Category Archives: Corruption

‘Our water is our gold’: Armenians blockade controversial mine

In the mountains of Armenia, a previously bucolic spa town is home to a goldmine locals say threatens the country’s biggest source of freshwater, and with it, an entire ecosystem.

Anna Bianca Roach | DW | 11 September 2019

Jermuk in southwest Armenia has long been renowned for its hot springs, soothing mineral water treatments and impressive waterfalls. But since mining company Lydian International moved in on a gold deposit upstream from the spa town on Mount Amulsar, it has become famous for something else.

Since June 2018, protestors have gathered from across Armenia to oppose a mine they say is fouling their land and water. Manned day and night, their blockade has succeeded in completely halting construction.

A year on, Armenia’s Prime Minister Nikol Pashinyan — still fresh to power following last year’s “Velvet Revolution” — is coming under increasing pressure to pick sides.

On one side, a popular protest movement sees the mine as a symbol of the corrupt regime it has just overthrown; on the other is a company — registered in the UK tax haven of Jersey — responsible for Armenia’s biggest foreign investment.

Polluting lakes and pasture

Before construction of the Amulsar mine even began, Lydian relied on the notoriously corrupt government at the time to clear farmland. Locals say they were given a choice between selling the pastures they relied on for a living, and having them expropriated.

“Villagers don’t know where to send their cows, or their sheep, so they have to stop agriculture,” Jermuk resident Aharon Arsenyan, who has been resisting the company since 2012, told DW.

Once the diggers arrived in 2017, locals say things got worse. Whenever the wind picked up, “there was dust,” Arsenyan says. “Every time. We have never seen — never! — such amounts of dust.”

The landscape around Mount Amulsar in southwest Armenia, which locals say is at risk from a polluting goldmine

As construction progressed, residents of Jermuk and the nearby village of Gndevaz say dark, muddy water ran from their faucets. A local fish farm, meanwhile, reported the unusual death of hundreds of their fish.

Others say the farmland they hadn’t been forced to give up wasn’t productive anymore, as cattle refused to eat the dust-covered grass or drink contaminated water.

Contradictory assessments

The biggest controversy, though, is over what might happen if the mine actually starts operating, and whether Armenia’s biggest source of freshwater will be safe.

Arsenyan calls his hometown “the capital of water.” Jermuk — and the mine — sit on the source of the Arpa and Vorotan rivers, which in turn feed Lake Sevan. The lake supplies much of the Armenian population with drinking water, and many with fish.

The entire country of Armenia is peppered with small fountains called pulpulaks. People rely on them for fresh, clean drinking water, and they’re especially beloved during Vardavar, the country’s water festival

“The entire ecosystem of the country depends on it,” Arpine Galfayan, a Yerevan resident and member of activist group Armenian Environmental Front (AEF), told DW.

According to Lydian’s first environmental impact assessment, published in 2016, waste water discharge would be minimal and treated to comply with water quality standards. Other disruption — noise, dust, pollution — would also be kept to manageable levels. The company said it would offset any remaining environmental damage by helping fund a new national park.

But when it approached Armenian-American geochemical engineer Harout Bronozian as a potential investor in the project, he had doubts — and commissioned his own environmental assessment.

Bronozian’s consultants said Lydian had hugely underestimated the environmental impact of the project, which would almost certainly contaminate Lake Sevan and other water sources — with chemicals including arsenic and cyanide — for centuries to come, risking both aquatic life and human health.

study by environmental NGO the Balkani Wildlife Society, meanwhile, found that the project could potentially infringe on the habitat of endangered species such as the vanishingly rare Caucasian leopard. It called Lydian’s promised park “a very negative example of biodiversity offsetting,” and said the mine failed to comply with Armenian and European environmental regulations.

The mine could encroach on the habitat of the exceedingly rare Caucasian leopard

‘Water is our gold’

Galfayan says although locals were concerned as soon as the company appeared more than a decade ago, few dared speak out. According to the AEF, members of government were among Lydian’s shareholders, and since state forces shot at a crowd protesting over disputed elections in 2008, there had been an atmosphere of fear and oppression.

In April 2018, all that changed. Armenians took to the streets after then president Serzh Sargsyan tried to install himself for another term. Promising to bring an end to corruption, opposition leader Nikol Pashinyan won the country’s first democratic elections and took prime ministerial office in May 2018.

Energized by this victory for public protest, residents of Jermuk and the surrounding villages began their blockade of the mine. Around the country “our water is our gold” became the slogan for the new frontline in the popular war on corruption. Each time Lydian tried a new legal mechanism to pressure government into breaking the blockade, a steady stream of vehicles arrived with reinforcements from around the country.

