Mining for Gold and the Truth in an Azeri Village

Country: Azerbaijan
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A recent story from Azerbaijan shows how secretive business deals can leave citizens without the power to keep mining companies, or their own governments, honest.

Villagers in Chodvar are seeing their homes and livelihoods threatened by a gold mining operation that, on first examination, appears to be based in the United Kingdom. In reality, though, the company can be traced through a series of transactions back to Azeri President Ilham Aliyev. In the words of Radio Free Europe writers Nushabe Fatullayeva and Khadija Ismayilova, "The UK company is actually a front for the first family."

AIMROC, the majority owner of the local mines, is a joint venture of four shell companies "set up specifically for this deal." The UK-based shell company is in turn controlled by three companies, registered in Panama, all of which include President Aliyev's two daughters as senior managers. (The article includes an illustration that attempts to link all the entities involved.)

This web of ownership is apparently news to many villagers.

Despite grinding poverty and the problems with the mine, most locals remain firm in their faith in Aliyev, whose omnipresent portrait gazes out over the people of Chovdar from the walls of shops and schools.

"The president knows nothing about this," says teacher Ramazanov. "Local officials say the president ordered that our land be taken, but I don't believe it. He is a good person."

The financial stakes are high. The area around Chodvar holds reserves of gold and silver estimated to be worth $2.5 billion. But with mining projects already buying up village land and blocking some water sources, local residents, many of whom struggle to subsist, appear more likely to suffer the social and economic costs of local mining activity than to share in any windfalls.

The situation in Chodvar graphically illustrates the need for disclosure rules that keep companies honest about ownership, to ensure that state resources are managed to benefit the public. It is also an example of how an expansion of EITI reporting to include all concession and contract information could strengthen the EITI standard. With Azerbaijan holding a prominent place as an EITI success story, it is particularly important for the country to "get it right" in cases such as this one.

Meanwhile, one of the reporters for this story has been subject to a campaign of intimidation and threats, presumably in response to her continuing efforts to expose government corruption and questionable practices.

Jed Miller is RWI Internet director.

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