Beyond the River

There’s a murder at the end of this post, so keep reading despite the boring business details.

With a tip of the hat to the classic Russian-dubbed Mexican soap opera, let’s go back and review last week’s post about the aluminum court case that’s making a big sucking sound on the Tajik economy:

Now, according to an excellent article in Asia Times, we learn that Rahmon has squandered more than 5% of the country’s entire GDP on legal fees against former partners in Tajikistan’s aluminum projects, as well as a Norwegian company called Hydro that handled complex commodity transactions for Tajikistan using a shell corporation in the Virgin Islands.

Well, there have been a couple of developments since John Helmer reported that the Tajik government, in the broad daylight of British jurisdiction, has spend upwards of $120 million on suing his former Talco (Tajik Aluminum Company) partners.

Now he’s reporting, in a modified reprint of the the original article in Mineweb, that the IMF has some egg on its face. While it did find out about the stolen $40 mil, its audits seem to overlooked $120 mil:

Masood Ahmed, the IMF spokesman, was asked by Mineweb how the IMF had managed to miss the expenditure of up to 4% of Tajikistan’s gross domestic product on the London and British Virgin Islands litigation, which Talco has pursued for the past three years. He declined to say. Ahmed also refused to say if the IMF has verified whether Hydro is a contractual beneficiary of the Talco litigation in London and elsewhere.

I suppose we would all decline to say in that situation. But the important thing is, we know now.

Also, he reports that US Ambassador Tracy Jacobson is officially miffed and that we’re going to, like, totally look into this matter:

Tracey Jacobson, the US Ambassador to Tajikistan, today told Mineweb she “would hope that all audits would be as complete as possible.” Official intervention by the US in support of the IMF’s mission to Dushanbe, and in the financial crisis now gripping Tajikistan, is unusual.

What is this all about? Well, it seems that the Tajik government, which is basically the owner of the Tajik aluminum company Talco, had a nice little deal set up. Tajikistan is good at making aluminum, but it doesn’t have alumina, which it needs to import to make the aluminum. Makes sense, and seems like a nice way to turn a profit.

However, apparently what they were really doing was setting up the alumina-aluminum transactions in such a way so as to make it look like the company was taking losses, when in fact the profits were being diverted into off-shore bank accounts with the help of a Norwegian company, Hydro. We all know what off-shore bank accounts are for: they’re for dictators who need to hide their dirty money from their shivering, hungry populations.

Here’s how Helmer summarized it back in March:

Hydro appears to sell alumina to Talco, and Talco appears to sell aluminum to Hydro - then appearances are deceiving. The court presentation of the documents shows that, according to a scheme of tolling the raw materials for processing at contrived prices, Talco receives alumina from Hydro and gives it to CDH. CDH then contracts it for processing by the smelter and receives the metal back in exchange. CDH then sells the same metal back to Talco at the market price, and Talco sells it to Hydro at a loss.

The combination of input and output prices leaves Hydro with a profit on its alumina and its aluminum. However, the biggest profit is reserved for CDH, leaving the plant in Tajikistan with what is described in court as “a huge loss on the entire transaction”. This diversion is done with the full knowledge of Hydro.

Fine, so the Norwegian government is not a big fan of their companies going around setting up corrupt financial schemes for small-time thugs who happen to run countries. They told Hydro to cut off the deal, which they did, which Tajikistan sued them in a British court for, which is why we even know any of this because the court filings are public there (as opposed to say in Tajik courts.)

That would be fine, too, except for the fact that not only did Hydro and Talco (i.e., the Tajik government) have a scheme to squirrel away millions of dollars offshore, but now the court case, which has lasted a while now, has cost the Tajik government $120 million dollars. Or about 5% of Tajikistan’s GDP.

I’ve done a very basic calculation, so bear with me, I could be totally wrong. The aluminum industry of Tajikistan, according to reliable sources at wikipedia, made up 40% of Tajikistan’s industrial output, and industry makes up 28% of the total GDP. So, we’re looking at just over $1.07 billion a year, if my method isn’t faulty. That at least gives as a ballpark, upper limit figure for how much money is at stake if the whole scheme collapses on Rahmon.

Now for the murder.

