Sunday, June 15, 2008

Tajik Aluminium Case Becomes Shooting-match

By John Helmer in Moscow

The spear points of the fence that guards the Royal Courts of Justice, off Fleet Street in London, haven’t been used to display the severed heads of criminals for half a millennium. They remain sharp, and deterring, nonetheless. Inside, and upstairs to the left, the swinging oak-doors of Courtroom 4 are also deterring — if you are the Tajikistan Aluminium Plant, the biggest spending plaintiff in recent English legal history.

And it is in this courtroom this week that the fates of the smelter owners, the rulers of far-off Tajikistan, are being decided. In fact, on June 10, in a hearing before High Court Justice Tomlinson, English lawyers argued over whether Hassan Saduloev (also spelled Sadullaev in Russian, Asadullozoda in Tajik) the second man in Tajikistan, brother-in-law to President Emomali Rahmon, and a key witness in the London court case, is alive or dead.

Saduloev is required to testify in court, and if he is dead, he cannot. If he is alive, he must. If he is in hiding, he may be cited for contempt of court, and the case may be dismissed by the judge.The case was initiated by President Rahmon himself, who directly controls the Tajikistan Aluminium Plant (Talco, aka TadAZ), the key plaintiff. The legal costs which the plant, and behind it the Tajik state treasury, have run up has set a record in the UK — more than $120 million.

That disclosure in a recent court hearing, and then by Mineweb, triggered widespread publicity in the international media, and also inside Tajikistan, where public poverty has become so desperate, there is inadequate electricity to sustain basic public health services. Public demonstrations have also been reported outside the capital, Dushanbe, though not by the state media, which are controlled by Rahmon.

In March, the International Monetary Fund (IMF) announced that the Tajik state bank was in default of its loan obligations, and ordered an internationally supervised audit of loan funds now estimated to total about $500 million. The World Bank and the European Bank for Recosntruction and Development (EBRD) are also involved in the pursuit of the missing money. Three months have elapsed, and the auditors have still not been appointed.

The US, which is the largest shareholder in the international banks, has announced publicly, through US Ambassador Tracey Jacobson in Dushanbe, that the audit should include the aluminium plant, and what is happening to the aluminium cashflow. This amounts to revenues exceeding $1 billion per annum.

The Russian government has been issuing conflicting signals, appearing hostile to Rahmon’s continued stay in power on the one hand; and on the other, protecting him on the World Bank and EBRD boards of directors.

The Norwegian government is also implicated, because the London court case has heard testimony and seen evidence that Hydro, the state-controlled aluminium company, is implicated in contract documents and computer records of the diversion of the aluminium cashflow through front companies in the British Virgin Islands (BVI). A source at EBRD claims privately that there may be serious consequences for a handful of Hydro executives, if they are required to testify in the High Court.

The one individual in Tajikistan who knows exactly where the aluminium cash is going, how Hydro is involved, and what Hydro’s executives know of it, is Saduloev. He heads the country’s leading commercial bank, Orienbank; he also he controls CDH, a BVI-registered entity listed on Talco’s website as one of its strategic aluminium and alumina trading partners. CDH is one of the parties to the London court case.

Brian Doctor, one of the advocates for Avaz Nazarov — one of the Tajik defendants accused by Rahmon, who is also counter-suing Talco — told the judge on June 10 that Saduloev must either testify, or show cause for the delay in testimony, ahead of the trial; this is scheduled in a few weeks’ time. According to Doctor, “we have been told that there is a solicitor from this country [UK] who has gone there [Dushanbe] and, in somewhat vague terms, reports that she has seen him and he is well… He is a person who has come to the United Kingdom in the past. I would not have thought it is all that difficult, if he is alive and well, to communicate with the court in some way.”

Stuart Isaacs, the advocate for CDH and Saduloev, told the judge: “the only doubt that appears to exist is in the minds of Mr Doctor and those behind him.” The judge wasn’t convinced, and asked: “are you able to tell me whether he has, in fact, been shot? He could have been shot, but nonetheless be alive and well.”

Isaacs’s reply equivocated: “As far as I am aware, based on instructions and Miss Chumak of Osborne Clarke, the solicitor in question [who had been sent to the Tajik capital], having met with him in Tajikstan recently, the answer is that the rumours that he had been shot by the President’s son are untrue.” Isaacs left open the possibility that Saduloev had been shot by someone else. But he was categorical in assuring the judge that he would testify. Exactly how and when aren’t clear.

There are grave dangers for Saduloev, if he perjures himself in the London court. Nazarov’s lawyers have already told Justice Tomlinson that they may press a contempt citation against Sherali Kabirov for allegedly wiping computers and destroying documents to prevent their disclosure at the trial.

Kabirov is deputy director of the aluminium plant, as well as managing director of Telco Service, which is a company owned by the offshore CDH entity; he is thus one of Saduloev’s and Rahmon’s subordinates, and a key figure in the forensic audit of the Talco fortune.
The information sought from his computer records involve the whereabouts of the aluminium cashflow. He is also described by the High Court judge as “the person who is involved in the day to day running of the litigation and who, therefore,gives you [Herbert Smith] your instructions.” This has been acknowledged by Herbert Smith.

