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Kyrgyzstan: Investigators Link Coup Plots and Kumtor

Kyrgyzstan has arrested yet another once-powerful politician on charges of plotting a coup — and in a surprising twist, authorities have linked their fight to quash a purported surge of political instability with alleged corruption at an economically crucial gold mine.
 
No fewer than seven politicians from two equally marginal opposition factions are currently facing trial on charges of seeking to violently overthrow the government after arrests in March and May that coincided with planned protests.
 
The latest figure to end up in the crosshairs of the ever-vigilant State National Security Committee, or GKNB, is Dastan Sarygulov, who led the state mining concern Kyrgyzaltyn from 1992 to 1999
 
Kyrgyzaltyn is significant because it represents the country’s stake in Toronto-listed Centerra Gold company, which operates the flagship Kumtor mine.
 
Sarygulov was among many former politicians to be dragged in for questioning in March over a coup plot whose existence has elicited much skepticism. Unlike three of his suspected co-plotters, who were slung into jail, Sarygulov remained under house arrest.
 
His name has now come up in relation to broad government probes into Kyrgyzstan into Kumtor. Few take the authorities’ claimed concerns of corruption or environmental damage created by the gold mining project at face value. 

Kyrgyzstan and Centerra — in which the Central Asian state’s government owns an almost one-third stake — have long been engaged in bitter struggle over the fate of the concession. Bishkek had hoped to renegotiate the terms of the deal, but talks between the two parties collapsed last year, setting the stage for a dirtier and more unpredictable showdown.

A GKNB press release from June 13 has taken the government’s two-fronted battle against Kumtor and would-be coup plotters and neatly merged them into one confusing bundle.
 
“Investigators do not rule out the possibility that efforts to destabilize the situation in the country in March and May were connected with the government’s active investigations into corruption schemes at the Kumtor project,” the statement said.

The security services allege that coup plot suspects have faced threats from relatives and allies of Kyrgyzstan’s two deposed and exiled former presidents, Askar Akayev and Kurmanbek Bakiyev.

This confounding link requires something of a leap in reasoning. And while the GKNB did not expand on its claims, it did circulate a letter seemingly addressed by former Centerra chief executive Leonard Homeniuk to the country’s current general prosecutor, in which Homeniuk attests to Sarygulov’s attempts to shake down the company when acting as head of Kyrgyzaltyn during the Akayev era.
 
The letter is worth reading in its entirety as a case study in the avenues authoritarian states pursue to shake down foreign investors — donations to charitable funds run by presidential relatives, contributions to electoral campaigns and so on.
 
“Such requirements were often very significant – more than $200,000 in a given month,” wrote Homeniuk, who was himself held by Interpol in Bulgaria on corruption charges for an extended period at Kyrgyzstan’s request before being released last year. 
 
According to Homeniuk, Sarygulov was one of the officials asking for such payments on a regular basis.
 
“[They] always explained such requests that they were under pressure from the office of the president,” he noted, claiming the payments themselves were “lawful,” even if Centerra could not be certain of how the money was being used.

Whether or not this means, as the GKNB is arguing, that latent “personal and commercial” Bakiyev and Akayev interests in Kumtor could be behind claimed coup plots is open to question, but Centerra itself is now under pressure from all angles.
 
More than a month on from an armed government raid on the company’s Bishkek office on April 28, Centerra has said its local affiliate’s managers have reportedly been prevented from leaving the country amid ongoing criminal investigations related to in-country spending.

Kumtor has also been ordered by a local court to pay the government over $100 million in environmental fines, although it is contesting that ruling both locally and in courts of international arbitration.

Just to make matters worse, President Almazbek Atambayev waded into the fray on June 14 by asking the General Prosecutor’s Office to review legality of extensions on the Kumtor concession lease in 2003-2004 and 2009.

"People need to understand why Kumtor, which should have become the pride of Kyrgyzstan and the country’s largest investment project is in fact perceived by the people as the biggest scam — a trough of corruption for two ruling family clans,” Atambayev said, referring to Akayev and Bakiyev.
 
Finally, there is the matter of whether the government will grant Centerra a license to operate the mine beyond June 30.
 
In the event of a license impasse leading to a stop work order at the mine, metal workers trade union leader Eldar Tadjibayev has said over 2,000 local workers and their families may be ready to rally.
 
Those are bigger numbers than the opposition figures arrested on coup charges ever seemed capable of getting.

Kyrgyzstan: Investigators Link Coup Plots and Kumtor

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