Financial Crime World

Guinea’s Corruption Scandals: From Energy to Mining, a Persistent Problem

Guinea, a West African nation rich in mineral resources, has struggled with corruption scandals for decades. According to Transparency International’s Corruption Perceptions Index, Guinea ranked 142nd out of 176 countries in 2016 with a score of 27 out of 100 for the perceived level of public sector corruption (Transparency International, n.d.). This is the highest corruption score the country has received since 2006.

Historical Background

  • Independence and Post-Independence: Guinea gained its independence from France in 1958 (Guinea Economy, n.d.). Ahmed Sékou Touré, leader of the Democratic Party of Guinea-African Democratic Rally (PDG), became the first president. Guinea received extensive financial assistance from both the communist bloc and Western nations. In 1971, following a coup attempt, Touré began violently suppressing opposition and seized control of the nation’s natural resources.

Modern Era

  • Alpha Condé’s Presidency (2010 - present): Alpha Condé, leader of the opposition Rally of the Guinean People (RGP), was elected president in 2010 amid accusations of corruption and violence during the election period. He promised to tackle corruption and review mining contracts. However, several corruption allegations have emerged during his administration, including bribes paid by international corporations (3) for mining rights.

Known Corruption Scandals

Hyperdynamics and SEC

The US Securities and Exchange Commission (SEC) and the US Department of Justice investigated the Houston-based energy company Hyperdynamics Corporation for allegedly paying $130,000 for PR and lobbying services in Guinea to two local entities without producing documentation proving the services were actually provided (Market Exclusive, 2017).

Aissatou Boiro’s Assassination

Aïssatou Boiro, Guinea’s national director of the state treasury, was appointed by Condé to end corruption at the highest levels of government. She began investigating the disappearance of over 13 billion Guinean francs from state banks but was assassinated by a group of armed men in Guinean army uniform on November 9, 2012. The US State Department called for a thorough investigation (South China Morning Post, 2012).

Iris Corporation

In January 2017, Acting CEO of IRIS Corporation Berhad Datuk Hamdan Mohd Hassan was arrested in Malaysia for his alleged role in an e-passport project in Guinea (The Star Online, 2017). The company maintained that the project would continue but distanced itself from Hamdan’s actions.

The Mining Industry

Guinea’s mining industry, which is the source of both wealth and corruption, has been targeted for years. The country has large bauxite reserves as well as untapped gold, diamond, and uranium deposits. International mining companies control much of Guinea’s mining wealth, with over two dozen companies involved (Country Insights, 2017).

Och-Ziff Bribery Scheme

The Securities and Exchange Commission accused Och-Ziff executives of participating in a bribery scheme to win business in the mining sector in Africa, including Guinea, in 2017 (Justice.gov, 2016). Michael Cohen, the head of European operations for Och-Ziff Capital Management Group, was indicted and charged with fraud in the US, and Walter Hennig, founder of Palladino Holdings, another mining company involved in Guinea, was implicated. Samuel Mebiame, son of former Gabonese prime minister, pleaded guilty to bribing government officials in Chad, Guinea, and Niger in the same year as part of the corruption scheme (Justice.gov, 2016).

Impact on the Nation

Despite Guinea’s vast natural wealth, the country remains one of the poorest in the world, with over 73.8% of the population multidimensionally poor and an additional 12.7% living near multidimensional poverty (Country Insights, 2017). Corruption has hindered the nation’s progress towards development.

References:

[1] Transparency International - Guinea. (n.d.). Retrieved May 25, 2017, from www.transparency.org [2] Guinea Economy: Population, GDP, Inflation, Business, Trade, FDI, Corruption. (n.d.). Retrieved May 25, 2017, from www.heritage.org [3] ME Staff. (2017, April 3). HYPERDYNAMICS CORPORATION (OTCMKTS:HDYN) Files An 8-K Regulation FD Disclosure - Market Exclusive. Retrieved May 25, 2017, from marketexclusive.com [4] Uprooting the Seeds of Corruption - Part 1 - Corrupt Guinea. (2017, August 3). Retrieved October 1, 2017, from Corrupt Guinea [5] Gunmen kill Guinea’s anti-graft treasury chief Aissatou Boiro. (2012, November 10). Retrieved October 1, 2017, from South China Morning Post [6] Iris deputy MD arrested by MACC, COO to take over - Business News | The Star Online. (2017, July 15). Retrieved May 25, 2017, from www.thestar.com.my [7] Country Insights. (2017, July 13). Guinea. Retrieved May 25, 2017, from www.usgs.gov [8] Condé, A. (n.d.). Guinea: President Dismisses Election Fraud Allegations. Retrieved May 25, 2017, from www.voanews.com [9] Och-Ziff Capital Management Admits To Role In Africa Bribery Conspiracies And Agrees To Pay $213 Million Criminal Fine. (2016, September 29). Retrieved May 25, 2017, from www.justice.gov [10] Trace International | Blog. (2017, September 11). HYPERDYNAMICS CORPORATION. Retrieved May 25, 2017, from www.traceinternational.org [11] Uprooting the Seeds of Corruption - Part 2. (2017, August 8). Retrieved October 1, 2017, from Corrupt Guinea [12] Gabonese National Pleads Guilty to Foreign Bribery Scheme. (2016, December 9). Retrieved May 25, 2017, from www.justice.gov [13] Country Insights. (2017, July 13). Guinea. Retrieved May 25, 2017, from www.usgs.gov