Pandora Papers and the man who won Rio Tinto’s Simandou leases

While French investigators trawl through corruption claims related to Guinea’s ex-president Alpha Condé, documents from the Pandora Papers shed light on the key playmaker who has ended up with the Simandou iron ore leases clawed back from Rio Tinto.

The Pandora Papers are documents from 14 offshore providers which were obtained by the International Consortium of Investigative Journalists and shared with The Australian Financial Review. Some documents will be searchable from Tuesday.

Condé was toppled in a coup by Colonel Mamady Doumbouya in September, a move with massive potential to affect the aluminium industry and the iron ore market.

How will Doumbouya see Condé’s history of approving mining developments?

When Condé came to power in 2010, one of his first moves was to challenge mining leases issued by his predecessor, Lansana Conte, notably Conte’s 2008 decision to strip two of Rio Tinto’s four leases for the huge Simandou iron ore deposits and sell them to Israeli entrepreneur Beny Steinmetz for $US160 million. Steinmetz subsequently tried to on-sell the leases to Vale for $US2.5 billion.

It wasn’t until 2019 that Condé finally wrestled the two Simandou leases back from Steinmetz’s company.

Fortescue Metals Group applied for the leases when tenders were called later that year, but they were awarded to the SMB-Winning consortium, which so far has spent relatively little of the $US14 billion it pledged to build a mine, a 650 kilometre rail line, and a port for the project.

Doumbouya so far has given few indications how he views the iron ore and the separate bauxite projects, which are interconnected because they are both run by SMB-Winning.

How this plays out will depend in large part on Fadi Wazne, a 55-year-old Lebanese-French businessman, whose closeness to the former president had critics perhaps unkindly label him Conde’s “argentier”, translated as treasurer, or money man.

He also appears in the Pandora Papers. Wazne (or Wazni – his name is spelt differently on his French passport and his Guinean residency permit) is listed in the documents as the beneficial owner of three British Virgin Islands companies: Lanister Investments Ltd, which he own directly, which in turn owns International Mining Investment Assets Ltd, which owns Safe Identity Ltd. More on that later.

In September last year, France’s National Financial Prosecutor’s Office (PNF) began investigating a complaint for “corruption, influence peddling and corruption laundering”, in the exploitation of bauxite in Guinea involving president Condé, several of his relatives, and mining companies, including a French company.

The complaint was filed in August 2020 by a Guinean opposition group, the Collective for the Transition in Guinea (CTG).

The saga dates to 2014, when a new mining company called Société Minière de Boké (SMB) discovered bauxite deposits in Guinea.

The Guinean government awarded SMB a mining exploration permit in January 2015, and a bauxite export licence in July 2015, just as the first bauxite was loaded on to ships.

But just who was behind SMB? Wazni was the CEO, and the shareholders were described as the SMB-Winning consortium.

The consortium has said it is comprised of Singapore’s Winning International Group, headed by Sun Xiushun (who became SMB chairman); Shandong Weiqiao, a Chinese aluminium producer and part of the Hongqiao group; and United Mining Supply SA, a Guinean logistics company owned by Wazne.

In fact, SMB was owned by a British Virgin Islands company, Asian African Mineral and Logistics Consortium (AAMLC) Ltd, which appears in the Pandora Papers as well.

AAMLC was set up and administered in the British Virgin Islands by law firm Aleman, Cordero, Galindo & Lee, and managed in Monaco by the Carey SAM advisory group, but it wasn’t until July 2017 when the BVI registry was moving to enforce reporting requirements that Carey revealed who the owners were – and more importantly what the shareholdings were.

Winning Shipping and Hongqiao, which appear to have provided almost all the funding and much of the expertise for the project, each had 25 per cent. Wazne was the single beneficial owner of 50 per cent.

It raised the question:, what was Wazne bringing to the table that was worth half the project?

Shortly after the disclosure of the AAMLC shareholdings, a new holding company was set up which obscured further changes in equity.

The 2017 restructure coincided with the Bank of Singapore taking a charge over “securities” held by Wazne’s BVI company Lanister Investments. Days later its subsidiary, International Mining Investment Assets, was listed with Singapore’s corporate regulator as an unregistered foreign entity.

If this related to the restructure of SMB, it’s a puzzle why Wazne was seeking loans in Singapore, the base of Winning Shipping. Was Winning providing indirect financial comfort?

Under the conditions of the original lease, the Guinean government had an option to take a 15 per cent stake in SMB. In the end it took 10 per cent, presumably from Wazne’s share.

The consortium had ambitious plans for SMB to expand bauxite production, which required further leases. In June 2017, Conde signed over a bauxite mining licence to a French company set up two years before. A week later, the French company sold the licence to SMB for a reported $US200 million.

How the licence came to be granted and where the $US200 million in proceeds from the sale ended up is the basis of the complaint lodged by opposition politicians last year, which is the subject of investigation by the National Financial Prosecutor’s Office in Paris.

All parties have strenuously denied any improper arrangements, and say the claims were made for political purposes.

But for the Chinese investors who have funded SMB’s transformation into a major bauxite explorer and now have to pony up $US14 billion for Simandou, it’s an unfortunate time to lose a president who has been so supportive of their work.

If the French investigation finds reason to question how SMB obtained its bauxite leases, then does that colour the way its Simandou leases are perceived?

None of this need be fatal to the Chinese projects in Guinea. But if the new president decides he wants them to sweeten the deal, it does suggest he has some leverage.