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Gazprom Fined in Lithuania, Prague and Warsaw Deny Ukrainian Mercenary Claims

Plus, Kosovo Prime Minister Thaci’s opponents spring an ambush and Kazakhstan takes aim at rampant financial crime.

by Ky Krauthamer, Barbara Frye, Rebecca Johnson, and Madeleine Stern 11 June 2014

1. Gazprom in trouble with Lithuanians, eases pressure on Ukrainians

 

The Lithuanian competition authority has fined Gazprom 123 million litas ($48 million) for hindering competition, Reuters reports.

 

The regulator said the Russian-government-owned company breached competition rules in 2012 when it declined to arrange a gas exchange to enable Lithuanian power corporation Lietuvos Energijos Gamyba to buy gas from a Western European company.

 

The company is also under investigation by the EU for anti-competitive practices.

 

The competition authority said Gazprom’s refusal to negotiate caused Lithuanian customers to pay more for electricity and heat powered by Russian gas. Gazprom supplies almost all of the country’s gas needs.

 

The regulator also said Gazprom violated an obligation to allow customers to seek alternative energy supplies it incurred when it purchased a stake 10 years ago in the gas supplier Lietuvos Dujos. EU competition rules bar an energy supplier from holding a dominant position in a country’s energy infrastructure.

 

Just last month, Gazprom agreed  to cut Lietuvos Dujos’ price by about 20 percent after Lithuania repeatedly called for a review of its tariffs, which are among the highest in Europe.

 

The EU’s investigation involves Gazprom’s practices in Lithuania, as well as Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Poland, and Slovakia. Gazprom provides nearly one-third of European natural gas supplies.

 

Meanwhile, Gazprom gave Ukraine an extension until 16 June to make its next advance payment for gas deliveries. EU negotiators and Ukrainian and Russian officials are trying to hash out a deal to revise Ukraine’s 2009 contract for Russian gas, agreed to by then-Prime Minister Yulia Tymoshenko. The deal locks Kyiv into paying for gas, whether or not it uses it, at the highest price for any customer in Europe.

 

2. Triad of Thaci opponents seeks to form next Kosovo government

 

Opposition parties in Kosovo are looking to form a coalition government after the recent elections that would deny Prime Minister Hashim Thaci a third term, Reuters reports.

 

The announcement came as a surprise, Balkan Insight writes, as most observers believed Thaci would be able to find the partners he needs to stay in power.

 

Thaci’s Democratic Party of Kosovo won a plurality, with 31 percent of the vote in the 8 June election but has struggled to find coalition partners, and some party members have defected to the opposition, Reuters reports. That splinter group has partnered with the Democratic League of Kosovo and the Alliance for the Future of Kosovo (AAK) in the newborn coalition.

 

Kosovo OppositionKosovo opposition party leaders Ramush Haradinaj (right) and Isa Mustafa after their meeting 10 June. Image from a video by Lajminet Kosovë / YouTube


The three parties’ candidate for prime minister is AAK leader Ramush Haradinaj, a former guerrilla commander who served as prime minister for a few months before stepping down in 2005 to face war-crimes charges at The Hague. He was acquitted in a second trial in 2012.

 

An attempt by Haradinaj to replace Thaci as premier last year failed.

 

The nationalist Vetevendosje party is also considering joining the coalition against the PDK, but has said it would not do so unless the other parties agree to end EU-led normalization talks with Serbia once in power, Balkan Insight reports.

 

3. Our citizens are not fighting in Ukraine, say Prague and Warsaw

 

Czech and Polish officials are skeptical of Ukrainian separatist claims to have detained mercenaries from the two countries.

 

Czech diplomats had no information about alleged Czech fighters in eastern Ukraine, a Foreign Ministry spokeswoman said 7 June after separatist leader Myroslav Rudenko told Interfax-Ukraine his units had captured Czech, Polish, and other mercenaries.

 

The Czech Embassy in Kyiv also said it had no information on the claim, and a Defense Ministry spokesman said there were no Czechs taking part in observer missions in Ukraine.

 

A spokesman for Poland’s Foreign Ministry rejected the claim as “black propaganda.”

 

Rudenko, named in the 7 June Interfax-Ukraine report as co-chairman of the secessionist Donetsk People’s Republic, said militia had also detained mercenaries who appeared to be Africans.

