé was sworn in as president on December 21 2010.

A wandering albatross has now deposited a monster report on my balcony, 86 pages of what it calls sensitive commercial information. South Africa and South Africans litter the pages: Tokyo Sexwale, Walter Hennig, Mark Willcox, two meetings in South Africa, one with President Jacob Zuma in April 2010, a Hein van Niekerk, said to be an intelligence officer, even old Pik Botha, and a plan to “pay back his (Condé’s) South African benefactors”. That’s when the Florus Bell/Palladino saga first hit the world headlines, a deal that needed to be hastily unscrambled when the details were unveiled.

The essence of the report is that the mining companies involved in Guinea are either going to be squeezed mercilessly or processes will be embarked upon which will see the ownership of mineral rights changing hands. It is certainly the case — so far, at least — that Rio Tinto was obliged to pay $700m to the Guinean government to ensure that its mineral rights would be left unchallenged.

Coincidentally, that $700m was about half the sum the Aluminium Corporation of China (Chinalco) paid to Rio for a stake in a portion of the fabulous Simandou high-grade iron-ore deposit.

I understand that the giant Russian aluminium producer Rusal, which operates the huge Dian Dian bauxite and alumina project, is under pressure to pay the Guinean government about $1bn, a sum calculated by Alex Stewart International as compensation for loss of earnings linked to the privatisation of the Friguia bauxite and alumina complex in 2006. Russian Foreign Minister Sergey Lavrov visited Guinea last month to resolve the impasse but came away, I am told, empty-handed.

Somewhere in the mix is Roger Agnelli, Brazilian mining house Vale’s former CEO. I gather he’s trying to winkle access to the remaining mineral rights over the Simandou deposit, although he has his former firm to contend with first — it holds a 60% interest.

Never far from any of this is Guinea’s neighbour, Mali. It is in the throes of putting down a revolt with strong religious ties and connections with some off-shoots of the al-Qaeda organisation. Guinea itself is reckoned to be 85% Muslim, so it must be assumed it will harbour some sympathy for Mali’s rebels.

It is a heady brew, destined for a showdown because a Guinean court has summoned opposition leaders to appear at a hearing today after nearly two weeks of protests in which eight people have died.

This comes just ahead of long-delayed elections for Guinea’s national assembly. The opposition has demanded that Waymark be replaced because some voter lists favour regions that support President Condé. Opposition leaders say they will be at court “accompanied by all our supporters”.

GUINEA MINING: Oh, What a Tangled Web is Weaved, When Alpha Conde and His South African Buddies Practice to Deceive

SOUTH AFRICAN OLIGARCH BEATS OLEG DERIPASKA TO THE POT IN GUINEA

John Helmer, Dances with Bears, June 13, 2012 7:29 am

TOKYO SEXWALE, SOUTH AFRICAN RICH GUY

Guinean officials who have tried to persuade Conde to continue the reforms initiated by former Mining Minister Mahmoud Thiam had hoped the new code would establish a transparent foundation for renegotiation of many of the Guinean resource deals. Those have enriched the country’s rulers, deprived the country of taxes and investment, and left its resources in the ground. The reformers suspect Conde of appearing to endorse the public goals while secretly bargaining for private gains to be channelled through newly created entities backed by fresh alliances. Sexwale, said a Conakry source, “and the South African gang were [President Conde’s] business partners through the ANC [African National Congress, the ruling South African political party] from before he became president. There is that trust and an agreement to do business that predates everything.”

MOSCOW—A group of South Africans, led by Tokyo Sexwale, has devised a scheme to take over mineral assetsand mining concessions in the west African republic of Guinea, which the government plans to renationalize after revoking deals struck by previous Guinean governments. The Sexwale scheme is a growing threat to Oleg Deripaska’s Rusal in Guinea, as the offers Deripaska has proposed to Guinean President Alpha Conde and his family miss their mark.

On the eve of Rusal’s annual general meeting of shareholders in Hong Kong, due on June 15, there has been no fresh warning to Rusal shareholders that their Guinean bauxite mines and alumina refinery are facing confiscation, and transfer to a state mining company controlled, indirectly, by the South Africans. These Guinean assets account for more than half of Rusal’s global bauxite reserves. On last year’s production results, the Guinea bauxite mines represent 36% of Rusal’s annual bauxite production of 13.5 million tonnes; 7% of Rusal’s alumina output of 8.2 million tonnes. Both totals were down below past-year volumes.

In its latest challenge, the Guinean government charges Rusal with fraudulent under-reporting of output figures. A billion-dollar claim by the Guinean government dating back to 2009 accuses Rusal of under-counting the volume of its bauxite and alumina exports, and under-paying on taxes.