A high stakes game

Pashinyan’s government, however, failed to either revoke the license his predecessors issued Lydian, or to effectively clear the blockades, saying a fresh audit was needed to decide whether the mine should be allowed to operate.

Environmentalist Aharon Arsenyan speaks at an anti-mining rally

All this has hit Lydian where it hurts. In 2018, it reported “blockade expenses” of over $42 million (€37 million), and total losses of over $136 million, warning “there is a risk that the company will be in default under its agreements” to shareholders.

In March, Lydian submitted notice to the Armenian government that it planned to sue the government through corporate courts if the situation was not resolved. Rumours circulated in local media that the company could try to claim losses of $2 billion, or almost two thirds of Armenia’s state budget.

Then in July, the government’s own environmental impact assessment was finally published, finding that the mine was safe. In the weeks since, Pashinyan has shifted position more than once, between assuring Armenians the mine is safe and casting doubts on the government’s own positive environmental assessment of the project. 

On September 7, the prime minister convened a meeting with both activists and Lydian’s interim, CEO Edward Sellers, who said the company would allow independent monitoring of the site. Two days later Pashinyan took to social media to ask protestors to clear the blockade. 

Galfayan said protestors would not only continue the blockade but were also planning a wider campaign of civil disobedience, including marches on the capital. “This is a matter of life and justice for us,” she said. “We are definitely fighting back.”

Meanwhile, Jean Blaylock, of campaign group Global Justice Now told DW the international corporate court process is so secretive, it’s possible Lydian may have already launched its case.

“Corporate courts are a perfect tool for transnational corporations to bully governments,” Blaylock said, adding that, “the payouts can be huge, the arbitrators take a very narrow perspective, and altogether it is a massive pressure on governments to back down.”

Lydian did not respond to DW’s request for comment on criticisms of its operations, or whether it was going ahead with corporate court proceedings. 


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Mountain of allegations & many questions about MRDC scandals

Mekere Morauta

Mekere Morauta | PNG Attitude | 12 September 2019

New information about the scandal-plagued Mineral Resources Development Corporation has become available, reinforcing the urgent need for an inquiry into its operations and the status of the hundreds of millions of kina it manages on behalf of landowner companies.

There is now a mountain of allegations about MRDC and its landowner subsidiaries. I expect that in the coming weeks more will be revealed about their dubious activities and the real value of the investments they have made, purportedly in the interest of landowners.

The latest revelations affirm prime minister James Marape’s decision to hold an inquiry into MRDC, and add substance to existing allegations of possible fraud, misappropriation, abuse of office and breaches of various laws including the Public Finances (Management) Act, the Companies Act and the Auditor-General’s Act.

It is in the public interest that these allegations are fully tested in a formal inquiry.

The new allegations came within a matter of hours of public comments in defence of MRDC and their own operations by Gulf Governor Chris Haiveta, the interim chairman of MRDC landowner company Petroleum Resources Gobe, and John Natto, the chairman of MRDC’s Petroleum Resources Kutubu.

They covered a wide range of activities by MRDC and its subsidiaries, including the expenditure of landowner trust funds I identified in parliament on 4 September.

One example is K30 million that was allegedly withdrawn from an MRDC subsidiary’s account in November last year.

Landowners have an absolute right to know the details of the processes involved in its use, the people responsible, the purpose of the expenditure, and the ultimate destination of the funds.

There are some important questions the prime minister’s inquiry should consider in this specific instance:

Where did the K30 million come from – was the ultimate source an account held by Petroleum Resources Gobe?

Was the K30 million drawn down in November 2018, and was approval granted by the PRG board at that time?

Was a board meeting, not attended by landowner directors Philip Kende (then chairman) and George Kisi, held in January this year to restrospectively ratify the draw-down?

Is it true that the K30 million was then split between Petroleum Resources Kutubu and Mineral Resources Star Mountains then shifted out, purportedly to pay for a shortfall in finances for the construction of the Hilton Hotel/Star Mountains Plaza?

On what authority did PRK and MRSM accept the transfer of funds to their accounts and is there any documentation to support the transfer?

Can the MRDC, PRK and MRSM boards demonstrate with documentation that the money was actually used on the Hilton, and not for some other purpose?

These are just some of the concerns about MRDC and its landowner subsidiaries raised by credible sources. Other allegations have been made about MRDC’s involvement in HeviLift, Dirio Gas and Power, resorts in Samoa and Fiji, the Four-Mile Casino, Ela Beach land and Moran Haus in Lae.

