BHP Billiton To Pay $25 Mln To Settle U.S. Probe Over 2008 Olympics Hospitality

(RTTNews) - Mining giant BHP Billiton (BHP.AX, BLT.L, BBL, BHP) has agreed to pay a penalty of $25 million to settle the U.S. Securities and Exchange Commission's charges that it violated anti-corruption laws when it sponsored the attendance of foreign government officials at the 2008 Summer Olympics in Beijing.

The Securities and Exchange Commission or SEC noted that BHP Billiton sponsored the bill for foreign government officials to attend the Olympics while these officials were in a position to help the company with its business or regulatory endeavors. The SEC has charged BHP Billiton with violating the Foreign Corrupt Practices Act or FCPA.

According to the SEC, BHP Billiton failed to devise and maintain sufficient internal controls over its global hospitality program connected to the company's sponsorship of the 2008 Summer Olympic Games in Beijing.

The SEC said its investigation found that BHP Billiton invited 176 government officials and employees of state-owned enterprises to attend the Games at the company's expense. The company ultimately paid for 60 such guests as well as some spouses and others who attended along with them.

BHP Billiton's sponsored guests, primarily from countries in Africa and Asia, enjoyed three- and four-day hospitality packages that included event tickets, luxury hotel accommodations, and sightseeing excursions valued at $12,000 to $16,000 per package.

BHP Billiton had required business managers to complete a hospitality application form for any individuals they sought to invite to the Olympics, including government officials. However, the SEC noted that the company failed to clearly communicate to its employees that no one outside the business unit submitting the application would review and approve each invitation.

In addition, BHP Billiton did not provide employees with any specific training on completing forms or evaluating bribery risks of the invitations.

Andrew Ceresney, Director of the SEC's Division of Enforcement said, "BHP Billiton recognized that inviting government officials to the Olympics created a heightened risk of violating anti-corruption laws, yet the company failed to implement sufficient internal controls to address that heightened risk."

As part of the settlement, BHP Billiton neither admitted nor denied the SEC's findings. However, the settlement requires the company to report to the SEC on the operation of its FCPA and anti-corruption compliance program for a one-year period.

In a separate statement, BHP Billiton said it had no independent compliance function at the time of its sponsorship of the 2008 Beijing Olympics and Paralympics. Instead, accountability for complying with the company's anti-corruption policies was vested in its operating business units.

BHP Billiton said it has since created an independent compliance function that reports to the head of the legal function and the Risk & Audit Committee of the company's Board. Today this function would be required to approve any offer of hospitality of this kind to a government official.

BHP Billiton CEO Andrew Mackenzie said, "BHP Billiton operates a global resources business and recognises that the highest standards of business conduct are an essential part of our operations. Our Company has learned from this experience and is better and stronger as a result."

BHP is trading at $46.01, up $0.04 or 0.08 percent on a volume of 653,110 shares.