In December, Iluka Resources acquired London-listed Sierra Rutile Ltd for AUD$375 million (US$ 294 million). A post-acquisition investigation conducted by Iluka Resources revealed that Sierra Rutile’s former chief executive John Sisay oversaw bribe payments to senior government officials to secure mining licenses.
Iluka Resources found evidence that Sisay, who is one of the most powerful men in West Africa and is vying to become Sierra Leone’s next president, approved a AUD$110,000 (US$ 86,000) bribe payment funneled via a West African logistics company, Imatrix 101 Ltd.
"Although these licenses did not have value attributed to them during the acquisition process, and while the outcome of the re-application is not financially material to Iluka, the company considers it is vitally important to be 'walking the talk' in relation to expected standards of conduct," Iluka's chairman Greg Martin said.
The inquiry further revealed that Sierra Rutile spent more than AUD$ 50,000 (US$ 39,000) on Sierra Leone cabinet minister Diana Konomanyi’s international flights.
Iluka Resources said Wednesday that the bribery scandal involving Sierra Rutile was unlikely to have a material impact on the company.
However, despite Iluka Resource’s initiative to notify international authorities of Sierra Rutile’s impropriety, the firm could face prosecution, fines, a broken relationship with senior government figures in Sierra Leone and possible shareholder legal action, Sydney Morning Herald reported.
The failure to impose lighter measures on companies that self-report corruption is seen as a shortcoming in Australia’s system. If the bribery was disclosed in the US, by contrast, Iluka might stand a greater chance to mitigate sanctions or prosecution.