Last week, Rahmon’s son Rustam shot his uncle, Rahmon’s brother-in-law, Hassan Sadullayev. The latter died on an emergency trip to Germany for treatment.

Ahem.

Rahmon is not totally psyched to have this news reported. He’s threatened to shoot anyone who divulges details of the murder publicly. Nice.

This is certainly not the first murder in Central Asian politics, and there have been signs that we were leading up to this. A short while ago, the radio station that Sadullayev owned was shut off. Bad sign.

Also, he ran Orien Bank, a very big bank by Tajik standards. Don’t be a big banker in Tajikistan.

Eurasianet reports that it might have been the case that Rahmon’s daughter was trying to wrest control of the bank from Sadullayev, and that ultimately sparked the shooting, but I am intrigued by Khurosonzamin’s repost of a September article about the rising star of Sadullayev:

According to well-informed sources, Rahmon himself sees a successor in his brother’s wife Hassan Sadullayev. He is the director of the largest bank in the country, Orientbank, and the head of the offshore company CDH, which has exclusive trading rights to the Tajik aluminum factory.

Oh, look, there’s that offshore company that handled the theft of millions, maybe hundreds of millions of dollars for Rahmon and Bros. Note also that this is mentioned in the same breath as the post-Rahmon era succession.

Update: RFE/RL has a more circumspect report, neither verifying nor disproving that the murder of Sadullayev has even taken place. They quote some loyal employees who claim that they saw him “just a half-hour ago” and that “thank god, he is in good health.” However, there’s no public sign of him and he didn’t accompany Rahmon to Kazakhstan (apparently he usually does come on regional visits), nor did Rahmon attend the Victory Day parade this year for the first time ever.

Let me start by saying that Tajikistan is a wonderful country. Its people are generous, kind, and hospitable, and its natural beauty is second to none.

But its government is a wreck, a gang of incompetent thieves.

In recent months the Tajik government has spent quite a bit of energy on going after “corruption”–you might have heard, if you’re living in Tajikistan, of the dubious action initiated against the owner of Dushanbe’s most successful grocery store chain, Orima.

Also, at the same time as the country was suffering its worst energy crisis ever, the parliament was debating whether or not to rescue the nation from the scourge of right-side-steering vehicles. They did.

Now, according to an excellent article in Asia Times, we learn that Rahmon has squandered more than 5% of the country’s entire GDP on legal fees against former partners in Tajikistan’s aluminum projects, as well as a Norwegian company called Hydro that handled complex commodity transactions for Tajikistan using a shell corporation in the Virgin Islands.

Yes, you read that right. Five percent of Tajikistan’s GDP, wasted:

Herbert Smith, one of the largest-billing of British law firms, has been forced to reveal this month in the High Court in London that it is charging the Tajikistan government more than US$100 million for a three-year court claim ordered by Tajik President Imomali Rakhmonov (Rahmon). Rahmon’s targets are a group of aluminum traders and managers, now based in London, who were ousted from the Tajikistan Aluminum Plant (TadAZ, Talco) after getting too close to the president’s interest in Tajikistan’s principal industry.

The fee numbers and estimates were part of the disclosures that were tabled in a High Court hearing on April 15 before Mr Justice Tomlinson. Herbert Smith is the law firm acting for the Tajik smelter (Talco), which is wholly owned by the Tajikistan government and directly supervised by Rahmon. The estimate of costs from Herbert Smith (aka Herbies in London legal slang) also covers barristers’ fees, which include those of Murray Rosen QC, who is acting for Talco on Herbies’ instructions.

Additional case-fee charges of 10 million pounds (US$20 million) have also been revealed. These are being run up by a British Virgin Islands-registered company called CDH, which is a cutout in the complex aluminum trading arrangements devised by Rahmon’s government between Talco and its Norwegian supplier and partner, Hydro Aluminum. CDH is being represented in the High Court by Osborne Clarke.

The total of $120 million represents 5.2% of the gross domestic product of Tajikistan, the poorest of the former Soviet Union member states, in 2005. That was when Rahmon and the aluminum plant launched the court case against Avaz Nazarov, a Tajik national, who had traded with the plant until Rahmon ousted him in late 2004.

