Police searched Ivanhoe Mines’ Vancouver office as part of Swiss bank transfer investigation

Location of Ivanhoe Mines office in Vancouver, BC. Credit: Wikipedia

Police searched Canada’s Ivanhoe Mines’ (TSX: IVN) Vancouver office seeking information on $2.7 million in bank transfers from Ivanhoe to a Swiss bank account in connection with contracts for its Congolese mining operations, The Globe and Mail reported Thursday.

Ivanhoe said it cooperated with the search in November 2021 and that no charges have been laid against the company or its directors or employees.

The RCMP obtained the search warrant after saying it had reasonable grounds to believe that Ivanhoe violated Canada’s Criminal Code and Corruption of Foreign Public Officials Act between 2014 and 2018, Ivanhoe said in a disclosure in an annual information form.

Some of the documents authorized for seizure were related to three bank transfers from Ivanhoe to the Swiss bank account of a company called Stucky Technologies from 2015 to 2018, A Swiss engineering firm, to work with Congo’s state electricity company on hydropower supplies for Ivanhoe’s Kamoa-Kakula copper project in the Democratic Republic of the Congo (DRC), The Globe and Mail reported.

The Vancouver-based miner has been working on Kamoa-Kakula for more than ten years. In 2015, China’s Zijin Mining Group became Ivanhoe’s partner in the project, with each company holding a 40% stake and the Congolese government owning 20%.

Ivanhoe Mines posted a profit of $85.4 million for the three months to September 30 2021, the first full quarter commercial production at its Kamoa-Kakula joint venture in Congo, the biggest copper mine to come online in decades. Mining billionaire and Ivanhoe founder Robert Friedland has said he believes the project will become the world’s second-largest copper mine and the one with the highest grades among major operations. 

Also on Thursday, US-based investigative organization the Sentry published a new report: “Gaming the System: How a Canadian Mining Giant Undermined the Law in the DRC, examining the miner’s control of deposits in the DRC’s copper belt.  The report alleges that Ivanhoe received preferential treatment when Congolese authorities extended its exploration licences beyond the legal limit of 15 years and that some extensions gained approval much faster than the average processing time for other applicants.

“Evidence examined by The Sentry reveals that the multibillion-dollar company, which is led by American-born founder Robert Friedland, arranged to share a potentially lucrative cut of local subsidiaries with a politically connected individual, just as the Congolese government took apparently illegal actions allowing Ivanhoe to maintain exploration licenses,” the report reads. “According to The Sentry’s analysis, those licenses by law should have been surrendered by Ivanhoe years ago.”

The Sentry report claims dealmaking may not have ended when former Congolese president Joseph Kabila left office in 2019. Hidden camera videos published this September apparently show Vidiye Tshimanga, then a close advisor to DRC President Félix Tshisekedi, claiming to hold 20% of an unidentified Ivanhoe Mines subsidiary.

Tshimanga also appears to be telling unidentified people he believed to be prospective investors that they could pay him off using concealed business arrangements, including channeling payments to political parties by tendering contracts to well-connected service providers, all with the approval of the president, the Sentry reported.

Tshimanga denied wrongdoing, but resigned and is facing prosecution.

Following the release of Sentry’s report, Kalloghlian Myers LLP issued a statement encouraging Ivanhoe Mines investors to inquire about a class action investigation.

Ivanhoe also issued a statement, saying The Globe and Mail article and the Sentry report “contain numerous inaccuracies, misrepresentations of Democratic Republic of Congo law and Ivanhoe Mines’ business relationships, and demonstrate a fundamental misunderstanding of the legislative framework under the Democratic Republic of Congo mining codes.”

Ivanhoe said the company intends to respond in full to the allegations shortly, but as of 6pm EST had not issued further comment.