It is clear from the reaction of MRDC that it is terrified of being exposed to the disinfectant of sunlight – it would much rather its activities remain hidden from scrutiny.

I have been reliably informed that extraordinary measures have been taken by board and management to cover up their activities, including IT measures and video surveillance of staff members.

In the face of this MRDC campaign against transparency and accountability, I encourage members of the public with information about MRDC and its activities to contact the Police Fraud Squad

The decision by the MRDC group not to publish all its audited accounts means that public suspicions and questions will not go away.

So I urge Governor Haiveta and Mr Natto to use their influence and involvement to ensure that MRDC publishes all the group’s outstanding audited financial statements.

It is the lack of verified information, and the refusal of auditors and the Auditor-General to sign off on many financial statements, that give credence to the public’s fear that all is not well within the MRDC group.

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Ex-US Interior official joins Papua New Guinea-based oil company Oil Search

Oil Search CEO Peter Botten

Having been instrumental in saddling PNG with the crippling UBS loan, Oil Search again shows contempt for business and political ethics

Tim Pearce | Washington Examiner | September 04, 2019

An ex-top official in the US Interior Department is joining a Papua New Guinea-based oil company days after leaving the Trump administration.

Joe Balash served roughly two years as the Department of the Interior’s assistant secretary for land and minerals management. Balash announced his departure from the government on Friday and confirmed his new position at Oil Search in an interview with the Washington Post on Tuesday.

Balash’s work at the Interior included expanding oil development on federal lands in Alaska, such as the 1002 Area in the Arctic National Wildlife Refuge. The 1002 Area is a 1.5 million-acre oil reserve created in 1980 as part of the same legislative package that established ANWR.

The Trump administration’s ethics pledge, which Balash signed after joining Interior, prohibits ex-administration officials from lobbying their former agencies for five years after they leave. Oil Search’s operations in the United States include Alaska, though the company’s business is largely on state lands.

Balash will work on energy policy for Oil Search. He said he will abide by the ethics pledge and refrain from lobbying Interior officials, but “I’ll supervise those who do” need to work with the federal government.

“I have a ton of restrictions dealing with the Department of Interior,” Balash said. “Most of Oil Search’s properties are state lands. There isn’t really the federal nexus.”

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Investigate MRDC and Petroleum Resources Gobe

Ensure politically connected do not out laws

Mack Lone Bolan | Post Courier | 28 August 2019

Taking back PNG also means ensuring that the politically connected do not out our laws – the case of MRDC.

It is quite alarming to witness that the Office of the Prime Minister and other responsible agencies of government have not found it necessary to inquire into what is unfolding at the MRDC and inform the public to reduce their apprehensions about the government’s resolve on curbing corruption.

We have the chairman of the trustee company, the Petroleum Resources Gobe Ltd (PRG) Philip Kende and the managing director of the manager (MRDC) Mr Augustine Mano engaged in open war of words over a K30.3m which disappeared just weeks before the recent vote of no confidence and there is plenty of speculation surrounding it.

The MRDC is just the manager of the trustee and therefore does not have the authority to be involved in anything relating to policies over the GLC process and the amendments to the provisions of the Oil and Gas Act on the management of the trust funds.

The Chief Secretary to Government, Isaac Lupari, is the chairman of the board of the manager – MRDC. He would be in a unique position to assist the government and inform the project area landowners what the truth is about the missing millions of kina not only the K30.3m but also the K200m reported in the newspapers in December last year.

In the interest of fairness, both men (Kende and Mano) ought to be sidelined and allow the National Fraud and Anti-Corruption Squad led by Chief Superintendent Mathew Damaru with his Officers to have free access to the records and interview staff at the MRDC to settle these things quickly.

The Minister for Petroleum would need to ensure that the Department of Petroleum is still responsible for policy issues in the sector and not stand by and have this function or parts of it performed by someone else such as overseeing the GLC process.

We would really like to believe that the days of “if you are politically connected, you can do anything” are gone but cannot begin to talk about “Taking Back PNG” when we still have an environment where the politically connected feel they can still continue to do anything.

Tok pisin bilong Waigani must stop. Commission and inducements for processing papers, clearing things, responding to correspondences and securing approvals etc. would have to be things of the past.

Only when we have overcome all of the above and more can we begin to feel that we are Taking Back PNG.

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Please review appointment of new KPHL chairman

Ivan Gordons | YuTok, Post Courier | August 5, 2019

Just recently I wrote a letter that was published in the local daily questioning the appointment of Andrew Baing as the chairman of KPHL on whether he was the same person who was found guilty by the leadership tribunal years back on misappropriation grounds and dismissed from holding public office.

