The two-year ongoing battle between the Ararat Gold Recovery Company (AGRC, LLC) , owned by the Indian billionaire Anil Agarwal, and the Government of the Republic of Armenia (ROA), appears to have entered its final phase. This is borne out by the statement released by the Press Secretary of the Prosecutor General's Office on August 2 nd confirming that on the same day Gagik Jhangiryan, the Deputy Chieh Prosecutor, lodged a legal action with the Economic Court of the ROA against the AGRC. The legal suit demands that the Court rescind the company's license permitting it to engage in all mining activities. According to a directive issued by ROA President Kocharian, all authority to regulate the mining industry was transferred to G. Jhangiryan who now deals with all issues related to that sector of the economy.
The Deputy Prosecutor General requested that the Court expropriate from the AGRC the amounts of some 4 billion Armenian drams and U.S. $10 million respectively which in turn would be deposited in the ROA budgetary coffers. He also called for the freezing of the company's assets and bank accounts.
The 4 billion drams to be seized is comprised of tax liabilities, additional V.A.T. taxes, fines for paying the wages of foreign workers in U.S. dollars, custom levies and other assorted sums. The $10 million is the amount of penalties cited by the ROA Ministry of the Environment for the company's improper operation of the mine and the fact that AGRC concealed some 1.5 tons of extracted gold.
During the past few years the company had been periodically issued warnings regarding these issues and a number of the violations were also revealed by the auditing company for AGRC. When it comes to doing business Anil Agarwal has his own set of personal rules which, for a variety of inexplicable reasons, he wasn't able to put into practice in Armenia. He's periodically been involved in some scandalous affairs, especially in his homeland of India. Agarwal has become infamous for the bribes he pays to officials and because the mines he owns and operates constantly cause damage to the surrounding natural environment.
According to our sources within the mining industry, the sole aim of of the Government of the ROA in taking these measures is to force the Indians into quickly selling-off the company. One month ago the Chief Executive Officer of AGRC, B.K. Sharma, stated during an interview with the “168 Hours” newspaper that he received word from the Office of the President of the ROA to sell the company. Sharma says, “ They didn't give a reason. We were merely told that they preferred that we sell the company and for us to leave.”
The court action would pressure Agarwal to hastily undervalue the company and sell it at a relatively cheap price. It's likely the final sale price will not exceed $50 million. This is the estimate provided by the industry specialists at the Sotk mining operation.
Announcements have already appeared in the press that the Madneuli Stock Company intends to buy AGRC. Madneuli is a sister affiliate of the Prominvest Corporation whose principal owners are Sergei Generalov and Siman Poverenkin. Generalov is a former Energy Minister of Russia and a past member of the Russian Duma. Our sources tell us that Poverenkin sat in on the negotiations between the Indian businessmen and Armenian officials.
In April of this year the Madneuli Company was able to obtain a license to start mining operations in Armenia under the name of Golden Ore, LLC; a fact which is being kept a close secret. So secret in fact that the Director of the Registry Service attached to the Legal Division of the Ministry of Justice provided us with false information when questioned about Golden Ore. This official could only knowingly give us false information if he had received instuctions from above not to provide us with the facts regarding the company.
It's a crimnal offense for a government official to provide false information in such cases and a criminal lawsuit could be initiated by the Prosecutor General's Office. That's of course if Gagik Jhangiryan, the Deputy Prosecutor General who's responsible for overseeing the mining industry in the ROA, receives such a directive from his superiors.