Kinross’s clash with contractors over West African gold mines – by Geoffrey York and Eric Reguly (Globe and Mail – October 5, 2015)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

JOHANNESBURG and ROME — Kinross Gold Corp., facing an investigation in the United States over alleged corruption at its West African mines, has portrayed itself as the victim of “noise” by contractors who fail to win bids at its massive gold mine in the Sahara Desert in Mauritania.

In an interview last month, before the U.S. investigation was disclosed, Kinross executives in West Africa insisted their contracting procedures are transparent and fair. They denied local claims that the company faced pressure by the Mauritanian government to hire politically connected contractors, but they acknowledged the losing bidders have sometimes alleged wrongdoing in the contracting process.

“They go to some politicians and then you hear noise about it,” said Mike Sylvestre, regional vice-president for Kinross operations in West Africa. “There does seem to be a lot of noise.”

Kinross said on Friday it had received subpoenas from the U.S. Securities and Exchange Commission and the U.S. Justice Department, seeking information about alleged “improper payments made to government officials and certain internal control deficiencies” at its gold operations in Mauritania and Ghana.

With the help of Canadian and American law firms, the company has conducted its own internal investigation into the allegations since August, 2013, when whistle-blower allegations surfaced. Under the company’s whistle-blower policy, any allegations have to be examined, even if they are thought to be relatively minor.

The Toronto company, which declined to comment beyond the contents of its Friday media statement, did not reveal the identity of the whistle-blower and may not know his or her identity. It said it is co-operating with the SEC and Justice Department probes. In its Friday statement, Kinross said its own probe “has not identified issues that Kinross believes would have a material adverse effect on the company’s financial position or business operations.”

Typically, whistle-blowers are current or former employees, though in this case contractors or former contractors should not be ruled out. Kinross has let go hundreds of employees at its Mauritanian operations since 2013, when the slide in the gold price triggered the decision to suspend a $1.6-billion (U.S.) expansion at its Tasiast mine, which would have created 4,000 new jobs. The mine currently produces about 200,000 ounces of gold a year.

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