Boston, MA 04/10/2014 (wallstreetpr) – The state-sponsored committee in Guinea has recommended withdrawing the mining rights of BSG Resources Ltd. and Vale SA(ADR) (NYSE:VALE) . The duos have got the rights of Simandou iron-ore project. The investigation was in process from last 18 months. The government committee said that the companies didn’t use the fair means to get the rights of Simandou iron-ore project. The deal is under scrutiny in the US too. They doubt that the deal has violated the Foreign Corrupt Practices Act.
VBG-The joint venture
Rights were granted to the joint company of BSG resources and Vale SA (ADR) (NYSE:VALE). It is named as VBG. The two companies have started the joint venture. However, it is BSG, mainly accused of wrongdoing in the report. The report states that the false corrupt practices were taken much before Vale came and joined the venture.
The recommendations
The government committee stated that it has got the evidence to prove the companies at fault. The investigation report finds representatives if BSG resources at fault. They are accused of offering bribes to get the exploitation rights of Simandou and Zogota. It is now on the government to take the future course of action. The deal was termed as the deal of the century. The government has still not decided as to whether it will cancel the agreement or will take some other course of action. The state-sponsored committee also said about reviewing the mining concessions.
The recommendations in the report are given by the Guinean committee. It is not necessary for the government to act as per the report findings. BSG Resources has denied all the allegations. BSG further added that the Guinean President only wants the mining rights back and this is only the objective of the investigation. Although Vale SA (ADR) (NYSE:VALE) is not accused of any wrong doings but still it is a part of the joint venture. Cancellation of rights will have a negative impact on company.
