Tajik Aluminum witness 'must appear'
By John Helmer
MOSCOW - A London High Court judge has warned that unless one of the leading
figures in Tajikistan appears in London in October for cross-examination on
oath, the key evidence in the high-profile Tajikistan aluminum case "will fall
away".
Justice Tomlinson was referring to Hassan Saduloev (the High Court spelling;
also known as Asadulozoda in Tajiki). He is brother-in-law of Tajikistan's
President Emomali Rahmonov (Rahmon); chairman of Orienbank; and the man reputed
to be the principal arranger of the billion-dollar annual operations of
Tajikistan Aluminum Plant (Talco), the country's principal
consumer of electricity and source of export earnings.
After weeks of uncertainty, lurid press speculation and missed deadlines,
Saduloev, according to his British lawyer in court, signed a required witness
statement on July 25. However, the authenticity of this document and of
Saduloev's signature were challenged by lawyers for Avaz Nazarov and the Ansol
group of companies, which he controls and which previously supplied the Talco
smelter. The Ansol group of companies has been sued in the High Court by Talco,
and they are counter-suing. Both sides allege fraud and the diversion of
hundreds of millions of dollars in the smelter's earnings over the past decade.
Amid courtroom allegations of corruption, fraud, forgery, and destruction of
evidence, the case has exposed the dynamics of the global aluminum trade,
involving three international aluminum giants - state-owned Hydro Aluminum of
Norway; United Company Rusal, the Russian producer controlled by Oleg
Deripaska; and India's National Aluminum Company. With Rahmon and Saduloev,
Deripaska took over control of the smelter at the end of 2004, ousting the
Ansol group. Talco's lawsuit followed to prevent Nazarov making a comeback in
the Tajik aluminum business.
The case has also put the spotlight on the political problems of Tajikistan,
the Central Asian cockpit in which great power interests, Islamic
fundamentalism, and the narcotics trade have been battling for primacy since
the collapse of the Soviet Union in 1991.
Now into its fourth year, the Tajik case has run up the second-largest legal
bill in English history; the largest in such a short time - more than US$126
million for the Tajik sides alone. Justice Tomlinson also presided in the
record-setting 13-year case between Deloitte and the Bank of England. When that
case was wound up in 2006, Tomlinson ordered Deloitte to pay the Bank of
England's legal costs at the highest rate possible - "indemnity costs".
Last week, after Talco lawyers Herbert Smith and barrister Neil Kitchener again
tried to protract the proceedings and delay the scheduled date of trial, the
judge said: "I am extremely resistant to the notion that we are going to
adjourn the beginning of the trial ... "
Saduloev's lawyer told Justice Tomlinson: "It is regrettable that Mr Saduloev
did not sign until last Friday. He did sign. He did not die and then become
resurrected and die again. He is alive and well. But, for whatever reasons, for
reasons we say of his travel and difficulty with communication and him just
being too busy to look at it, too preoccupied, it was not signed until Friday
[July 25]."
The lawyer was referring to reports on the BBC and Radio Free Europe that
Saduloev had been shot in May, following a Rahmon family dispute over business;
or had been held incommunicado since that time.
The judge ordered Saduloev's lawyer to provide the original of the July 25
statement and signature for forensic testing. He also required Saduloev to
appear in person when the witnesses are called in the trial. This is scheduled
for October 27.
According to Stuart Isaacs, Saduloev's barrister, "We intend that Mr Saduloev
will give evidence in person at the trial. I cannot give an absolute 100%
guarantee that that will happen, but that is the intention, and your lordship
has already made observations in relation to there being no permission for
evidence by video link at this stage anyway."
The judge announced, "If he does not turn up then his evidence will fall away."
The case was initiated in 2005 by President Rahmon himself, who directly
controls Talco, aka TadAZ, the key plaintiff.
The cost disclosures, amounting to about 4% of the entire gross domestic
product of the country, triggered widespread publicity in the international
media, and also inside Tajikistan. Public poverty has become so desperate there
is inadequate electricity to sustain basic public health services.
The latest economic statistics from Tajikistan indicate that the power
shortages caused a significant slowdown in the country's gross domestic product
growth and industrial production in the first quarter of the year, but
apparently both recovered in the second quarter.
