Bribery can be a common aspect of doing business when it comes to mining and exploration projects in many third world countries.
“[In] some of these countries there is some bribing that goes on,” said Stefan Ioannou, an analyst with Haywood Securities Inc. “A lot of North American countries try to stay away from that stuff, but it does happen and sometimes it’s a necessary evil of the business.”
While commodity markets remain strong, dozens of Vancouver mining companies are looking abroad for the next big find.
Ioannou said he didn’t want to point fingers at any particular nations, but explained that developing mining projects in foreign lands can be a tricky balancing act.
In order for a project to progress, many mining companies need someone who’s from the country that can connect them with the right people and guide them through often-complex regulatory requirements.
At the same time, those allegedly “connected” people can take advantage of companies that have not done their homework.
Ron Thiessen, CEO of Vancouver-based Hunter Dickinson Inc. (HDI), said these bribes are often known as “facilitation fees."
Thiessen said: “A lot of these countries they even have it right at the border … guys expect you to give them money to get into the country.”
HDI counts 10 Vancouver-based mining enterprises and projects all over the world among its stable of companies, but Thiessen said no monetary grease is worth the consequence.
He said: "We don’t do that because if you do it once you have to do it forever and you have to do it with everybody."
Ioannou also cautioned against the practice, adding that bribes become larger as time wears on because people expect more.
Check out next week’s print edition of BIV for more about the dozens of Vancouver mining companies developing mineral wealth in foreign lands.