Are the Taliban fascists?
mark.jones at tiscali.co.uk
Thu Dec 6 08:14:10 MST 2001
At 06/12/2001 14:29, Jared wrote:
You probably don't recall that you wrote:
> > > Jared Israel reminds me of Arthur Koestler's famous description of a
> > typical Stalinist commissar in the USSR in the 1930s, as someone who is
> > gangster, part gramophone
That may have been doing you an injustice, Jared. I've reached the more
charitable conclusion that your death-or-glory defence of Russian gangsters
was simply the result of being misguided. Here's a nice little story about
the kind of people you've been rushing to defend, ie, the Russian mafia,
which I just posted to the A-List.
To: alist <a-list at lists.econ.utah.edu> Subject: Diamonds and oil forever?
[The truth is the Russian oil industry is fully criminalised, and the
criminality begins with Putin and the Kremlin. What this illuminating
little story doesn't discuss is the importance of LUKoil to the alleged
renaissance of Russian oil production. LUKoil, Gazprom, Mikhail
Khodorkovsky's Yukos, are being touted as the West's answer to Opec.
Because these guys are now OUR sons-of-bitches, white, ex-communist,
Christian and westernised, so the theory goes, so therefore the West can
trust its energy future to them and to hell with Saudi Arabia. Really? Mark]
The Russia Journal
November 30-December 6, 2001
Gem of conspiracy from LUKoils Alekperov
An everyday tale of alleged fraud, conspiracy and unjust enrichment
By JOHN HELMER
In the town where I was born, it could be said of a man that he was so
crooked, he couldn't lie straight in bed.
In a recent issue of a Moscow magazine, Russian businessman Alisher Usmanov
demonstrated the many places in his apartment where he lies down, but not
how. The answer to that question is given in a lengthy court filing that
was lodged in a Denver, Colorado, court this week.
Usmanov is named as one of three principal defendants in a claim for $4.8
billion in damages by the Archangel Diamond Corporation (ADC). LUKoil,
which is run by Usmanov's friend and business partner, Vagit Alekperov, is
another of the targets, along with Arkhangelskgeoldobycha (AGD), a Russian
mining company controlled by Usmanov, LUKoil and VA Investment, a firm
whose initials stand for Vagit and Alisher.
The lawsuit, initiated by U.S. attorney Bruce Marks, is the first ever
attempted in the United States by one of dozens of Western mining companies
that have been targeted by Russian raiders, stripped of the assets they
have paid for, and driven out of the country. It is also the first serious
legal challenge to the tactics that have enriched LUKoil and a great many
other Russian resource companies.
Moscow investment houses have already begun warning LUKoil shareholders and
investors interested in the company that the lawsuit may put off LUKoil's
planned listing on the London Stock Exchange. That in turn is viewed by the
investment community, here and abroad, as pushing downward on LUKoil's
share price and the value the government can expect to get for the
planned sell-off of the state's 6 percent stake in the oil company.
This is also the first warning to those who control the Russian diamond
sector of their vulnerability and financial liability in the United States
the market that sustains global diamond prices and drives the
international diamond market.
The story really began a decade ago, when the Yeltsin government and its
regional allies were intent on creating private fortunes out of the efforts
of several generations of Soviet geology to identify and develop Russia's
extraordinary diamond wealth. Leonid Gurevich, who headed parliament's
watchdog for the diamond industry, tried but failed to halt the secret
chartering of Almazy Rossii-Sakha, the diamond miner now known as Alrosa.
That deal gave effective control of Russia's diamond mines to a clique
around the president of the Republic of Sakha, Mikhail Nikolayev. Only
today is the federal government trying to right the wrongs committed by
then President Boris Yeltsin and Nikolayev in grabbing the diamond assets
for themselves. So far they aren't any more effective than Gurevich was.
A decade ago, Gurevich told me, Moscow thought it would be a good idea to
attract foreign mining capital into the diamond sector, but not because
there was a genuine interest in seeing foreign companies mine Russian
diamonds. The idea of opening up the Arkhangelsk region to exploration was
partly Gurevich's and partly that of Boris Yatskevich at the State Geology
Committee, egged on by regional government representatives. And so tenders
were held for exploration and mining rights in Arkhangelsk and the
neighboring region of Karelia. Many foreign mining firms competed, along
with Russian partners, and many were awarded licenses.
As Gurevich said at the time, the objective was to get them to spend money
in regions that needed it and on geologists who were out of work. No one in
Moscow believed they would strike diamonds, let alone develop profitable
mines. And none of the major internationals who started work De Beers,
Ashton, BHP, Riotinto nor the many juniors from Israel, South Africa and
elsewhere found anything worth mining. They spent their money and went home.
Except for ADC, which in 1996 managed to do something that wasn't expected
it found a deposit whose diamonds have been analyzed to be worth about $5
billion and the quality of which is equal to or better than Alrosa's mines
in Yakutia. Technically, ADC's discovery turned out to be easier, quicker
and cheaper to develop than Alrosa's deposits.
