Mark Hawthorne
November 21, 2008
PERTH-BASED Range Resources was quick to issue a
statement to the Australian Securities Exchange regarding
its relationship with the self-appointed government of
Puntland — a group of clan elders that issues resource
rights to small-cap mining outfits and rules a region that is
home to the world's most lucrative piracy operation.
Being linked with pirates of the high seas, who this week
seized a Saudi Arabian supertanker with $US100 million ($A157
million) of oil aboard, isn't the kind of news any board wants
to read. Especially one with an annual meeting with shareholders
scheduled in Perth on Monday.
Investors may wish to ponder if the hijacked oil tanker,
Sirius Star, holds more oil than Range Resources will ever
get its hands on in Somalia.
London-based Range Resources director Peter Landau — a
man with extensive business dealings with former Melbourne day
trader and Opes Prime victim Leo "The Gun" Khouri
— responded to questions from The Age regarding payments
totalling $US6 million to the Puntland government.
"The monies were paid to the Puntland government NOT the
president or any other member of the government," Landau told
The Age. "Importantly, at the end of each year, a letter has
been sent by the Puntland government to Range Resources
acknowledging the monies have been received."
Shareholders will no doubt appreciate that a rebel government
operating in a war-torn region of Somalia is happy to perform
such efficient bookkeeping on their behalf. Maybe the owners of
the Sirius Star will also get a receipt after paying pirates
their ransom money?
In its statement to the ASX, Range Resources vehemently
denied it was involved in any wrongdoing in Puntland.
"The company would like to make the following specific
comments," read the statement. "Neither the company, nor any of
its directors, have any ties to Somali oil pirates."
Range also denied it had "paid millions of dollars in
controversial fees to Somali rebels responsible for a surge in
international piracy".
Of course, Range Resources and its directors have little idea
just what the $US6 million of shareholders' money the board paid
to the internationally disputed government of Puntland was used
for. And the point is, they probably don't want to know.
But here's a clue. Range's deal with Puntland was struck with
Puntland's minister of finance, Mohammed Ali Yusuf, whose
name appears on documents lodged by Range with the ASX.
In 2005-2006, Mr Yusuf's department spent $US4 million on
military equipment for Puntland's security forces — a year in
which that department received $US3.1 million from Range and had
total expenditure of just $US11.3 million.
That equipment was used, according to Mr Yusuf, for the
"pacification of neighbouring non-Puntland territories, like
Southern Mudug and disputed territories of Sol and Sanag".
There is, of course, no way of proving that Range Resources'
money was specifically used to arm security forces, but the
Australian company certainly helped to finance a Puntland
department involved in the "pacification" of its rivals.
One must wonder if that's the sort of overseas deal a listed
Australian company ought to be involved with.
Given the rise of piracy in Puntland, which captured the
world's attention this week, and its entrenchment in Puntland
society, few doubt that the ruling clans of the region also
control that trade. Despite this, Range is happy to do business
with the government of these very clan elders.
"The article suggests that the current government of Puntland
is disputed. It was selected by tribal clans representing the
Puntland region," Range wrote to the ASX.
"To suggest that the government is disputed
implies that the Puntland people do not have the
right to appoint parliamentary members who then
elect the president of Puntland."
Range
Resources and its directors obviously hold a
unique definition of the word democracy, one
that differs to the Australian Government.
According to the Department of Foreign
Affairs and Trade, Australia does not
recognise the rebel state of Puntland.
"Australia does not have diplomatic relations
with Somalia, but it does deal on occasion with
the Transitional Federal Government,
which is broadly accepted by many countries as
the legitimate authority in Somalia and which
represents Somalia in international bodies such
as the United Nations," a spokesman for DFAT
said.
"Australia does not recognise Puntland as a
separate state."
Neither, for that matter, does the TFG. In
2005, then TFG prime minister Ali Mohammed
Gedi wrote to the ASX to state that Puntland
had no legal right to sell any mineral or
hydrocarbon rights for the region to an
Australian company.
Yet the deal went ahead, rivals to the ruling
Puntland clans were pacified, pirates were
armed, Range Resources' share price soared and
hundreds of small investors have since been
burned — from a high of $1.09 in May last year,
Range's share price is now 5¢.
All that ought to make Monday's annual
meeting in Perth an interesting affair.
Source:
http://business.theage.com.au/