Centerra Gold Inc.’s political crisis in Kyrgyzstan is escalating, prompting the gold miner’s former chief executive to raise concerns about the situation.
Len Homeniuk, who left Centerra in 2008, is worried the Toronto-based firm is not doing enough to protect the well-being of employees who are caught in the middle of the company’s dispute with the government. He said there is a “real animosity” brewing between the two sides.
Homeniuk himself became a victim of this dispute last year, as he was detained in Bulgaria for nearly three months after Kyrgyzstan issued an Interpol “Red Notice” calling for his arrest and extradition. He said he did nothing wrong.
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“I’m concerned employees from Centerra, many of whom I know, aren’t getting any type of protection,” the 69-year-old said in an interview.
Back in 2009, Centerra and the Kyrgyz government signed an agreement that was supposed to permanently end a long-running feud over Centerra’s Kumtor gold mine. It resolved tax issues around the mine and made the government Centerra’s largest shareholder. Kyrgyzstan currently owns 32 per cent of the company.
But before long, Kyrgyzstan was unhappy with the deal and wanted to scrap it. The government has spent the last few years pressuring Centerra, accusing the company of massive environmental destruction and other crimes. Centerra rejected all the allegations, and negotiations between the two sides stalled in December.
Last Thursday, the dispute worsened as Kyrgyz authorities raided the company’s office in Bishkek. The Kyrgyz appeared to want documents for a criminal case related to “alleged financial violations” involving Centerra’s internal corporate transactions.
The following day, two of Centerra’s Kyrgyzstan-based executives, Mark Burton and Leslie Louw, left the country. Centerra spokesman John Pearson said they departed on holidays that were booked months ago.
“It was pure timing that they left the day after (the raid),” he said, adding that the Kumtor mine continues to operate normally.
Nonetheless, a report from the Kyrgyz media outlet Akipress said the two men are expected to be available for questioning, and that the Kyrgyz could take legal action if they refuse.
That alarmed Homeniuk after his arrest and detainment in Bulgaria last year. He was eventually released in October and returned to his home in California.
“Who knows what the Kyrgyz are going to do?” he said.
Homeniuk said that, in his case, he thinks he could have avoided arrest if Centerra had put him directly in touch with the Kyrgyz authorities that wanted to interview him. He noted that he did speak with the Kyrgyz after the Bulgarian ordeal, and they have agreed to drop the Red Notice.
He also thinks Centerra should have taken the Kyrgyz to international arbitration in order to get the Red Notice scrapped. Centerra has always tried to resolve its political disputes through open dialogue rather than arbitration.
Despite all the political turbulence, the Kumtor mine continues to operate. It has done so for 18 years, with only one brief interruption in 2013, which was related to the political climate.
However, Centerra is still waiting on an environmental approval from the government for its mine plan. The company has an extension to operate normally until June 30.
“We would hope between now and then we’d be able to answer any of their questions and concerns to resolve any outstanding issues,” Pearson said.