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By John Helmer in Moscow

Leading Tajikistan figure ordered to testify by London judge or “evidence will fall away”.

A London High Court judge warned this week that unless one of the leading figures in Tajikistan appears in London in October for cross-examination on oath, the key evidence in the high-profile Tajikistan aluminium case “will fall away”.

Justice Tomlinson was referring to Hassan Saduloev (the High Court spelling; also known as Asadulozoda in Tajiki). He is brother in law of the Tajik President, Emomali Rahmonov (Rahmon); chairman of Orienbank; and the man reputed to be the principal arranger of the billion-dollar annual operations of Tajikistan Aluminium Plant (Talco), the country’s principal consumer of electricity and source of export earnings.

After weeks of uncertainty, lurid press speculation, and missed deadlines, Saduloev, according to his UK lawyer in court, signed a required witness statement on July 25. However, the authenticity of this document, and of Saduloev’s signature, were challenged by lawyers for Avaz Nazarov and the Ansol group of companies. The latter have been sued in the High Court by Talco, and they are counter-suing. Both sides allege fraud and massive diversion of hundreds of millions of dollars in the smelter’s earnings over the past decade.

Amid courtroom allegations of corruption, fraud, forgery, and destruction of evidence, the case has exposed the dynamics of the global aluminium trade, involving three international aluminium giants — state-owned Hydro Aluminium of Norway, United Company Rusal, the Russian producer controlled by Oleg Deripaska, and India’s National Aluminium Company. With Rahmon and Saduloev, Deripaska took over control of the smelter at the end of 2004, ousting the Ansol group. Talco’s lawsuit followed to prevent Nazarov making a comeback in the Tajik aluminium business.

The case has also put the spotlight on the political problems of Tajikistan, the Central Asian cockpit in which great power interests, Islamic fundamentalism, and the narcotics trade have been battling for primacy since the collapse of the Soviet Union in 1991.

Now into its fourth year, the Tajik case has run up the second largest legal bill in English history; the largest in such a short time — more than $126 million for the Tajik sides alone. Justice Tomlinson also presided in the record-setting 13-year case between Deloitte and the Bank of England. When that case was wound up in 2006, Tomlinson ordered Deloitte to pay the Bank of England’s legal costs at the highest rate possible – “indemnity costs”.

This week, after Talco lawyers, Herbert Smith and barrister Neil Kitchener, again tried to delay the scheduled date of trial, the judge said: “I am extremely resistant to the notion that we are going to adjourn the beginning of the trial…”

Saduloev’s lawyer told Justice Tomlinson: “It is regrettable that Mr. Saduloev did not sign until last Friday. He did sign. He did not die and then become resurrected and die again. He is alive and well. But, for whatever reasons, for reasons we say of his travel and difficulty with communication and him just being too busy to look at it, too preoccupied, it was not signed until Friday [July 25].”

The lawyer was referring to reports on the BBC and Radio Free Europe that Saduloev had been shot in May, following a Rahmon family dispute over business; or had been held incommunicado since that time.

The judge ordered Saduloev’s lawyer to provide the original of the July 25 statement and signature for forensic testing. He also required Saduloev to appear in person when the witnesses are called in the trial. This is scheduled for October 27.

According to Stuart Isaacs, Saduloev’s barrister, “we intend that Mr. Saduloev will give evidence in person at the trial. I cannot give an absolute 100 per cent. guarantee that that will happen, but that is the intention, and your Lordship has already made observations in relation to there being no permission for evidence by video link at this stage anyway.”

“If he does not turn up then his evidence will fall away,” the judge announced.

The case was initiated in 2005 by President Rahmon himself, who directly controls the Tajikistan Aluminium Plant (Talco, aka TadAZ), the key plaintiff.

The cost disclosures by Mineweb , amounting to about 4% of the entire gross domestic product of the country, triggered widespread publicity in the international media, and also inside Tajikistan. Public poverty has become so desperate, there is inadequate electricity to sustain basic public health services.

The latest economic statistics from Tajikistan indicate that the power shortages caused a significant slowdown in the country’s GDP growth and industrial production in the first quarter of the year, but apparently both recovered in the second quarter.

National Bank of Tajikistan statistics indicate that aluminium exports from Talco dropped 2.5% in the first quarter to 96,111 tonnes, but rose 5% to 106,281 tonnes in the second. Altogether, for the first half of this year, Talco appears to have exported 1% more aluminium than it did in the same period of 2007.

Fresh power cuts to the country, if not Talco, may be imposed soon, according to a warning from Barki Tojik, the national electricity utility. The utility acknowledges it is overdue in its repayment for Russian electricity supplies.