I simply stated that this was not right for someone with such a record to be appointed to such an office that was dealing with public monies especially of such magnitude.

A reply was published also from a person saying that he was grateful for the last Prime Minister for the appointment and that he was going to prove the country proud or something along those lines.

Not much was said after that.

Fast forward to this present day and we all can see for ourselves. It is ridiculous how KPHL has addressed this saga to date.

Yes they can rant on about this law and that, this Act and that but with all that aside they are dealing with public funds.

Just provide the information to the PAC and explain yourselves to the people of this country where their money from the 500 shipment of gas has gone. There are many stories out in the public domain on the abuse and misuse of these funds benefiting the well off while the people are struggling.

I have faith and trust in our new PM honourable James Marape that he will not let his people down.

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Deputy PM Orders KPHL To Go Under PAC Scrutiny

Isaac Nicholas | Post Courier |  August 5, 2019

Kumul Petroleum Holdings Limited must do the right thing and respond to the summons of the Public Accounts Committee, Minister for Justice and Attorney-General Davis Steven said on Friday.

“I want to clarify to the people of Papua New Guinea and to the KPHL Board and management that the powers of the Public Accounts Committee are quite clear under the Constitution,” he said in a statement.

Mr Steven said there had been arguments raised questioning and challenging the PAC mandate that the oil company was separate from the State-owned entities and was not subject to processes, including scrutiny of its financial affairs by the Permanent Parliamentary Public Accounts Committee.

“These arguments, in my view, are erroneous and misleading to the general public as to the intention of the law,” Mr Steven said.

“The fact that the State owns the interests in petroleum projects and the KPHL is a nominee of the State to hold its interests for and on behalf of the people of PNG, this brings the KPHL under the jurisdiction of the Public Accounts Committee.”

He said the PAC is the body that the Constitution has mandated with that responsibility by giving it a broad mandate to examine and report to the Parliament on the public accounts of Papua New Guinea, and on the control of and on transactions with or concerning, the public moneys and property of PNG.

“It is not in PNG’s national interest and has always not been the intention of establishing the KPHL that it should not be open to public scrutiny of its financial accounts, where such requests made by the Public Ac- counts Committee.

“KPHL must now do the right thing and respond to the summons of the Parliamentary Accounts Committee,” Mr Steven said.

“I am concerned that State institutions and businesses like KPHL are questioning the authority of the Parliament. KPHL including the Mineral Resources Development Authority (MRDC ) are trust companies holding the interests of the citizens of Papua New Guinea.

“I therefore urge all government departments, agencies, SOEs to answer to the demands of our people and work together with the political leadership and the relevant bodies established by the Constitution to change PNG. Our people demand that.”

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Yalo: KPHL answers to Parliament

The National aka The Loggers Times | August 2, 2019

KUMUL Petroleum Holdings Ltd (KPHL) is answerable to the legislature, former judge and lawyer Nemo Yalo says.

“The legislature, like the judiciary, has the ultimate oversight role on the executive arm and its agencies,” Yalo said in a statement.

“KPHL chief executive and the board are appointed by and are answerable to the executive arm.

“Therefore, by extension, KPHL is answerable to the legislature.

“Who does the KPHL board and CEO ultimately declare and present dividends to?

“To themselves or to the people through their executive government?”

Yalo said he was only expressing his opinion on the matter.

He said only the National Court and the Supreme Court could settle the issue of whether or not KPHL was subject to the Constitutional oversight powers and functions of the legislature.

Yalo said the Supreme Court, in the case MRDC vs Ombudsman Commission SC931 (August 2008), ruled that MRDC, a company registered with the IPA and of which the prime minister was the sole shareholder holding shares for and on behalf of the State, was subject to the scrutiny of the Ombudsman Commission (OC), in particular its CEO being subject to the Leadership Code, including the ex-officio board members, who by virtue of their substantive offices, were also declared as being subject to the same law.

He said the committee on public accounts was a Parliamentary committee performing the role of the legislature when it was not in session.

Those very roles and functions each Parliamentary committee was obligated to perform.

“If one were to buy the KPHL’s legal proposition, it is amazing that an Act of Parliament passed by the Parliament itself restricts its own ultimate power to supervise the executive.

“Was the Parliament blind to the doctrine of separation of powers when it passed laws to tie its own hands behind its back?

“It is immaterial that KPHL, or any state-owned enterprise was registered with the IPA,” Yalo said.

“The Parliament through the PAC has power to review and probe the Auditor General’s reports, OC reports and others, and compel relevant persons and entities to give information.

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