From: Tsegai Emmanuel (emmanuelt40@gmail.com)
Date: Mon Jul 27 2009 - 11:21:24 EDT
[image: Stratfor]
Namibia, China: Curious Cases of Bribery Stratfor Today
»<http://www.stratfor.com/analysis>July 25, 2009 | 1656 GMT
[image: Namibian President Hifikepunye Pohamba with Chinese Premier Wen
Jiabao in December, 2005]
GREG BAKER-POOL/Getty Images
Namibian President Hifikepunye Pohamba with Chinese Premier Wen Jiabao in
December 2005
Summary
The Namibian government announced another bribery case involving a Chinese
company, the second in the past week. China’s financial involvement in
Namibia and Rio Tinto’s ownership interest in the Namibian mining sector
suggest a possible link between the Namibian crackdown and the lingering Rio
Tinto case in China.
Analysis
The Namibian government announced July 23 that Namibian President
Hifikepunye Pohamba has suspended the country’s defense force chief for
allegedly accepting kickbacks from a Chinese company that supplies the
Namibian military. This followed a July 17 announcement by Namibian
authorities that three people, including one Chinese citizen, had been
charged with bribery in a case involving the Chinese company Nuctech, which
used to be headed by Chinese President Hu Jintao’s son, Hu Haifeng.
China has made considerable investments in Namibia. According to contracts
signed in 2007, the Chinese would purchase Namibian products worth $34.7
million and had promised more in concessional loans and export buyers
credit. Because of this, STRATFOR finds it odd that Namibia would be willing
to take on the high-profile Nuctech case, implicating not only a Chinese
company but also a company that has ties to the Chinese president’s son.
The Chinese have blocked all media on this case within China, and STRATFOR
sources say their personal e-mails on the subject are being blocked. Indeed,
with China in the midst of its own anti-corruption crackdown, it could be
quite troublesome for Hu’s son to be implicated in a corruption scandal in
another country.
The timing of Namibia’s crackdown is also curious, coming only a few weeks
after the Chinese Ministry of State Security detained four Rio Tinto
employees<http://www.stratfor.com/analysis/20090708_australia_china_accusations_espionage>,
including one Australian citizen, for bribery during contentious iron-ore
price negotiations<http://www.stratfor.com/analysis/20090701_china_beijings_limitations_affecting_global_commodity_prices>.
Even if Chinese companies were engaged in bribery in Namibia, Namibia would
not likely be inclined to spoil its relationship with China without
receiving something in return.
If there are strings being pulled, the source believes, Rio Tinto is the
puppeteer. Rio has a 69 percent interest in the Rossing uranium mine in
Namibia, which is the fifth-largest uranium mine in the world. It produces 8
percent of the world’s primary uranium oxide and is a major contributor to
the Namibian economy. For the past 30 years that the mine has been in
production, it consistently has been able to sell contracts well above
spot-market prices because buyers fear a supply risk and are willing to pay
extra to maintain a uranium supply from an independent country. On July 9,
Rio Tinto announced plans to increase production at the mine, and on July 20
the Namibian president visited the mine at the invitation of Rio Tinto.
This may merely be a coincidence, but as we recently
noted<http://www.stratfor.com/analysis/20090723_china_security_memo_july_23_2009>,
on July 17 — the same day that Chinese Vice Foreign Minister He Yafei
indicated to Australian Foreign Minister Stephen Smith that the Rio Tinto
espionage investigation may be dropped, leaving only the bribery
investigation — Nuctech’s African representative was detained on bribery
charges. Other sources note that the Chinese companies involved in the two
bribery cases may have failed to bribe the right person, or that Namibia was
simply fed up with Chinese corruption and these companies were obvious
offenders in Namibia’s anti-corruption campaign.
However, the timing is such that we must consider Rio Tinto’s hand in the
Namibian crackdown on the Chinese companies, while Australian citizen Stern
Hu, general manager of Rio Tinto’s iron-ore division in China, remains in
custody in China without formal charges.