In March, the International Monetary Fund (IMF) announced that the Tajik state bank was in default of its loan obligations, and ordered an internationally supervised, forensic audit of loan funds now estimated to total about $500 million. The World Bank and the European Bank for Reconstruction and Development (EBRD) are also involved in the pursuit of the missing money.

The US, which is the largest shareholder in the international banks, has announced publicly, through US Ambassador Tracey Jacobson in Dushanbe, that the audit should include the aluminium plant, and what is happening to the aluminium cash flow. This amounts to revenues exceeding $1 billion per annum.

A notice, posted on the website of the National Bank of Tajikistan, gave June 10 as the deadline for prospective auditors to apply for the job. There has been no subsequent announcement of the selection.

The Russian government has been issuing conflicting signals, appearing hostile to Rahmon’s continued stay in power on the one hand; and on the other, protecting him on the World Bank and EBRD boards of directors.

The Norwegian government is also implicated, because the court has heard testimony and seen evidence that Hydro, in which the Norwegian state is the largest shareholder, is implicated in contract documents of the diversion of the aluminium cash flow through front companies in the British Virgin Islands (BVI). The High Court and the London Arbitration Tribunal have already heard testimony by Hydro in a separate case, in which it successfully claimed against the Tajikistan smelter for breach of contract. The evidence of Hydro’s position in that case is now available to contradict Hydro’s position towards the smelter, and also the BVI companies, in what Justice Tomlinson in the current case is calling the ‘Hydro Scheme’.

The one individual in Tajikistan who knows where the aluminium cash is going, how Hydro is involved, and what Hydro’s executives know of it, is Saduloev. He is reported in the court documents to be behind CDH, a BVI-registered entity listed on Talco’s website as one of its strategic aluminium and alumina trading partners.

CDH is one of the parties to the London court case. It claims that its relationship to the Tajik state gives it sovereign protection from claims in the UK court.

There are dangers for Saduloev, if he appears and his testimony is challenged on the evidence. The lawyers of Adukadir Ermatov, a former director of Talco and key defendant, have already told Justice Tomlinson that they may press a contempt citation against Sherali Kabirov, another witness due to appear in London, for allegedly wiping computers and destroying documents to prevent their disclosure at the trial. Kabirov is deputy director of the aluminium plant, as well as managing director of Talco Service, which is a company operating the offshore CDH entity; he is thus one of Saduloev’s and Rahmon’s subordinates, and a key figure in the forensic audit of the Talco fortune.

The information sought from his computer records involve the whereabouts of the aluminium cash flow. He is also described by the High Court judge as “the person who is involved in the day to day running of the litigation and who, therefore, gives you [Herbert Smith] your instructions.” This has been acknowledged by Herbert Smith.

Justice Tomlinson acknowledged the possibility of contempt charges, but said this week that the trial must begin, and testimony and evidence presented for cross-examination, before he will consider the contempt charges.

On June 17 Mineweb’s call to Saduloev in the Tajik capital of Dushanbe was connected to Rustam Soliev. He identified himself as the chief of the chairman’s staff. On the question of proof that Saduloev is communicating personally and directly, Soliev declined to speak on the record.

Ahead of this publication, Saduloev’s office at Orienbank was contacted again. Soliev has been replaced by Anvar Kuliev. He was asked to confirm that Saduloev had been in the mountain town of Khorog recently, where he was reportedly seen by credible western sources; that Saduloev had signed the witness statement on July 25; and that he has agreed to appear in the High Court in London in October.

Kuliev told Mineweb he could not answer the questions on the spot, and had to consult. Asked if Saduloev was in his office, Kuliev said he did not know.

Hydro spokesman Halvor Molland has told Mineweb: “Hydro has a zero tolerance towards corruption and we are following Hydro’s guidelines in all parts of the world where we are doing business. We have spent a lot of time discussing issues concerning transparency and corporate governance [in Tajikistan] with the World Bank and EBRD and other NGO’s.”

A claim originated in India in July that Rahmon may be considering selling Talco to the National Aluminium Company (Nalco) of India. Market reports suggesting that Nalco — which already sells alumina to Talco — is considering buying 51% of the Tajik plant were subsequently dismissed in Dushanbe as “absurd”.

There have been no negotiations for a buyout by Nalco, a Talco spokesman announced. “Talco is a national unitary company, not a joint-stock entity. Thus, it cannot sell its shares. Selling a company that provides 75% of the country’s total cash currency, and when world aluminium prices are soaring, would be against our national interests,” Talco’s press secretary Saekhat Kadyrova was reported as saying.

Contact with Talco headquarters today confirms that Kadyrova is still Talco’s spokesman, but she did not respond to telephone and email contact. Questions from Mineweb to verify Talco’s production figures this year, and the position towards Nalco, have gone unanswered.

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