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The mine is Kyrgyzstan's biggest tax contributor and employer (Image: Centerra Gold).
Akylbek Japarov (no relation to the president), is that Centerra Gold has actively meddled in the state affairs of Kyrgyzstan.
“Some activists and politicians got into jail due to criticisms from [Centerra Gold], while others built their careers with the help of Centerra Gold. The company helped some of them take
the posts of prime minister and even president,” Akylbek Japarov asserted on May 17. He provided no evidence to back up his accusations.
Nothing new
In many ways, there is nothing new about the government’s unproven
claims about the environment, national interests and political meddling. Similar justifications have been employed during all previous disputes with Centerra over profit-sharing and investigations into the company’s purported connections with government officials.
One of the earliest examples of harassment directed at Centerra occurred in 2013. It featured as many
as 10 cases of alleged criminality that emerged as part of a corruption probe at Kumtor, leading to the detention of some
forced to leave the field,” Kazakhstan- based political scientist Eduard Poletayev told Russian news agency REGNUM this week. “Either these are not very skilful attempts to initiate negotiations with the aim of increasing payments or [there is a move] to revise the state’s share in the company.”
“Canadian Centerra Gold, operating at Kumtor mine, is one of the few large investors in Kyrgyzstan, and direct pressure from Bishkek looks – at the very least – illogical,” the analyst suggested.
“This situation, if it goes too far, will make other foreign investors working in the mining industry of Kyrgyzstan think about things,” Poletayev added.
That latter point, however, may not be much of a concern to Bishkek given that in terms of other Kyrgyz gold mines,
the second-biggest, Jerooy, is being developed by Russia – a geopolitical ally in the neighbourhood that no Kyrgyz political faction would dare to seriously oppose – and several smaller gold mines are owned by China, another giant that won’t brook much nonsense from its smaller neighbour, especially given the pile of debt the Kyrgyz owe Beijing.
Sore point
The ownership of the mine has always been a sore point with many Kyrgyz, given Kumtor’s importance. Kumtor is the country’s single largest contributor to gross domestic product, accounting for 5-7% of GDP, while the mine is
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also the nation’s largest taxpayer and employer. It is wholly owned by Centerra Gold through KGC, while Kyrgyzstan, via state mining firm Kyrgyzaltyn, gets some reward via its 26% stake in the Canadian parent company.
Several political factions have long called for the nationalisation of Kumtor, and their demands were especially loud after the ex-Soviet country’s second revolution in 2010. The agreements signed by the former regimes of Askar Akayev and Kurmanbek Bakiyev,
“Several political factions have long called for
the nationalisation of Kumtor, and their demands were especially loud after the ex-Soviet country’s second revolution in 2010”
respectively, were widely assailed as “unfavourable to Kyrgyzstan”, with alleged personal enrichment for various individuals involved.
Nevertheless, provided it is legally watertight, a deal is a deal, thus Japarov and his posse need more than just environmental objections with which to attack the strategic investor. Allegations of political meddling are another factor that has been put in play.
One vague insinuation voiced by the head of the state commission on Kumtor,
top-level Kyrgyz officials. Then there was the case of CEO of Centerra between 2004 to 2008, Leonard Homeniuk. He was detained in Bulgaria in July 2015 on corruption allegations made by Bishkek, but he was three months later allowed
to fly home after a court refused to extradite him on the charges presented.
In 2014, Kyrgyzstan struck a non- binding agreement with Centerra Gold for the restructuring of Kumtor. Under this deal, the government would swap its stake – which back then stood at 32.7% – in Centerra Gold for a 50%