The only reference Rusal has made to the potential losses is this line in the annual financial report for 2011: “Operations in these countries involve risks that typically do not exist in other markets, including reconsideration of privatisation terms in certain countries where the Group operates following changes in governing political powers.” In its May 2012 financial report, Rusal also claims that the government’s position in the Guinean courts “has no merit and the risk of any cash outflow in connection with this claim is low and therefore no provision has been recorded in this regard in these consolidated financial statements.”

The collapse of Rusal’s position in Guinea this year is one of the targets for legal challenges against Deripaska’s management by shareholding partners, Victor Vekselberg, Len Blavatnik, and Mikhail Prokhorov.

Rusal’s share price is currently fixing in the Hong Kong market at an all-time low of between HK$4.20 and HK$4.60 (54 and 59 US cents). At US$9 billion, the company’s value in the market is $2 billion less than its bank debts. The Russian government’s official and unofficial stake in the company is now worth about $2.6 billion, two and a half times less than it was worth when the Kremlin agreed to bail Rusal out of insolvency and default in November 2008; then underwrite Deripaska’s initial public offering of shares on the Hong Kong Stock Exchange in January of 2010.

Sexwale is one of South Africa’s wealthiest black leaders, with substantial holdings in the minerals and mining sector through his Mvelaphanda Group . He is also the Minister for Human Settlements (slums) in the current South African government, a critic of President Jacob Zuma, and a potent challenger at the next presidential election in 2014.

According to sources in Johannesberg, Sexwale is discussing with Eurasian National Resources Corporation (ENRC) a plan to buy into mining interests in Guinea. London-listed ENRC is one of Kazakhstan’s dominant mining companies, producing iron-ore, ferro-alloys, copper, coal, bauxite and alumina. Although ENRC is smaller than Rusal as a global bauxite and alumina producer, if Sexwale manages to oust Deripaska from Guinea, that would change dramatically. Currently, ENRC’s market capitalization is $8.1 billion.

Sexwale is believed to be the power behind two obscure British Virgin Island vehicles, one called Palladino Holdings and another called Floras Bell, which are managed by Olaf Walter Hennig. An investigation by David Gleason in Business Day of Johannesberg reports that a year ago Hennig arranged for a loan of US$25 million to finance the start-up of a new Guinean state mining company. The new mining code, drafted by Conde’s advisors, would grant that new state entity a free 15% stake in the country’s mining projects, and the option to buy another 20%.

Behind Hennig and the $25 million loan, according to Gleason and confirmed independently by sources in Conakry, the Guinean capital, are Sexwale; Mark Willcox, the chief executive of Mvelaphanda, and several other businessmen of South African, Polish, and British extraction. One of them reported by Gleason is Ian Hannam, a City of London financier who tried to arrange Rusal’s float on the London Stock Exchange in 2007, but failed.

Guinean sources say Sexwale, Willcox and Hennig are the control shareholders of the BVI entities. A report in the Sunday Times of London in May claimed that Hennig was a “shadowy middleman”, and that the Palladino loan had been signed in April 2011 by the Guinean finance minister and a local proxy for Palladino. The terms look as if they were copied out of the Russian loans-for-shares book. If the Guinean state entity defaults on repayment of the Palladino loan, Sexwale and his pals would be eligible to convert the debt into a 30% stake in the state mining company and its assets.

A senior Guinean official says this is one of several non-transparent deals arranged by President Conde which have convinced BHP Billiton to withdraw from concessions they currently hold in Guinean bauxite and iron-ore. Rusal’s concessions are a target, the source adds, because of the personal falling-out between Conde and Deripaska chronicled here.

Guinean officials who have tried to persuaded Conde to continue the reforms initiated by former Mining Minister Mahmoud Thiam had hoped the new code would establish a transparent foundation for renegotiation of many of the Guinean resource deals. Those have enriched the country’s rulers, deprived the country of taxes and investment, and left its resources in the ground. The reformers suspect Conde of appearing to endorse the public goals while secretly bargaining for private gains to be channelled through newly created entities backed by fresh alliances. Sexwale, said a Conakry source, “and the South African gang were [President Conde’s] business partners through the ANC [African National Congress, the ruling South African political party] from before he became president. There is that trust and an agreement to do business that predates everything.”

Other Guinean sources contend the Palladino loan is illegal, because it hasn’t been ratified by the Guinean parliament; because violations of US and UK anti-corruption laws are suspected, and because the government in Conakry has pledged that in return for debt relief from the Club of Paris government creditors, the World Bank and the International Monetary Fund (IMF), it cannot pledge or transfer national resource assets bilaterally.

