Monday, June 10, 2013

The gold challenge to new Balochistan chief minister


Shaheen Sehbai 










Monday, June 10, 2013 From Print Edition  

DUBAI: Besides the hot political issues of bringing back the angry and desperate nationalists and militants back into the mainstream, the new chief minister of Balochistan has another burning issue to handle —- the multi hundred billion gold mines at Reko Diq and who will be given its mining rights.

Following the Supreme Court judgments in the Reko Diq case, the biggest mining Canadian-Chilean conglomerate was thrown out of Pakistan and has filed, and lost, two cases in international arbitration tribunals but in Pakistan the fate of the mines and how it would be awarded for mining is yet to be decided. The Government of Balochistan will have the major say in this decision.

Chief Minister Dr Malik and Hasil Bizenjo have already made statements and have shown their inclination to favour the ousted Canadian Barrick Gold, Chilean Antofagasta and Pakistani TCC, although the Supreme Court of Pakistan had found the company involved in malpractices in the past.

Mining experts say this is not a good sign. The new chief minister was taken by the Chileans on a free junket to Chile and Canada and was one of the many politicians, including Sharmila Farooqi of PPP, who had no particular reason to be visiting the corporate headquarters of these companies.

The Canadian Chamber of Commerce also hosted a reception in the delegation’s honour in which the mining people were in high visibility. It was officially reported in the media.

Back in 2008, Antofagasta sponsored Dr Malik’s visit to Chile. It is also a fact that Fakhruddin G Ebrahim was also a highly paid attorney of TCC in the SC hearing during 2011-2012.

It is also a fact that Dr Malik is a close relative of Naseer Baloch, ex site Manger of the TCCP and is currently Manager TCCP Quetta office. Hasil Bizenjo and Dr Malik are on the same page as far as Reko Diq is concerned and Mr Bizenjo recently took a pro-Chilean position on Hamid Mir’s Capital Talk programme on Geo TV. But all these facts do not mean that the new chief minister will be biased and will overrule Supreme Court judgments in the case.

Experts say with all these complications no one can resort to favouritism on this project any more. It has to be an international tender, under credible international consultants and strict oversight by the Pakistan Supreme Court and whoever the highest and the best bidder is, should get the project.

It is learnt that many Canadian, Australian and American companies repositioning themselves and already preparing their bids for such tenders and the base price begins at $100 billion and could go as high a $500 billion in 50 years.

It has also been confirmed to me by the Canadians that a Canadian firm, SNC-Lavalin carried out the Feasibility Report of Reko Diq mines on behalf of Barrick Gold at a cost of US$70 million in recent years but that report has been kept a secret from Pakistan.

When I asked the spokesperson of Lavalin about this report I got this official version: “Here is the answer from Leslie Quinton, spokesperson for SNC-Lavalin: Our apologies for the delay responding to your email. We had to gather the information in order to answer you. Yes, we were involved in this study. It was actually for Tethyan Copper (a joint venture of Barrick and Antofagasta), and the mandate was carried out between 2008 and 2012.

“Unfortunately, as per our internal policy, we cannot comment on the value of our services as it is usually confidential between us and our client.” Signed Lilly Nguyen.

Lavalin is however a company with not such a good reputation. In February this year its former CEO was arrested on corruption charges specially bribing foreign governments to win contracts, according to FCPA, an international anti-corruption blog.

He pleaded not guilty in a court but Pierre Duhaime, 58, was arrested in November last year for fraud and forgery. The allegations were connected to at least two domestic projects. He left Canada’s biggest engineering firm in March 2012 after an internal audit found more than $50 million in payments to middlemen that couldn’t be traced to the performance of any services.

According to the blog an affidavit prepared by the Royal Canadian Mounted Police alleged that a former SNC-Lavalin executive arranged more than $160 million in bribes to the son of late Libyan leader Moammar Gadhafi in exchange for engineering contracts.

Riadh Ben Aissa, who was charged by Canadian authorities in November with fraud and corruption, arranged the massive payments to Saadi Gadhafi, 38, described in the affidavit as a friend of Ben Aissa.

Ben Aissa is in jail in Switzerland for suspicion of money laundering and bribery linked to at least two Canada projects.

In June last year, two other executives from SNC-Lavalin were charged in Toronto with bribing officials in Bangladesh in connection with bidding for the $1.2 billion Padma Bridge project in Bangladesh. Ramesh Shah and Mohammad Ismail were arrested after a raid by Royal Canadian Mounted Police on SNC-Lavalin’s offices.

With such a record of bribing officials in Libya, Bangladesh and other countries, the involvement of Lavalin in Pakistan raises many questions and a thorough probe may be needed to find out what happened behind the scenes on Reko Diq.

But the new chief minister will have to keep these facts in mind before deciding the fate of Reko Diq, which could bring hundreds of billions of dollars to Pakistan.

Another fear is that China may pressurise Pakistan politically to gain the mining rights. But given the bad experience of Saindak Copper mines, the Nawaz Sharif government will have to examine carefully how Pakistan’s interests and its huge resources would be protected while keeping a friend happy.

But recently while China has helped Pakistan in many moderate ways, the real Chinese investment has gone to other countries and only in Indonesia, China is reported to have committed $17 billion for power projects to help the energy crisis.

Two Chinese companies — China Power Investment Corporation and Anhui Conch Cement — will invest $17 billion in dams in North Kalimantan, Indonesia’s newest province located on the island of Borneo, reported the Jakarta Globe on Sunday.

The Indonesian government granted permission for the project on the Tayan River late last month. Indonesia’s Energy and Mineral Resources Minister Jero Wacik said the first phase of the project will break ground next year. “Construction for the first phase will be completed in one-and-a-half years,” Jero was quoted as saying. “By 2015, the power plant will generate 700 megawatts of electricity.”

When complete, the project will have a capacity of 7,000 megawatts from hydropower plants, the newspaper reported on June 9.

If China had given Pakistan half of that amount, not only many dams would have been built here but the real mess in the economy would not have been created. But Pakistan gave Gwadar to China for only $35 million, or peanuts by any standard.

http://www.thenews.com.pk/Todays-News-2-182941-The-gold-challenge-to-new-Balochistan-chief-minister

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