MAC/20: Mines and Communities

London Calling

Published by MAC on 2007-09-01


London Calling

1st September 2007

Anil Agarwal escapes yet again - smirking all the way to the bank

This website has run several articles exposing Anil Agarwal's shenanigans in Armenia over the past couple of years. In summary, his outfit Sterlite Gold, registered in Canada, bought into Armenia's biggest gold operations in the 1990s, thanks to an alliance with a mining magnate whose dodgy maneuvers and manipulations almost match his own - Robert "Toxic Bob" Friedland.

Friedland quit Armenia and Sterlite took control of two gold mines (primarily Zod) and a tailings treatment facility called AGRC (Armenia Gold Recovery Company).

After Agarwal’s Vedanta was registered on the London Stock Exchange in December 2003, he kept Sterlite Gold as a separate entity. Not only were its operations already causing some concern to the Armenian government, they were also running at a loss - not a very pretty parcel to set before stock brokers and the market in attempting to present a picture of clean and profitable assets.

In 2005, Sterlite Gold was accused by Armenian authorities of various acts of commission and omission, some criminal. Agarwal professed his determination to remain in Armenia - but at a price: namely permission to site a processing plant on the shores of pristine Lake Sevan in order to save in transport costs. Later that year, the first charges were brought against the company. Shortly afterwards, Agarwal effectively sold the Armenian operations to himself, in the shape of a takeover of Sterlite Gold by Vedanta Resources plc, of which 54% is held by him and his family.

Armenia revived the charges against him in early 2007 and,.three months later, its public prosecutor announced that the company was likely to be fined around US$46 million (figures differed). Meanwhile, the government suspended all operations of AGRC and the Zed mine, effectively declaring Agarwal a persona non grate.

The trial was set for early last month. But it didn't happen.

As predicted on the MAC website last March, Agarwal "cut and ran" from Armenia, but took steps behind the scenes to sell off the Sterlite gold mining interests, before the Armenian government got really nasty.

Georgia on my mine

Vedanta's overlord has now succeeded in doing so - garnering a reported US$80 million, paid in cash with extinction of all the company's debt liabilities. Those behind this stitch-up are a shady Georgian outfit, called Madneuli, run by the country’s president, Saakashvili. But, according to Mineweb’s Moscow-based correspondent, John Helmr, Madneuili is primarily backed by shadowy Russian finance company, Industrial Investors, which is headed by former state minister and ex-parliamentary deputy, Sergei Generalov. . Agarwal has also escaped indictment in an Armenian court for alleged environmental and fiscal misdemeanours . And the government appears to have welcomed the sale.

At a stroke, Agarwal has escaped the "crime scene" unscathed - receiving a hefty payoff to boot.

The audacity of the move is breathtaking. It succeeded because Agarwal and his advisors clearly knew how to play a highly precarious political game, picking a buyer calculated to pander to the Armenian government's nationalist claims over the Nagorno-Karabkh region (where Sterlite's operations were centred) and siding with it against the counter-claims of neighbouring Azerbaijan.

For a desk-bound buccaneer, secure in his London stronghold, it's a breathtaking coup.

[Source: “BEATING SWORDS INTO SHOVELS: Saakashvili shootdown - Georgian President behind Russian funding for gold grab in warzone, by John Helmer, Mineweb, 31 August 2007.]

London Calling is published by Nostromo Research Reproduction is encouraged, so long as acknowledgment is given to the source. Responsibility for the content of this column is solely that of Nostromo Research.

 

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