I came across this complaint letter from Canadian Friends of Burma. Apparently they are upset about the registration of two high powered lobbyists, Eddie Goldenberg and Allan Gotlieb, who have been hired by Ivanhoe Mines to lobby the Canadian government regarding foreign investment in Canada.

In Mr. Goldenberg’s and Mr. Gotlieb’s registration filing they stated that Ivanhoe Mines, “does not have any subsidiaries that could be affected by the outcome of the undertaking.” Canadian Friends of Burma claims that according to Ivanhoe Mines’ Annual SEC filings that they do own interests in two companies, Ivanhoe Mines Mongolia Inc and SouthGobi Energy Resources Ltd, which have substantial coal interests in Mongolia. Therefore, Canadian Friends of Burma believe that Mr. Goldenberg and Mr. Gotlieb misrepresented themselves on their registration forms and thus have violated the Canadian Lobbying Act.

So what does this have to do with the United States Department of Treasury Office of Foreign Assets Control (“OFAC”)? Ivanhoe Mines owns by way of blind trust a 50% stake in Myanmar Ivanhoe Copper Company Limited (MICCL), which OFAC designated as an SDN under the Burmese Sanctions Regulations on January 15, 2009. According to MICCL’s website:

“Ivanhoe Copper Company Limited (MICCL) is a joint-venture company whose parent companies are Ivanhoe Myanmar Holdings Limited (IMHL), a wholly-owned subsidiary of Ivanhoe Mines Ltd., of Canada, and No.1 Mining Enterprise (ME-1), an agency of the Ministry of Mines of the Union of Myanmar.

The Sabetaung-Kyisintaung (S&K) Mine, located in central Myanmar, is an open-pit, heap-leach copper mine operated by MICCL. Currently, the mine is operating at a capacity of 39,000 tonnes per year (tpa) of cathode copper, 56% above its initial design capacity of 25,000 tonnes of copper per year.”

Executive Orders 13310, 13448, and 13464 authorize the “blocking of property and interests of any person determined to be…….to have materially assisted, sponsored, or provided financial, material, logistical,
or technical support for, or goods or services in support of, the Government of Burma, the SPDC, the USDA, any successor entity to any of the foregoing, any senior official of any of the foregoing, or any person whose property and interests in property are blocked pursuant to E.O. 13310, E.O. 13448, or E.O. 13464.”

One would think that ownership of a blocked entity under these Executive Orders would call for the blocking of the parent company for materially assisting, sponsoring, or providing financial, material, logistical, or technical support for, or goods or services in support of their subsidiary.

So why hasn’t OFAC made a move against Ivanhoe Mines? This is a good question. At first glace I don’t see any reason to believe that OFAC wouldn’t designate Ivanhoe Mines due to their role as a stake holder in MICCL. But as I often say OFAC moves in mysterious ways.

Another point of concern is related to U.S. persons who serve as Ivanhoe Mines directors or management. These individuals must be careful not to assist in the facilitation of any transaction prohibited by the Burmese Sanctions Regulations. Although it is likely that OFAC does not have authority to penalize Ivanhoe Mines (they are a non U.S. company), any U.S. persons working for Ivanhoe Mines as directors or managment can be penalized for the facilitation of such transactions.

There are a lot interesting aspects to this story that I haven’t touched upon, and I advise my readers to do more research if they are interested. Regardless, the word is out: Burma has friends…..and they are Canadian.