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By John Helmer in Moscow

The Guinean Government in Conakry says it has enough evidence to launch a new court claim against Russian aluminium company, Rusal, for at least $1 billion. A local court filing is expected shortly, government sources in Conakry say, citing evidence of inflated costs and allegations of manipulation of financial accounts that have reduced taxes the government says Rusal was obliged to pay in Guinea over several years. At the same time, the Guinean government has decided to engage an internationally recognized accounting firm to analyze both the internal financial accounts, and also Rusal’s export declarations, to support the court claim, and if warranted, increase it.

In Moscow, Rusal has responded with what appears to be a threat from the Russian government to punish Guinea in the United Nations (UN) if Rusal’s bauxite and alumina production in Guinea is penalized. A report appearing in Kommersant newspaper on Tuesday warned that Russia may not issue its UN Security Council veto, if a resolution imposing sanctions on Guinea for political rights violations is introduced for a vote. A sanctions campaign in the UN has picked up momentum after more than 150 people were killed in Conakry, and more than a thousand wounded, after Guinean Army troops fired on protesters on Monday and Tuesday. The Guinean government move into court against Rusal was decided before the violence began.

The Moscow press report claims that a Guinean foreign ministry delegation is expected in Moscow on October 5 to negotiate a diplomatic bargain. “The diplomatic help of Russia is now very necessary to Guinea,” the newspaper reports an anonymous source as claiming. If the Guineans drop the financial claims against Rusal, the anonymous source reportedly says the Russian Foreign Ministry will consider vetoing a sanctions resolution against Guinea at the UN.

A high-level Russian advisor on Africa policy in Moscow said the UN sanctions threat “sounds unreal”. He added: “the [Rusal] situation isn’t on a big enough commercial scale to justify political intervention.”

A Conakry court ruled on September 10 in favour of the government’s application to revoke the privatisation of the Friguia refinery to Rusal’s benefit, on the ground that the asset transfer violated local law and was priced at only a fraction of the asset value. A day later, the Russian Foreign Ministry issued a statement saying that “without interfering with mutual relations of the Guinean authorities with its commercial partners, including Russian UC Rusal, it intends to watch closely the development of the situation.” Guinean government officials say they have proposed negotiations with Rusal chief executive, Oleg Deripaska, only to have him refuse. They also say that Rusal and the Guinean authorities had earlier agreed on the appointmnt of an independent auditor to look into the books and financial claims, but that Rusal has since reneged.

Rusal operates the big Kindia bauxite mine in Guinea on a 25-year concession. It owns the Friguia alumina refinery and associated bauxite mine, and it has exploration and mining rights to the Dian-Dian bauxite deposit, which is not yet in operation.

The Russian Foreign Ministry maintains a traditional policy of non-interference in the internal affairs of the African states. In July of 2008, Russia opposed a US-drafted sanctions resolution at the UN Security Council, aimed at Zimbabwe. At the time, and backed by South Africa, China, and other UN members, the Russian Foreign Ministry announced: “the adoption by UN Security Council of that document would have established a dangerous precedent opening the way for Security Council interference in the domestic affairs of states over some or other political events, including elections, which is a gross violation of the UN Charter.”

Guinean sources in Conakry believe that at least one member of the UN Security Council, apart from Russia, would veto a sanctions move, if it is attempted. The Russian African policy advisor in Moscow said “the situation [in Guinea] is not similar to Zimbabwe in any way.” He believes Rusal is bluffing.

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