October 21, 2018

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Afghanistan Signs Major Mining Deals Despite Legal Concerns

Afghanistan Signs Major Mining Deals Despite Legal Concerns
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KABUL, Afghanistan — The Afghan government on Friday signed two contracts for the exploration of copper and gold deposits in the north, in a bid to move away from the country’s dependence on foreign aid by tapping its mineral wealth.

But watchdog groups say aspects of the contracts may violate the law and aggravate questionable practices that have marred the mining sector for years. Strongmen and political elites have long profited from the country’s riches, and mineral wealth could turn into another source of instability in a country mired in decades of war.

The contracts, which had been stalled for years, were signed in Washington between the Afghan ministers of finance and mining, and executives from Centar Ltd., an investment company founded by Ian Hannam, a former J.P. Morgan banker who partnered with local Afghan firms to bid for the mines.

Centar’s local partner is Sadat Naderi, who until June was Afghanistan’s minister of urban development. The Afghan minerals law prohibits senior officials from bidding on mining contracts for five years after they leave government.

Civil society activists say government officials seemed pressured to move forward with the contracts despite unresolved legal issues.

“They signed the contracts without giving us satisfactory answers on concerns that the contracts were very clearly against the law,” said Sayed Ikram Afzali, the executive director of Integrity Watch Afghanistan who met repeatedly with senior officials, including the Afghan president and vice president, to discuss concerns. “It was very clear that they were under pressure to move on with these contracts — they said they were facing international pressure to finalize these.”

Bradley Barnett, the chief executive of Centar, said in a statement that the company had negotiated the deal “in strict adherence to Afghan law and international standards” and that the bidding process had been transparent.

The contracts call for developing a copper deposit in Balkhab district of Sar-e Pol Province and a gold deposit in Badakhshan Province. Although the value of the two mineral deposits is not clear, Centar said if exploration finds large-scale mining opportunities, the projects could generate $1 billion in economic impact and more than 10,000 jobs.

The Afghan government has repeatedly dangled its mineral wealth in front of President Trump, who is losing patience with the costly presence of American troops in the country. Mr. Barnett of Centar called the deal “potentially transformative” for Afghanistan in his statement.

Stephen Carter, the Afghanistan campaign leader at Global Witness, an organization focused on mining and conflict, said that was not the point.

“Regardless of whether or not this is a good deal for Afghanistan, approving a contract in apparent contravention of the minerals law would undermine the government’s declarations that it is bringing the rule of law to the sector,” said Mr. Carter, the Afghanistan campaign leader at Global Witness, an organization focused on mining and conflict.

The government of President Ashraf Ghani, which took office in September 2014, immediately halted major mining contracts issued by its predecessor over concerns of corruption. Mr. Naderi was a political ally of Mr. Ghani during the election campaign, and he was appointed to his cabinet.

Because the two contracts had been completed by the previous government — which had chosen the consortium as favored bidder long before Mr. Naderi became a cabinet minister, but had left the official signing to the new government — officials say the contracts do not violate the law. To avoid even “perceptions of a conflict of interest,” Mr. Naderi resigned from the government in June.

Mr. Afzali, of Integrity Watch, said the contract that was agreed upon by the previous government has been considerably revised since that time.

“During the renegotiation of the contract, Mr. Naderi was still a cabinet minister,” Mr. Afzali said.

The Afghan government provided contradictory information on when the renegotiation happened. Ajmal Ahmady, an adviser to Mr. Ghani, said the contract was renegotiated only after Mr. Naderi resigned in June. But the legal director of the Ministry of Mines said during a news conference the negotiations had been going on for 15 months.

Fatima Faizi contributed reporting.





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