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Did Ivanhoe secretly sell Burmese stake to cronies connected to Chinese arms firm?

By Canadian Friends of Burma  •  June 28, 2010

A trusted source has told the Burmese opposition website Mizzima News Agency that Vancouver-based Ivanhoe Mines’ so called “independent trust” secretly concluded a deal last year to sell Ivanhoe’s stake in Myanmar Ivanhoe Copper Company Limited (MICCL), the joint venture created by Ivanhoe Mines and the military regime which operates Burma’s largest mine, the Monywa copper project.

According to Mizzima’s sources, the 50% stake in MICCL was sold to influential business cronies of the Burmese regime who have close ties to China’s business community.

In February 2007, Ivanhoe Mines announced that it had transferred its 50% stake in MICCL operator of Burma’s largest mine to an “independent third party trust” in return for a guarantee that when the trust sells the stake Ivanhoe will then be paid, as part of the trust deal Ivanhoe continued to receive royalties from the mine and by way of the trust remained owners of half of MICCL.  To date Ivanhoe has maintained that the “independent trust” has not sold its stake but the firm refuses to say who runs the “independent trust”.

If indeed Ivanhoe’s 50% stake in the lucrative Monywa joint venture was sold to cronies of the Burmese regime, this would violate Ivanhoe’s claim that the “independent trust” would not sell the stake to Burmese or American citizens.  More importantly such a sale would also violate US and Canadian sanctions.

In light of Mizzima’s article, CFOB Executive Director Tin Maung Htoo urges the Government of Canada and the newly created Extractive Sector Corporate Social Responsibility Counsellor Marketa Evans to investigate this matter.

Tin Maung Htoo believes that “Canada must investigate Ivanhoe’s apparent departure from Burma. This is just the latest in a very long list of scandals for Ivanhoe Chairman Robert Friedland.  He must be held to account for Ivanhoe’s actions and investigated for any violation of Canadian and US sanctions that Ivanhoe may have committed.  If the stake was indeed sold to junta cronies acting as fronts for Chinese business interests, this is indeed a violation of the sanctions.”

In early 2009, the US Treasury Department’s Office of Foreign Assets Control (OFAC) added MICCL to the list of banned junta related firms following the EU’s November 2007 decision to add MICCL to its own sanctions list.

Although MICCL is not on the Canadian sanctions list, selling the 50% stake in MICCL to Burmese cronies of the junta would be illegal under Canada’s own sanctions. Canadian sanctions on Burma were significantly strengthened by the Harper government following the regime’s massacre of protesting Buddhist monks in 2007.

The allegations of Ivanhoe’s secret MICCL sale come just days after China’s state controlled weapons producer China North Industries Corporation (NORINCO) reported that in early June it had concluded a deal with the Burmese government to get access to copper from Monywa.  NORINCO was sanctioned by the US government in 2003 and 2005 for selling missile technology to Iran.

Supporting the Mizzima source’s claim of a secret sale to junta cronies connected to China is a March 2009 posting on the Australian business news commentary website, Business Spectator purportedly written by MICCL’s General Manager Glenn Ford.  The posting states “Now Chinalco, in partnership with Chinese state-owned arms dealer Norinco, is buying the whole copper deposit of Ivanhoe and the Myanmar government.”

While Mizzima was unable to speak to MICCL’s Ford to confirm if he is indeed the same Glenn Ford who made the posting, the posting supports statements made by a former MICCL employee Gerald Nugawela in seven separate SEC filings for his new company that Chinalco had been involved in a deal to get access to Monywa, and he had negotiated it. (Please see CFOB’s press release from March 2009 on the Nugawela statements, Ivanhoe’s “open letter” by John Macken written in response and CFOB’s detailed response to Macken’s contradictory letter).

According to Mizzima’s article, Ivanhoe spokesperson Bob Williamson denied that the “independent trust” sold Ivanhoe’s stake in the mine, but Tin Maung Htoo believes “we can’t just take Ivanhoe’s word for it, their PR people will say anything to make their Burmese fiasco go away.  If this so called “trust” is “independent” why does Ivanhoe refuse to disclose any details about it?  Both the Canadian and Burmese people deserve to know what is really going on with Monywa mine.”

Media contact: 613-297-6835

Mizzima’s article can be found here

Read CFOB Press release on Nugawela affair and Chinalco here

Download Ivanhoe’s Open Letter to CFOB on Nugawela affair here

Read CFOB’s response to Ivanhoe’s  so called “open letter” here

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This post is in: Press Release

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