National Bank of Tajikistan statistics indicate that aluminum exports from
Talco dropped 2.5% in the first quarter to 96,111 tonnes, before rising 5% to
106,281 tonnes in the second. Altogether, for the first half of this year,
Talco appears to have exported 1% more aluminum than it did in the same period
of 2007.
Fresh power cuts to the country, if not Talco, may be imposed soon, according
to Barki Tojik, the national electricity utility. The utility acknowledges it
is overdue in its repayment for Russian electricity supplies.
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, forensic audit of loan funds now estimated to total about $500
million. The World Bank and the European Bank for Reconstruction and
Development (EBRD) are also involved in the pursuit of the missing money.
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 aluminum plant, and what is happening to the aluminum
cashflow. This amounts to revenues exceeding $1 billion per annum.
A notice posted on the website of the National Bank of Tajikistan gave June 10
as the deadline for prospective auditors to apply for the job. There has been
no subsequent announcement of the selection.
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 court has heard
testimony and seen evidence that Hydro, in which the Norwegian state is the
largest shareholder, is implicated in contract documents of the diversion of
the aluminum cashflow through front companies in the British Virgin Islands
(BVI).
The High Court and the London Arbitration Tribunal have already heard testimony
by Hydro in a separate case in which it successfully claimed against the
Tajikistan smelter for breach of contract. The evidence of Hydro's position in
that case is now available to contradict Hydro's position towards the smelter,
and also the BVI companies, in what Justice Tomlinson in the current case is
calling the "Hydro Scheme".
The one individual in Tajikistan who knows where the aluminum cash is going,
how Hydro is involved, and what Hydro's executives know of it, is Saduloev. He
is reported in the court documents to be behind CDH, a BVI-registered entity
listed on Talco's website as one of its strategic aluminum and alumina trading
partners.
CDH is one of the parties to the London court case. It claims that its
relationship to the Tajik state gives it sovereign protection from claims in
the English court.
There are dangers for Saduloev, if he appears and his testimony is challenged
on the evidence. The lawyers of Adukadir Ermatov, a former director of Talco
and key defendant, have already told Justice Tomlinson that they may press a
contempt citation against Sherali Kabirov, another witness due to appear in
London, for allegedly wiping computers and destroying documents to prevent
their disclosure at the trial. Kabirov is deputy director of the aluminum
plant, as well as managing director of Talco Service, which is a company
operating 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
aluminum 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.
Justice Tomlinson acknowledged the possibility of contempt charges, but said
this week that the trial must begin, and testimony and evidence presented for
cross-examination, before he will consider the contempt charges.
On June 17, a call to Saduloev in the Tajik capital of Dushanbe was connected
to Rustam Soliev. He identified himself as the chief of the chairman's staff.
On the question of proof that Saduloev is communicating personally and
directly, Soliev declined to speak on the record.
Ahead of this publication, Saduloev's office at Orienbank was contacted again.
Soliev has been replaced by Anvar Kuliev. He was asked to confirm that Saduloev
had been in the mountain town of Khorog recently, where he was reportedly seen
by credible Western sources; that Sadoloev had signed the witness statement on
July 25; and that he has agreed to appear in the High Court in London in
October.
Kuliev told Asia Times Online he could not answer the questions on the spot and
had to consult. Asked if Saduloev was in his office, Kuliev said he did not
know.
Hydro spokesman Halvor Molland has told Asia Times Online: "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 NGOs."
A claim originated in India in July that Rahmon may be considering selling
Talco to the National Aluminum Company (Nalco) of India. Market reports
suggesting that Nalco, which already sells alumina to Talco, is considering
buying 51% of the Tajik plant were subsequently dismissed in Dushanbe as
"absurd".
There have been no negotiations for a buyout by Nalco, a Talco spokesman
announced. "Talco is a national unitary company, not a joint-stock entity.
Thus, it cannot sell its shares. Selling a company that provides 75% of the
country's total cash currency, and when world aluminum prices are soaring,
would be against our national interests," Talco's press secretary Saekhat
Kadyrova was reported as saying.
Contact with Talco headquarters on Friday confirmed that Kadyrova is still
Talco's spokesman, but she did not respond to telephone and email contact.
Questions from Asia Times Online to verify Talco's production figures this
year, and the position towards Nalco, have gone unanswered.
John Helmer has been a Moscow-based correspondent since 1989,
specializing in the coverage of Russian business.
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