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Azerbaijani Government Awarded Gold-Field Rights To President's Fami

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  • Azerbaijani Government Awarded Gold-Field Rights To President's Fami

    AZERBAIJANI GOVERNMENT AWARDED GOLD-FIELD RIGHTS TO PRESIDENT'S FAMILY
    By Nushabe Fatullayeva, Khadija Ismayilova

    http://www.rferl.org/content/azerbaijan_gold-field_contract_awarded_to_presidents_family/24569192.html
    May 03, 2012

    Production is expected to begin at the Chovdar gold field in western
    Azerbaijan later this year. It contains reserves of 44 tons of gold
    and 164 tons of silver, worth about $2.5 billion at current prices.

    BAKU -- Novruz Allahverdiyev, 40, lives in a mud house in the village
    of Chovdar, a small mining town in the mountainous region near the
    border with Armenia. He is one of 800,000 internally displaced persons
    from the war with Armenia that battered his native Nagorno-Karabakh
    region in the early 1990s.

    Allahverdiyev and members of 60 other displaced families found
    shelter and a place to farm in the mountains around Chovdar. Like
    many in his predicament, Allahverdiyev is patriotic, and the walls
    of his poor home are plastered with pages from an aging calendar
    featuring portraits of President Ilham Aliyev and his late father,
    former President Heydar Aliyev.

    Allahverdiyev's family now faces yet another problem. A British mining
    company has taken over some of his land and has blocked one of the
    two streams his village relies on for water. Allahverdiyev is sure
    President Aliyev will help him and his community

    But his faith may be misplaced. What Allahverdiyev doesn't know is
    that the president and his family own a stake in the new mine. The
    U.K. company is actually a front for the first family.

    In two 2007 decrees, the state assigned the right to develop the
    Chovdar gold field and five other sites to a company called Azerbaijan
    International Mineral Resources Operating Company, Ltd. (AIMROC).

    AIMROC -- which controls a 70 percent stake in the mines, while the
    Azerbaijan government controls 30 percent -- has been building the
    infrastructure for the Chovdar mine and is expected to begin production
    this year.

    Panamanian Trail

    But sorting out AIMROC's structure is a daunting task. While Chovdar
    locals blame the "ingilis" (English) for their woes, the truth is
    quite different. AIMROC is a joint venture of four companies: Londex
    Resources, S.A, Willy and Meyris S.A., Fargate Mining Corporation,
    and Globex International LLP. All four are shell companies that,
    according to Azerbaijani officials, were set up specifically for
    this deal. It is unclear if any of them have any mining experience
    or other mining projects.

    Graphic: Azerbaijani President Ilham Aliyev's family stake in the
    gold fields (click to enlarge).xGraphic: Azerbaijani President Ilham
    Aliyev's family stake in the gold fields (click to enlarge).

    â~@~Kâ~@~KA fifth company -- Mitsui Mineral Development Engineering Co
    Ltd (MINDECO), a mining-engineering company owned by Japan's Mitsui
    Mining and Smelting Company -- is listed as the official project
    supervisor, but has no ownership.

    â~@~Kâ~@~KOf the four AIMROC owners, the only U.K.-based company is
    Globex International, which has an 11 percent stake, worth about $200
    million. But Globex is actually owned by three companies registered in
    Panama: Hising Management SA, Lynden Management Group, Inc., and Arblos
    Management Corporation. According to Panamanian registration records,
    all three firms list President Aliyev's two daughters -- Leyla and Arzu
    Aliyeva -- and Swiss businessman Olivier Mestelan as senior managers.

    Mestelan has long had close ties to the Aliyev family. He has organized
    artistic events with them and, together with Leyla and Arzu, appears
    in the records of other Panamanian companies being used as fronts
    for businesses in Azerbaijan, including the Azerfon cellular-services
    provider. Mestelan declined to be interviewed for this story.

    Aliyev's office refused to answer questions about his family's
    business interests in the gold fields. Presidential spokesman Azer
    Gasimov did not return phone calls and did not respond to questions
    submitted in writing.

    Opaque Decisions

    AIMROC has been controversial from its beginning. The consortium was
    formed by a 2006 presidential decree that identified Globex as part
    of the consortium. In 2007, AIMROC was awarded 30-year leases on the
    mineral fields.

