JOHANNESBURG - On August 10 this year ArcelorMittal South Africa (AMSA) announced its purchase of Imperial Crown Trading 289 (ICT) for R800m as well as a so-called "BEE" deal with various cronies and family members of the ANC leadership.

Subsequently, AMSA CEO Nonkululeko Nyembezi-Heita told the Mail & Guardian that "both the BEE deal and the ICT acquisition would have to pass an internal due diligence investigation in terms of the United States Foreign Corrupt Practices Act (FCPA) and satisfy South African anti-corruption legislation before coming into force." Business Day reported shortly thereafter that a team of lawyers had been appointed to do this vetting.

AMSA's ICT/BEE deal may well pass muster with local anti-corruption legislation. However crooked it may appear to the uninitiated, it can probably hide behind the spiral staircase of BEE. Since Zuma loyalists control the security services local investigators are unlikely to expend much effort poking at it with sticks trying to prod it out from there.

The more intriguing question is whether the deal can ever be threaded through the eye of the FCPA needle. By its own admission ArcelorMittal is bound by the provisions of this Act primarily due to its listing on the New York Stock Exchange.

According to the US Department of Justice (DOJ) the FCPA essentially "makes it unlawful to bribe foreign government officials to obtain or retain business." Among the key components that make up an offence is corrupt intent: a payment must be "intended to induce the recipient to misuse his official position to direct business wrongfully to the payer or any other person."

The DOJ states: "The FCPA prohibits any corrupt payment intended to influence any act or decision of a foreign official in his or her official capacity, to induce the official to do or omit to do any act in violation of his or her lawful duty, to obtain any improper advantage, or to induce a foreign official to use his or her influence improperly to affect or influence any act or decision."

The Act prohibits corrupt payments to "a foreign official, a foreign political party or party official, or any candidate for foreign political office." It also outlaws payments made through third parties. "It is unlawful to make a payment to a third party," the DOJ states, "while knowing that all or a portion of the payment will go directly or indirectly to a foreign official. The term ‘knowing' includes conscious disregard and deliberate ignorance."

ArcelorMittal has very good reason not to try and push their luck too far on this matter. Fines imposed for violations of the FCPA can run to twice the benefit the accused company "sought to obtain by making the corrupt payment." Conduct that violates the provisions of the Act "may also give rise to a private cause of action for treble damages" by competitors who lose out due to such corrupt payments.

AMSA would presumably be chancing it if, firstly, the ICT/BEE deal was intended to obtain improper advantage over Kumba in its battle to try and win back its 21,4% share of the Sishen Iron Ore Mine. And, secondly, if AMSA "knew" that some of the hundreds of millions of rands that it planned to pay out would ultimately make its way to - or be put at the disposal of - influential government and party officials. Interestingly, according to the DOJ the mere "offer or promise of a corrupt payment can constitute a violation" of the FCPA.

If the stakes were not so high for AMSA one wonders if they would be quite so enthusiastic about this deal. Their own anti-corruption guidelines warn: "Additional caution should be applied in respect of persons who are known or suspected to be family members of government officials or in respect of companies who are controlled by family members of government officials so as to avoid that these persons serve as a conduit for an illegal payment to a government official."

These guidelines also state that among the principles that "should be applied in respect of the use and remuneration of all third-parties" are the following: "Payments to third-parties must be reasonable and rationally reflect the value of the services provided; Third-parties should have a proven track record in the industry concerned; Third-parties should not be referred by government officials."

There would perhaps be less reason for AMSA to concern itself with due diligence procedures if the DMR's decision to grant ICT the prospecting right to the Sishen mine, and to turn down subsequent appeals by Kumba, was pure as the driven snow. However, the affidavits produced by Kumba in their court challenge are pretty damning of the quality of ICT's application and of the DMR's decision to approve it despite its manifest flaws. Not least, officials of the DMR are accused of colluding with ICT to give it unlawful access to Kumba's mining rights application, sections of which were then copied, fraudulently manipulated and inserted into its own application.

Just over a week after AMSA announced its decision to purchase ICT the Minister Susan Shabangu wrote to Kumba to tell them she was turning down their appeal against the award of the prospecting right to ICT. She then stated in a speech that having "carefully examined" the allegations made against the ICT award she could find "no evidence of maladministration or irregularity" in the manner in which its prospecting rights were granted.

No doubt the minister, in reaching this determination, was completely uninfluenced by the fact that had she upheld Kumba's appeal her boss's son (not to mention the patriotic funders of a new pro-ANC newspaper) would have had hundreds of millions of rands cruelly snatched from his grasp.

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