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Kinross spent $7.1-billion in 2010 for the Tasiast mine, as part of its takeover of Red Back Mining.

More than two years after U.S. authorities began investigating Kinross Gold Corp. for alleged corruption in Africa, the case remains unresolved, but details of the company's financial activities are starting to leak out.

Internal company documents viewed by The Globe and Mail suggest that one of the targets of the U.S. investigation is a Mauritanian firm that won the bidding for a $50.1-million (U.S.) transport and logistics contract from the Toronto-based gold miner.

Kinross awarded the contract to a French company in partnership with the Mauritanian company – which was owned by a former top Mauritanian government official – even though its bid wasn't the lowest.

In its review of the bidders, Kinross concluded that the lowest bidder had a "political" disadvantage, the documents show. It decided instead to award the contract to the French and Mauritanian partnership. This would satisfy the "stated preference" of Mauritania's government, according to another internal document.

A spokesman for Kinross wouldn't comment on the documents, but he told The Globe that the company doesn't always choose the lowest bidder, and that many commercial and business factors are considered in its decisions, not simply the price.

Kinross announced last October that the U.S. authorities, including the Justice Department and the Securities and Exchange Commission, had issued subpoenas in 2014 and 2015 seeking information about alleged "improper payments made to government officials" in connection with its gold-mining operations in Mauritania and Ghana.

Kinross says it is co-operating fully with the U.S. investigations and has launched its own probe into the allegations, some of which originated from a whistle-blower. It says it has retained Canadian and American law firms to review the issues.

Kinross spent $7.1-billion in 2010 to acquire the Tasiast gold mine in Mauritania, as part of its takeover of Red Back Mining Inc. But the mine has been losing as much as $65-million annually, and Kinross has laid off hundreds of workers and written down most of the value of its Tasiast asset.

Mauritania, a sparsely populated desert country in West Africa, is run by a military-backed regime that took office after an army colonel seized power in a 2008 coup and later claimed legitimacy from disputed elections in 2009 and 2014. Corruption is a severe problem in Mauritania, according to the World Bank and other institutions, and the government's dealings with businesses have often been opaque and murky.

In 2014, Kinross reviewed bids for a $50.1-million three-year transport and logistics contract for its Mauritania and Ghana mining operations. Of the shortlisted bidders, the lowest bid came from a company called Damco International, which was $2.6-million lower than any other bid, according to Kinross documents seen by The Globe and Mail.

In its review of the bids, Kinross concluded that the Damco bid had several disadvantages – including "political and external relations risk due to political affiliation/alignment," one of the documents said.

Kinross decided to award the contract to a more expensive bidder, a partnership between French company Schenker and Mauritanian company Maurilog, even though this bidder had "questionable Ghana capability" and a "poor history" in Mauritania due to a previous commercial dispute over its work at the Tasiast mine, the document said.

The review listed a number of technical advantages of both the Damco bid and the Schenker/Maurilog bid, including the "local ownership content" of the Schenker/Maurilog bid. It also cited a concern over "possible under-resourcing" by Damco. The technical and "external relations" advantages of the winning bidder were enough to offset the price difference, it said.

A separate internal document, seen by The Globe, said Kinross "in deciding to award the contract to Schenker/Maurilog also considered and took into consideration the stated preference of officials of the Government of Mauritania that the logistics contract be awarded to Schenker/Maurilog."

It said the government expressed this preference because the Mauritanian ownership component would help increase competition and improve the skills of Mauritanian companies in the logistics industry. But it also confirmed that Maurilog's owner, Mohamed Yahya, is a former senior official in the Mauritanian government, serving as the General Commissioner of Private Investments in 2008 and 2009.

Mr. Yahya is a close associate of Mauritanian President Mohamed Ould Abdel Aziz, according to the whistle-blower whose allegations led to the U.S. investigations.

In a subpoena last year as part of its investigation, the U.S. Securities and Exchange Commission ordered a former Kinross vice-president to provide all documents relating to Mr. Yahya and a number of other officials and executives.

Louie Diaz, senior manager of corporate communications at Kinross, said he could not comment on the bidding process for the transport contract because it was confidential. But he said Kinross considered "many commercial and business factors" when it awarded the contract to Schenker/Maurilog.

When the company reviews bids, they are "evaluated across a wide range of metrics and capabilities, with price being only one such consideration," Mr. Diaz said in an interview. "We choose the supplier and proposal that best addresses the company's needs and advances its business interests in a legally compliant manner, which is not always the lowest bidder."

Requests for bids are always publicly announced, and the criteria for evaluating the bidders are transparent, he said. "Suppliers are required to sign our Supplier Standards of Conduct, and we monitor compliance. Kinross is committed to operating in accordance with the highest ethical standards."

Although the contract was originally planned as a three-year $50.1-million deal, Kinross decided to opt out of its contract with Schenker/Maurilog after one year, The Globe and Mail has learned. The contract was also modified to cover only Mauritania, not Ghana.

Two independent groups, MiningWatch Canada and the French anti-corruption organization Sherpa, announced in December that they have asked the RCMP to investigate Kinross for its activities in Mauritania and Ghana.

Follow Geoffrey York on Twitter: @geoffreyyorkOpens in a new window

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