Being Accused of Conflict of Interest not Fun

27_Kalia-Moldogazieva-taking-samples-at-the-Kumtor-Goldmine-Dr. Kalia Moldogazieva (right), the Director of “Tree of Life”, a Kyrgyz NGO, accused Prizma’s Mehrdad Nazari of “conflict of interest” in his work relating to Kumtor, a subsidiary of Centerra Gold. Are Dr. Moldogazieva’s concerns justified?

 

In a recent interview, Dr. Moldogazieva reportedly stated that Prizma’s advisory work relating to the Kumtor gold mine in the Kyrgyz Republic constitutes a "conflict of interest". She highlighted that yours truly, the owner of Prizma LLC, was an employee of the EBRD. This is fact – and deserves a qualification that this was ten (10) years ago. And Dr. Moldogazieva linked my previous employment with the EBRD with the fact that KOC is a subsidiary of Centerra which, in turn, benefits from a revolving credit facility from the EBRD (see here) to arrive at her conclusion.

Below, I have summarized Prizma’s disclosures about my employment status with the EBRD and quoted the relevant section from EBRD’s Code of Conduct related to post-employment conflict of interest issues. These show that Dr. Moldogazieva’s accusations are wrong.

But, first, let’s acknowledge that trust is a rare commodity in the Kyrgyz Republic, one of the former Soviet republics with about 5.5 million people located in Central Asia. Look at this context to understand why: Transparency International, a non-profit, non-governmental organization best known for its Corruption Perceptions Index, recently ranked Kyrgyzstan in position 154 of 176 countries reviewed (see here for more details). Kyrgyzstan has also seen a couple of revolutions and plenty of government changes over the last decade. According to the UN High Commissioner for Refugees (see this article), more than 400 people were killed and 375,000 others were forced to flee their homes when communal/ethnic violence hit southern Kyrgyzstan in June 2010. This all suggests that, in general, Kyrgyz people have little trust and confidence in their own elected government representatives, key institutions, and even communities/neighbors. It makes you wonder how this plays out when Kyrgyz consider the trustworthiness of foreigners and international consultants…?

Now let’s examine Prizma’s disclosure before reviewing EBRD’s guidance contained in its Code of Conduct. In Prizma’s reports (posted here), my previous employment relationship with the EBRD were already disclosed in the Executive Summary section of each one of Prizma’s Independent Assessments. Similar information can also be found on my my LinkedIn profile, Prizma’s website and even this blog. This means that Dr. Moldogazieva did not ‘uncover’ any major findings or new facts which had been ‘kept in the dark’ previoulsy. In fact, Dr. Moldogazieva knows me personally from my days at the EBRD and met with me in mid-2012 but did not raise any "conflict of interest" concerns at that time.

A look at EBRD’s Code of Conduct and Rule 6 (d) on Post-Employment is also instructive. It notes the following: "Except with the appropriate authorisation, Bank Personnel who have separated from the Bank may not, for a period of one year after separating from the Bank, perform services for any entity or its Affiliate(s) in respect of any matter in which the Bank has an interest or is a party and in which such Bank Personnel have Participated Personally and Substantially while at the Bank" [underlining added]. EBRD's Code of Conduct is very clear. As I have not been an employee of the EBRD for about ten (10) years, Dr. Moldogazieva’s assertions of “conflict of interest” based on my  employment at the EBRD 10 years ago are unsubstantiated and wrong.

However, the underlying issue of concern raised by Dr. Moldogazieva probably relates to the way Prizma’s findings, which rely on some 50 studies and references ranging from Kyrgyz Government publications to studies by various UN agencies, undermine her key conclusions  relating to the environmental performance of the Kumtor mine.

Without getting into an ‘tit for tat’ arguments, suffice to note that Dr. Moldogazieva does not have to like, accept or rely on Prizma’s findings - or use a "conflict of interest" argument in an attempt to discount it. Instead, she could consider the subsequent report published by Environmental Resources Management Limited (ERM), an environmental consultancy with over 140 offices around the world and over 4,700 employees. ERM noted that “No major or materially significant environmental issues were identified by the ERM document review, site visit and legislative review.” I wonder if ERM will pass Dr. Moldogazieva's "conflict of interest" tests? - Prizma’s and ERM’s independent reports (which also contain recommendations to further improve Kumtor’s environmental performance) are available in Russian and English languages on Kumtor’s website (http://www.kumtor.kg) and are also posted here. Dr. Moldogazieva accusations and my response was also picked up by the Kyrgyz press during recent interviews in Bishkek. See  here for English translation of article which appeared in Vechernyi Bishkek and 24.kg on December 21, 2012.

But let me close on a more positive note. I am pleased that Prizma’s role is not generally viewed to be tainted by conflict of interest as wrongly asserted by Dr. Moldogazieva. Instead, Prizma was recently involved in facilitating a cross-sectoral stakeholder workshop focused on biodiversity issues in the Kyrgyz Republic. This workshop identified opportunities to further promote nature conservation in Kyrgyzstan using a more collaborative approach. I have blogged about the workshop, posted workshop summary and other outcomes here: Biodiversity Management Strategy & Plan for Gold Mine.

As highlighted during a previous meeting I had with Dr. Moldogazieva and some of her colleagues in Bishkek in mid-2012, I hope we can find a way to work towards improving trust and confidence in data, facts and processes in order to support rational decision-making relating to the Kumtor gold mine.

You may also be interested in a subsequent article published by Eurasia.net, a Soros-funded media outlet: Kyrgyzstan: Bishkek Locks Horns with Key Investor (Jan 28, 2013)

Picture source.

 

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