    Chovdar alone is a lucrative parcel. According to the Azerbaijani
    Environment Ministry, it contains reserves of 44 tons of gold and
    164 tons of silver, worth about $2.5 billion at current prices.

    The contracts were awarded to AIMROC hastily and over the objections
    expressed by many members of parliament during hearings held in June
    2007. Lawmakers complained that the consortium's ownership was opaque;
    that the contract was awarded in violation of bidding procedures;
    that none of the companies had any history of mining; and that the
    deal was contrary to Azerbaijan's national interests.

    Ilham Aliyev's daughters, Arzu (left) and Leyla, are listed as senior
    managers at the Panamanian-registered companies.xIlham Aliyev's
    daughters, Arzu (left) and Leyla, are listed as senior managers at
    the Panamanian-registered companies.

    â~@~Kâ~@~KDuring the hearings, deputy Valeh Aleskerov, chairman of the
    parliamentary Natural Resources Committee, defended the deal. He said
    the creation of offshore companies was "a common practice around the
    world" and that no tender was issued because of the uncertainty about
    how much mineral wealth there was. Instead, he said, the government
    held talks directly with potential investors.

    The Environment Ministry's chief geologist, Agamahmud Samedov, told
    RFE/RL that the estimates of the other five fields are classified. He
    also declined to comment on AIMROC's ownership or its lack of mining
    experience.

    When asked last month about AIMROC's ownership, Aleskerov said,
    "Do you think the Azerbaijani government would contract with someone
    unknown, with just anyone from the street?" When asked if the Aliyev
    family has any financial interest in the project, Aleskerov said only
    "Shame on you!" and hung up.

    Professional Proxies

    Parsing the rest of AIMROC's structure is more difficult. Londex
    Resources and Fargate Mining are registered in Panama, according to
    documents obtained from the Panama Registry of Companies.

    The documents indicate that the companies are interrelated through a
    complicated chain of company directorships. All three are or were at
    one time owned by two companies registered at the same address on the
    tiny Caribbean island of Nevis: Casal Management and Tagiva Management.

    Casal and Tagiva act or acted as the director for at least 20 companies
    in the United Kingdom, the United States, and Panama. It is likely that
    the companies are professional proxies used to hide actual ownership.

    According to a document of the Tax Registry of Azerbaijan, Willy
    and Meyris S.A. (listed in some documents as Will & Meyris S.A.) is
    represented by a Czech geologist, Mirko Vanecek, the executive editor
    of "The Journal of Geosciences" in Prague.

    'The President Is A Good Person'

    Meanwhile, back in Chovdar, locals are looking forward to a rumored
    visit by President Aliyev to mark the opening of an ore refinery the
    consortium has built.

    "We have heard that president will come to the opening ceremony of this
    factory," villager Paneh Huseynov says. "Please tell our president
    to come and visit us. Tell him we support his policies. We will not
    be allowed to approach him. Please, we ask him to come and ask about
    our living conditions. Then he'll see how we live and how we suffer."

    Novruz Allahverdiyev is sure the president will help him.xNovruz
    Allahverdiyev is sure the president will help him.

    â~@~Kâ~@~KVillagers had no idea that the president's family owns part
    of the mine operator. "How can the president be benefiting from this
    production? ... All of the companies here are foreign. Englishmen
    are running the business here," says one local who refuses to give
    his name.

    Teacher Nureddin Ramazanov lost some land to AIMROC. With a salary
    of just $130 per month, Ramazanov says his family is starving.

    "The company destroyed our road," he says. "Geologists took our land.

    They paid us only 2,000 manats [$2,500] per hectare.... Now I don't
    know how we'll survive."

    Meanwhile, Karabakh exile Allahverdiyev says he is hoping to get a job
    at the mine. Locals say mining jobs pay the equivalent of $12 a day.

    So far, the mining site has hired very few locals.

    Despite grinding poverty and the problems with the mine, most locals
    remain firm in their faith in Aliyev, whose omnipresent portrait gazes
    out over the people of Chovdar from the walls of shops and schools.

    "The president knows nothing about this," says teacher Ramazanov.

    "Local officials say the president ordered that our land be taken,
    but I don't believe it. He is a good person."


    From: Baghdasarian
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