This all has a lot to do with a) the best natural resource Tajikistan has, aluminum; and b) the deal between RusAL, the Russian aluminum company, and the Tajik government to build a new aluminum plant as well as to complete the Rogun Hydroelectic Dam. (That dam that the Tajik government is now begging for private donations for.)

It’s also in the context of the recent revelation that the Tajik government basically stole a $79mil loan from the IMF intended for poverty reduction, which they were busted for.

Tajik citizens can find a perverse kind of vindication for all of their suspicions that the Rahmon gang is picking their pockets. In a court decision related to the aluminum controversy, a London judge called TadAZ claims of victimhood nonsense, and laid the blame squarely on Rahmon and Bros.:

Ruling in that case, Justice Morison of the High Court’s Queens Bench Division wrote, in an opinion dated May 18, 2006, that 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]”.

Isabel Gorst, a reporter for Financial Times, writes today that Tajikistan is a “Muslim nation bordering Iran and Afghanistan.” Ah, the perils of being a Moscow-based reporter asked to say things about strange little Muslim nations… I tip my hat to Sue for this link.

The content of the article, that Tajikistan’s government is begging for donations from private citizens to complete the Rogun Dam project, I’ll leave without comment. IWPR, who actually knows about Central Asia, gives a good background to the dam and water issues in the region generally in this 2006 article.

Posts here at BTR have been few and far between lately, as a new project gets started and free time narrows, but if you haven’t yet deleted us from your blog list, you should check out this post at Registan, where some smart people are having a conversation about this article in the comments about the future of Afghanistan.

Yes, the Pakistanis really are funding the Taliban insurgency at the same time as they’re taking money from the US to fight the insurgency. Salon writer Matthew Cole debriefed a Taliban defector who talks all about specifics, names, etc.

I think this is the third week in a row that the NY Times Week in Review section has had an article about Central Asia–this time about the Oscar nomination for Best Foreign Picture of Mongol, a Kazakh production of the life of Genghiz/Chinggis. Of course, Borat had to be in the title. Some say X, while others believe Y, Y being the correct answer:

“Kazakhs’ self-worth was degraded for 70 years,” says Gani Kurashev, a well-known Kazakh actor, director and producer, referring to the Soviet period. “Film is propaganda. It’s up to the director to decide what to propagandize.”

The view is not universal, of course. Others here are already arguing that distortions of fact aren’t the only problem with using film to engineer a new Kazakh sense of identity. That goal goes hand in hand with a government campaign to promote the Kazakh culture and language nationwide, even though many people here — ethnic Kazakhs included — still speak only Russian. Such Kazakh-ness, critics of the program say, comes at the expense of the country’s multitude of other ethnicities.

“In order to create a compelling national idea, the government has to integrate all the people — Kazakhs, Russian-speaking Kazakhs, Russians who were born in Kazakhstan,” says Zhanara Nauruzbayeva, a Kazakh scholar who is conducting doctoral research at Stanford on visual artists and cultural production, focusing on Kazakh film and visual representations. “Nation building only based on the idea of Kazakhs will not succeed.”

The governments of Europe may cite Iraq as the reason they don’t want to contribute troops to Afghanistan, but here is one other possible reason, courtesy of today’s NY Times Magazine:

He couldn’t figure out who they were. Then he realized they were hauling Brennan off through the forest. “I started shooting,” he recalled. “I emptied that magazine. They dropped Brennan.” Giunta scrambled up to Brennan. He was a mess. His lower jaw was shot off. “He was still conscious. He was breathing. He was asking for morphine. I said, ‘You’ll get out and tell your hero stories,’ and he was like, ‘I will, I will.’ ”

They were still taking fire. No one was there to help. Hugo Mendoza, their platoon medic, was back in another ditch, calling: “I’m bleeding out. I’m dying.” Giunta saw Brennan’s eyes go back. His breathing was bad. Giunta got Brennan to squeeze his hand. A medic showed up out of the sky. They prepared Brennan to be hoisted to the medevac in a basket. Soon he would be dead.