This meant that, if the Russian government were serious about increasing
production of diamonds and expanding Russia's share of the world market, it
could leverage foreign mining capital to do so in regions outside
Nikolayev's little empire.
What ADC didn't realize what no one quite understood then or since was
that there was no state policy for the diamond sector. Instead, Alrosa
sought to protect its monopoly, while Nikolayev milked the company for all
he could. According to one financial consultant to Alrosa, up to 15 percent
of the company's revenues were diverted each year.
The cow and her milkers have never been in any mood to share the pasture
Yatskevich, who rose to become the minister in charge of mining licenses
before he was dismissed this year, had no interest in protecting the rights
of ADC as Alrosa's competitor. Valery Rudakov, head of the state diamond
stockpile, liked to say he saw no reason for Russia to use foreign miners
to develop its diamond mines, although he knew that Alrosa lacked the
creditworthiness to raise substantial sums to finance its new mines or halt
the decline of production at its older ones.
Valery Borisoglebsky, head of the diamond trading agency Almazjuvelirexport
until last year, was not only uninterested in seeing ADC develop its mine.
He helped finance the raid by Russians intent on stopping ADC and taking
its mining license for themselves. Like Yatskevich, Borisoglebsky has been
removed from office. But his agency's backing for the attack on ADC has
never been faulted, or its effect reversed.
These were the conditions in which Usmanov and Alekperov felt safe to
arrange their conspiracy to enrich themselves. Usmanov took over AGD and
handed LUKoil the control it sought over AGD's lucrative oil licenses and
prospects. In return, LUKoil assured Usmanov he would take the diamond
property, once it had been lifted from ADC. While Russian government
officials up to the prime minister's level repeatedly promised to rectify
the situation and protect the foreign investor's rights, the talk never
penetrated the smoke in the backrooms of Moscow and Arkhangelsk. There,
Usmanov and Alekperov told their allies to be patient and wait for the
foreigners to lose their money and abandon their claim.
What Alekperov didn't realize is that you should never be seen to be biting
the hand that feeds you. LUKoil badly needs the foreign listing and
injection of foreign equity and credit on which its faltering production
plans depend. ADC has been able to attack LUKoil in the United States
because Alekperov's partnership with Usmanov violates U.S. law.
According to the court papers, ADC accuses LUKoil, Alekperov, Usmanov, VA
Investment, AGD and other Russian companies associated with them of
operating "a scheme of fraud, breach of express and implied contract, civil
conspiracy, intentional interference with contract, breach of fiduciary
duty and unjust enrichment."
"As a result of the fraud and breach of contract," the court papers claim
that ADC and its investors have lost the value of $30 million already spent
on finding and proving the diamond find, as well as $400 million in profits
they expect to earn from ADC's 40 percent stake in the joint mining
venture, together with another $800 million in profits they believe can be
generated from diamond deposits in the territory covered by the disputed
Usmanov is identified in the court papers as the mastermind of the scheme
by which ADC's Russian partner, AGD, was first privatized, and then turned
over to companies controlled by Usmanov himself and by LUKoil. Together,
according to the court papers, they have refused to honor agreements to
transfer the license for the diamond mine to the joint venture with ADC.
Their objective, the suit alleges, is to drive ADC out of Russia and take
over the diamond project for themselves.
As evidence of fraud, the court claim cites and describes 19 communications
from the Russians between August 1997 and April 2000, as well as 76
Jurisdiction under the Colorado court is claimed because ADC's office is
based there, and because LUKoil operates a gas station and other business
in the state.
ADC is also in court in Stockholm, Sweden, trying to enforce the
arbitration provisions of its joint venture contract with AGD. In June of
this year, a three-man arbitration tribunal in Stockholm reversed its
earlier ruling and told ADC it did not have jurisdiction to consider the
dispute. An appeal of that ruling is currently before the Swedish Supreme
A few weeks ago, LUKoil filed suit in an Arkhangelsk regional court trying
to cancel the international arbitration provisions in the joint venture
Valery Dikevich, spokesman for Usmanov, told me he "cannot provide any
official comments on behalf of Usmanov, because I haven't seen the
lawsuit." He claims Usmanov is not directly involved because VA Invest has
sold its stake in the diamond project to LUKoil.
Timur Ayatkulov, an attorney with Blischenko and Partners, the Moscow law
firm representing the Russians in Stockholm, claims "there are no grounds
for appealing to the U.S. court, and this is just a gesture of despair by
ADC. They are trying to find scapegoats."
Dmitry Dolgov, a spokesman for LUKoil, said his company will not respond
until it has seen the court documents. LUKoil, he said, has yet to decide
on attorneys to represent it in the Colorado court. He added that Akin Gump
has been representing LUKoil in the United States on other matters and is
likely to represent it in the latest case. One of the founding partners of
the law firm, Robert Strauss, was a U.S. ambassador to Russia in the 1990s.
He claims to be one of the defenders of foreign-investment rights in Russia.
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