“The [share] pledge made in this [Palladino loan] agreement by the Government cannot be implemented. Under Guinea’s procurement and asset disposal law, any transaction with state-owned assets with a value exceeding 800 million Guinea francs ($120,000) has to be made through a public tender process. [The Palladino loan] also violates Article 150 of the new mining code which says the same things. Perhaps the [Palladino] consortium, aware of the provisions of the mining code, part of which they may even have drafted, secured their agreement five months ahead of the release of the mining code in the hope the new law would not be retroactive. Too bad! The public procurement law overrides the mining code.”

A high Guinean source describes the Palladino scheme an “an attempt to seize the assets of the Guinean Government by the back door, on the cheap and risk free. Essentially, whoever is behind Paladino has found it easy to penetrate the higher echelons of the new Guinean administration. The $25 million loan, far from being a loan, can actually be perceived as ‘entry ticket’ or ‘signature bonus’. All the consortium has to do is bide their time seat and wait.”

An advisor in Conakry says that for Rusal to wait for Conde’s relationship with Deripaska to improve plays into the South Africans’ hands now. “Deripaska and Conde had a marriage of convenience that worked in the beginning and each side thought it would extract maximum value for very little in return. Neither was able to deliver to the other’s expectations.”

NEPAD Rep. Reports South Africa Funding Rogue States, Including Guinea in 2008-2009

DA:  SA Funding Rogue States

Aug 5, 2010 4:01 PM | By Sapa


The Democratic Alliance says it is dismayed by information presented to Parliament’s international relations portfolio committee showing South Africa has provided millions to “rogue” African states.


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Guinean soldiers wait to vote in Conakry June 27, 2010. Voters in Guinea went to the polls on Sunday, forming long queues for their first chance to freely elect a leader since the coup-prone West African state won independence from France in 1958.

Guinean soldiers wait to vote in Conakry June 27, 2010. Voters in Guinea went to the polls on Sunday, forming long queues for their first chance to freely elect a leader since the coup-prone West African state won independence from France in 1958.
Photograph by: LUC GNAGO
Credit: REUTERS

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The information provided by international relations and co-operation department director of Nepad, Harvey Short, showed more than R770 million of South African state funds had been used to prop up rogue states, and countries that had a history of human rights abuses or non-democratically elected governments, over the course of the past three years, and under the auspices of the African Renaissance Fund (ARF).

DA spokesman Kenneth Mubu said on Thursday a total of R600 million in economic assistance had been provided to Zimbabwe’s government under the ARF, even though the committee heard that South Africa did not track how the funding was spent.

A total of R300 million was transferred in 2009 as part of an economic recovery programme, a portion of it in the form of emergency food aid.

However, during Wednesday’s committee meeting, when he asked whether the department had monitored and evaluated how the funds had been used, the response was that they had not.

“Parliament has seen no evidence that any of this money was spent on those programmes to which it had been designated,” Mubu said.

The documentation provided “admits” government did not have a proactive planning mechanism, nor were monitoring and evaluation in place.

A total of R172 million had been handed over to Guinea Conakry, beginning in 2008, the same year in which the country underwent a military coup that saw a military junta led by Captain Moussa Dadis Camara.

“Disturbingly, the ARF continued to fund two more projects in Guinea in 2009 while it was under the rule of Camara, only suspending a third due to political instability,” he said.

In that same year the junta declared demonstrations illegal a day before a planned public demonstration in its capital city of Conakry.

However, according to media reports at the time, thousands of demonstrators defied this ban and assembled in a soccer stadium.

The junta ordered its soldiers to respond, and 157 people were left dead in the ensuing violence.

“Again, officials indicated they have no way of knowing where this money was spent, and how much of it, if any, actually went towards the causes earmarked.”

The ARF had, since 2004, allocated over R1.2 billion to fund projects in over 17 African countries.

The purpose of the fund and its stated guiding principles were described to include the promotion of democracy and good governance, socio-economic development and integration, and the prevention and resolution of conflict.

“Clearly these laudable objectives have been usurped by the department of international relations’ utter inability to oversee the implementation of the ARF, and the accountable distribution of funds.

“We have no direct evidence that funds have been misappropriated, but we have no evidence either that funds were spent on the appropriate projects, and instead evidence that no monitoring of the use of the funds is in place.

“In the absence of proof to the contrary, it is very difficult to believe that these funds have gone where they should have,” Mubu said.

The minister needed to get funding allocations at the ARF under control.