As the medevacs flew out, Sergeant Sandifer had talked in air cover: Slasher, the AC-130. The pilot was a woman and, Sandifer later told me, “It was so reassuring for us to hear her voice.” She spotted guys hiding and asked if she was clear to engage. “ ‘You’re cleared hot,’ I told her. And we killed two people together.” But, at this point, the killings were no consolation to Sandifer.

As Giunta said, “The richest, most-trained army got beat by dudes in manjammies and A.K.’s.” His voice cracked. He was not just hurting, he was in a rage.

Elizabeth Ruben gives an incredibly vivid picture of the American side of the counterinsurgency effort, but institutional memory–including journalists–is pretty short. The Americans started off in Korengal fairly badly, as Robert Crews and Atiq Sarwari write in the epilogue to The Taliban and the Crisis of Afghanistan, just published this month by Harvard:

Reports from Kunar revealed that one of the American tactics involved threats of collective punishment for the population of the Korengal Valley if they did not take up arms against the militants. U.S. Army forces blocked the only road into the valley to punish communities whom they accused of assisting the Taliban. As an incentive to cooperate with the Americans, they also built a bridge over the Pech River to facilitate trade in the valley.

An American officer explained that the goal of this policy was to divide pro-Taliban elders from their opponents, to create “a fracture between the two groups.” According to a transcript of a radio broadcast obtained by the BBC, a text issued in the name of the local government, but apparently composed by the U.S. military, warned that if the people of Korengal “are not going to comply with the demands of expelling the enemy from their villages then we will be forced to continue to pursue the enemy relentlessly until the elders either force them to leave or the hand of our national security troops force them out. The people of Korengal are either with the people of Kunar or against them.”

Though a U.S. military spokesman denied that the Americans had written the text, Afghan officials pointed out that this was “how the foreigners speak,” adding, “It will make things worse.” A Human Rights Watch researcher called the threat “a violation of the Geneva Conventions and other laws of war.” (339-40)

I’ll hopefully have the chance to write a review about this book, a collection of mostly excellent essays on the rise, fall, and resurgence of the Taliban. In the meantime, keep an eye on Abu Muqawama for posts sure to come on the Times article.

Tajik reporters with IWPR have an excellent follow-up to the story of the firefight between ex-opposition members and the Tajik special forces. First, the government’s version, which claims the OMON team was only visiting for a “conference”:

Colonel Oleg Zakharchenko of the OMON or riot police was shot dead on February 2 in Garm, a small town high in the mountains 150 kilometres east of the capital, Dushanbe.

What makes this case unusual is that the violence was between two units subordinate to the Tajik interior ministry - Zakharchenko’s team, who had driven up to the remote township from Dushanbe, and the district police in Garm.

The head of Garm’s organised crime squad, Mirzohoja Ahmadov, has been accused of Zakharchenko’s murder.

The official version put out by the interior ministry is that Zakharchenko and a number of policemen, together with Rajabali Mahmadaliev, head of the national police directorate for combating organised crime, were sent up to Garm to attend a meeting concerning the performance of the local police.

According to the authorities, the group was approaching the local organised crime squad building when it came under fire from Ahmadov’s men, Zakharchenko was shot in the head as he attempted to intercede, and four of his comrades were injured in the firefight.

But of course the other side says that the real reason for the firefight was that Rahmon has been eliminating and sidelining former members of the opposition for a while:

Contrary to the official report that the Dushanbe team had arrived for a conference, Ahmadov insists they attacked him because he was at one time an opposition guerrilla leader in the 1992-97 civil war.

Like many members of the United Tajik Opposition, UTO, Ahmadov and his men were amnestied and went through a disarmament process as part of the 1997 peace deal, and were then “reintegrated” – in their case recruited as the local police force.

As the paramilitaries on both sides were reined in and some UTO leaders were brought into government, the peace deal seemed to work unexpectedly well given the bitterness and suspicion left behind by the conflict. Making police commanders out of guerrilla chiefs like Ahmadov seemed a pragmatic step in the Garm valley, a stronghold of the UTO and in particular its leading force, the Islamic Rebirth Party.