According to Doctor in court this week, “what happened was that, a week before [Kabirov] handed the computer over to Herbert Smith [Rahmon's London lawyers], it was wiped.” Software called Acronis privacy Expert 7 was used, the judge was told. But seven months have elapsed since the tampering was reported in court, and the judge was asked to consider dismissing the case on the ground that a fair trial of the evidence has become impossible.
“This is a case where a man from a foreign jurisdiction has come to sue in these courts, none of the defendants can go to Tajikistan or our lawyers cannot go there,” Doctor told Justice Tomlinson.Saduloev is at risk in London, for if he is found to be deceiving the High Court, his free movement in and out of the UK may be curtailed, and the interbank reputation of Orienbank is likely to be challenged. But there are obvious problems for Saduloev in Dushanbe if he tells what he knows.

Was he shot to silence him on account of the domestic problem? Has Saduloev urged Rahmon to drop the London case, pay off its costs, and stop the proceedings before he himself, along with Kabirov and others are interrogated? Did Saduloev attempt to press Rahmon in what Rahmon and his son Rustam judged to be a putsch attempt? Or were the shooting and disappearance contrived by Rahmon, Saduloev and others, in order to make him appear to be alive, but inaccessible all the same?Mannered though the courtroom statements may be, according to English practice, it is now the political fate of Tajikistan which is now being tried in London. After spending almost 5% of Tajikistan’s GDP on the court case, Rahmon now finds that he cannot risk allowing his brother-in-law to appear physically in Courtroom 4, or dictate a witness statement.
As Doctor told the judge, “it seems odd that you should have to send someone to, as it were, identify him.” The normal thing, Doctor added, was that if someone were said to be unavailable for a court appearance, then “I would ask [him] to walk through the door… there may be other ways of conveying that Mr Saduloev is alive and in a position to give evidence.”
The problem remains — what evidence will Saduloev give, if he is alive?

On May 2, Saduloev was filmed in the company of Rahmon at a regional event. The media reports claim he was shot later that day. Rustam, the president’s eldest son, did the shooting, according to one press version. Rustam was educated at a US university, and is involved in the automobile business at home.

Russian-language reports in the region reported the shooting around May 4. According to one press report from Tashkent, in neighbouring Uzbekistan, Saduloev was treated for his wounds in a German clinic, but died on May 8.

Diplomats in Dushanbe believe they saw Saduloev at a reception on May 9, but as he is believed to have a twin brother, there have been rumours that a ringer has been appearing in his place. A source at the May 9 reception said that Saduloev’s double is unlikely to have greeted quite so many people as he appeared to know.

Officials at Orienbank have been emphatic that nothing has happened to Saduloev, and that the rumours are nothing more than “old ladies gossiping at the marketplace.” Radio Free Europe/Radio Liberty correspondents in Tajikistan have reported that at least two officials at the bank said they had seen Saduloev “just half an hour ago.” Saduloev’s deputy, Umed Davlatzoda, is reported by RFE/RL as claiming that Saduloev is alive and well, but does not want to comment on the rumours.

Orienbank has repeatedly refused to put calls for Saduloev through to him, and he has not responded to messages. The bank website announced on May 30 that their chairman was fully occupied. “Beginning from 10th May this year for three weeks, Mr Khasan Asadullozoda, the Chairman of Orienbank OJSC, held meetings with heads of governmental and international entities and commercial structures being clients of the bank for the purpose of further development and enhancement of cooperation. During the meetings, the parties conducted in-depth and comprehensive analysis of the bilateral relations, gave consideration to comments and suggestions on further improvement of banking and implementation of new types of bank services, which would cut operational expenses and therefore increase their income.”

Such meetings, Orienbank said, “are planned to be regular in the future. They will give a fresh impetus to the development and boosting of financial and credit relations between the bank and its clients through joint implementation of large credit and commercial finance projects.”
There have been signs and rumours of a falling-out between Rahmon and Saduloev for some time, possibly encouraged by outside powers, or by internal factions backing Saduloev to succeed Rahmon as president of the financially desperate country.

Then on April 8, Radio Imruz, a Tajik language bradcaster owned by Saduloev’s Orien bank group, went off the air, allegedly on account of “technical problems”. A few days before the closure order, Imruz had reported on a protest in the eastern city of Khorog, claiming that local people were unhappy with low and often unpaid wages, as well as with growing food prices. The radio had also revealed the IMF default notice against the central bank.

Rahmon’s political standing has already been been undermined in the two key foreign capitals, where he has counted on support — in Oslo, Norway, and in Washington, DC. Despite lobbying by Hydro executives for an official visit to Norway, the foreign ministry in Oslo has refused point-blank. US scources in Washington say they “are not currently planning for a Presidential visit to the United States. ”In London, which is also headquarters of the EBRD, the High Court has already ruled against the Rahmon-appointed management of the aluminium plant. According to Justice Morison of the High Court’s Queens Bench Division, in an opinion dated May 18, 2006, Talco/TadAZ “are not the victims of fraud, they have been the perpetrators of it in this litigation…. [Talco] has been involved in deliberate attempts to mislead the [Arbitration] Tribunal and have committed acts which in this jurisdiction are serious crimes [forgery and attempting to gain a pecuniary advantage by fraud].”

WhatHydro executives have gained from their contracts with the aluminium plant and the BVI companies will be explained by Saduloev, if he finally testifies. If he is dead, or on the run, Hydro’s vulnerability is not less considerable.

Hydro spokesman Halvor Molland has told Mineweb: “Hydro has a zero tolerance towards corruption and we are following Hydro’s guidelines in all parts of the world where we are doing business. We have spent a lot of time discussing issues concerning transparency and corporate governance [in Tajikistan] with the World Bank and EBRD and other NGO’s.”

by John Helmer - Friday, June 13th, 2008

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