State commission proposes to introduce external management on Kumtor

AKIPRESS.COM - The state commission on Kumtor proposes the Kyrgyz government to terminate the concession on the basis of the concession law and impose a temporary external management on Kumtor Gold Company, said the head of the state commission Akylbek Japarov at an extraordinary session of Parliament on May 17. Commission also suggested law enforcement agencies and the General Prosecutor's Office to check prime ministers, presidents and other officials who signed agreements on Kumtor whether they lobbied a foreign company's interests.
Other officials that are recommended for check include directors of State Environmental Inspectorate, Chairmen of the State Tax Service, members of the board of directors of Centerra Gold Inc. from Kyrgyzstan, Chairmen of the Board of Directors and the Management Board of Kyrgyzaltyn JSC, Chairmen of the Revision Commission of Kyrgyzaltyn.
"We see a sign of treason," Japarov said and asked the Prosecutor General's Office to confirm it.
He asked to extend the work of the commission until the fall when new parliament comes in force to help the government to collect compensations and get ready for trials. "We have prepared all the papers and our lawyers suggest that the parliament should participate in the arbitration proceedings as a representative of the people. There are two options to resolve the Kumtor issue, either we choose horror without end for Kyrgyzstan or end the Centerra corrupt scheme," Japarov said.
"During the months of work of the state commission we made Centerra Gold Inc pay for the use of water, now all mining companies will pay for 1 cubic meter of water used," he said.
The court fined the company for more than 260 billion soms or $3.2 billion for environmental violations, he said. Additionally, there are also unpaid taxes and fines totaling $1.2 billion, he said.
Last week, president Sadyr Japarov signed into amendments to law on joint-stock companies and Criminal Code that would enable the Kyrgyz government to impose external management on Kumtor in case of environmental breach posing direct threat to the lives of people. Parliament approved the bill on May 6.
On May 7, a court in Bishkek ruled to fine the Kumtor Gold Company JSC for 261.719 billion soms (ovev $3 billion) in favor of the state and pay a duty of 1.308 billion soms for violation of environmental legislation of the Kyrgyz Republic: the company dumped mining waste on the Davydov and Lysyi glaciers for many years. The company dumped 1.2 billion tons of waste rock in total for the period of its operation, according to court's ruling.
On May 8, Centerra Gold Inc. said in a statement that it understands that this newly adopted law on external management would apply in circumstances where Kumtor Gold Company (KGC) violates certain Kyrgyz laws relating to safety and thereby creates an immediate threat to the life or health of people: (i) prohibits KGC's managers from managing the mine (or else face criminal sanctions); and (ii) enables the Prime Minister of the Kyrgyz Republic to appoint an external manager to take control of all management activities of KGC, including its bank accounts.
It also stated that Company is aware of other draft laws and decrees in the Kyrgyz Republic which seek to undermine the 2009 restated Kumtor project agreements and the tax and fiscal regime under which the Kumtor Mine has operated since 2009. It is unclear whether such drafts have progressed past the proposal stage.