In the years since then, however, the government of President Imomali Rahmon has gradually reversed the balance, removing most of the senior UTO members from posts at national level, and charging some of them with crimes. In 1995, for instance, Democratic Party head Mahmudruzi Iskandarov, a former UTO commander also from the Garm valley who had returned to civilian life as a politician and head of Tajikistan’s gas monopoly, was arrested and jailed.

Political analyst Parviz Mullojanov says that this miiiiight not be the best time for the government to go around starting gunfights:

“Social tensions in the country, and in Garm especially, have reached their highest level since the end of the civil war because of societal problems and the energy crisis. At the same time, the level of trust in the authorities is falling significantly,” said Mullojanov.

“At a time like this, the authorities would do well to avoid any steps that might further complicate an already difficult situation.”

In what is perhaps the most telling part of the story, the authors of the article describe how no drivers were even willing to risk the trip to Garm, based on the rumors about gunfights:

IWPR’s journey to Garm to interview Ahmadov highlighted the rigours of life in the remote mountain valleys of eastern Tajikistan.

Reports of the clash had reached Dushanbe, and no taxi driver wanted to risk the trip.

“They say there’s gunfire there,” one elderly driver told IWPR. “I wouldn’t drive you there for any money.”

In the end, another driver agreed to go to Garm for 300 US dollars, a massive premium on the usual price of around 20 dollars.

So, say, multiply Tajikistan’s baseline political tension by 15, and that’s about where it stands as the winter drags on. I’d be curious to hear from anyone in Dushanbe (or elsewhere in TJ) about how things are feeling politically.

Eurasianet says that Tajikistan is facing “pestilence and hunger” in the coming months because of energy shortages, water purification problems, bread-price inflation, and more; but the real question is whether or not the general population loses its patience with the leadership, like this lawyer has:

“We have double standards in our society,” said a Dushanbe lawyer, speaking on condition of anonymity. “We see a number of new construction sites in Dushanbe … Five-star hotels being erected … And we see the fancy cars and homes in the city.”

“Everybody knows who these things belong to. These ‘masters of life’ control the economy, but they are deaf to the people’s cries,” the lawyer continued. “In the spring we will be facing another serious threat – dirty water from taps. And somebody will be appealing again for international assistance. It happens time and again.”

Rebecka Rosenquist of Reuters AlertNet has a good roundup of the Tajikistan crisis.

P.S. The votes are in–we’re changing our look for 2008.

Languagehat has started a discussion about the etymology and usage of the Persian term “Fararud” for Transoxiana–since it’s also the name of this blog, I thought I’d post a link. Any votes for replacing the “ma wara’ an-nahr” in our header image with the Persian version?

BTR has been on hiatus for the last month or so, and you can be sure it was because at least one half of us was getting some much-needed downtime.

In the meantime, the folks over at neweurasia have been doing an amazing job keeping the outside world up to date on developments related to energy, or the lack of it, in Tajikistan. The weather in Central Asia has been unbelievably cold and snowy, so much so that the Nurek dam outside of Dushanbe actually froze and couldn’t produce hydro-energy for a time. It’s led to severe electricity rationing, and of course Iran has taken the opportunity to jump in and offer to build another hydroelectric station, which of course comes along with a commitment to expand defense ties.

What I haven’t seen much reported, except in Ferghana.ru and TASS, is a gunfight that took place in Garm last week between OMON forces and members of the former opposition:

The opposition meanwhile claims that participation in the conference was not what Zakharchenko intended. “They [OMON servicemen - Kommersant] rode up in two KamAZ trucks, formed a ring around the building of the district department of internal affairs, and told the people inside to lay down their weapons,” Dodojon Atovulloyev of the movement Vatandor said. According to the opposition leader, the visitors were particularly interested in Colonel Mirzohodja Ahmadov, Organized Crime Department Commander. Ahmadov himself confirmed it in an interview with the BBC Persian Service on Saturday. A field commander of the United Tajik Opposition in the civil war in Tajikistan (1992 - 1997), he commands vast respect from his former subordinates and the locals. Ahmadov said he knew for a fact that the republican OMON was coming to eliminate him for his past with the United Tajik Opposition.

This really doesn’t bode well for a country that is already plunged in darkness much of the night hours. Ten years after the truce, could this be a sign that the opposition and the government could take the country back to fighting?