 

Donetsk Region Governor Sergei Taruta said citizens of several countries were among more than 200 prisoners being held by local militia and that talks were under way to secure their release.

 

4. Kazakhstan mounts visible anti-graft campaign

 

Kazakhstan’s government has been making noises about fighting corruption recently, with the latest salvo aimed at insider trading and other attempts to rig the stock market, the Times of Central Asia reports.

 

Since April, top officials have been giving public briefings detailing the staggering figures lost to corruption. First up was Adilbek Dzhaksybekov, the newly minted secretary of state, who on 10 April told a meeting of law enforcement and judicial officials that of 2.2 trillion tenge ($11.8 billion) that courts had ruled to be recovered on behalf of the state last year, only 108 billion tenge – 5 percent – had been collected.

 

“According to the secretary of state, judiciary enforcement authorities are among the most corrupt officials in Kazakhstan,” Tengri News reported at the time.

 

In May, the National Chamber of Entrepreneurs met to discuss the issue of wealthy citizens sending vast sums of money abroad, beyond the reach of tax inspectors. Kazakhstan was among the 20 countries in the world to see the highest unrecorded exodus of capital, offshore assets, and earnings from the 1970s through 2010, according to a 2012 report by the Tax Justice Network. The organization estimated that $138 billion left Kazakhstan through back channels during that period.

 

Then last week the deputy chief of the country’s anti-corruption police said almost 300 billion tenge had been embezzled in Kazakhstan since the beginning of 2013, according to Tengri News.

 

During that time, prosecutors have gone after nearly 300 officials, 22 of whom are in senior positions, the news agency reports. Among them have been a deputy agriculture minister, the president of the national space agency, a former regional governor, and top executives of the country’s nuclear fuel company and the state railways.

 

Most recently, the government announced this week it was preparing legislation to outlaw insider trading and the practice of disseminating misleading information in order to manipulate a stock’s value, according to the Times of Central Asia.

 

A member of parliament last week blamed corruption for a 17 percent drop in foreign direct investment in Kazakhstan last year. In a discussion on legislation to improve the country’s investment climate, lawmaker Tursunbek Omurzakov lamented that the country’s reputation for corruption was deterring investment into underdeveloped industries such as clothing and electronics.

 

5. More embarrassment for Tajikistan’s Talco aluminum giant

 

Documents seen by EurasiaNet.org reveal tantalizing information about the lavish spending of Tajikistan’s money-losing Tajik Aluminum Co. (Talco), the country’s biggest company.

 

Talco’s own figures say it lost more than $40 million in 2013 and last made a profit in 2010. Yet, between 2008 and 2010 a company reportedly linked to Talco purchased two Boeing 737s at a cost of more than $96 million. The planes were used “to start a private airline reportedly controlled” by the brother-in-law of President Imomali Rahmon, according to a second EurasiaNet.org report.

 

Information about the plane purchases appears on Deutsche Bank records made available to EurasiaNet.org by representatives of the Russian aluminum company Rusal, which recently won an arbitration case against Talco.

 The Talco aluminum plant. Photo by Brybry26/Wikimedia Commons

 

“Around the time of the purchase, Tajikistan was coercing its citizens to make monthly contributions for a massive hydropower dam project that the state needs, essentially, to sate Talco’s appetite for electricity,” EurasiaNet.org’s David Trilling writes.

 

The Talco aluminum smelter is one of the 10 biggest in the world. It generates more than 70 percent of Tajikistan’s meager foreign currency earnings and consumes 40 percent of the national supply of electricity, according to Asia-Plus.

 

Talco laid off some 20 percent of its staff earlier this year and cut wages by 30 percent, EurasiaNet.org writes. The company, like others in Tajikistan, has been dogged by rumors of financial mismanagement and large flows of cash to Rahmon’s inner circle.

 

In last year’s arbitration case in a Swiss tribunal, Talco was ordered to pay Rusal about $275 million in damages, interest, and legal fees, RFE reported. The tribunal threw out Talco’s $400 million counterclaim that corruption on the part of a Rusal subsidiary rendered its contracts with Talco invalid.

 

Talco spokesman Igor Sattarov confirmed to EurasiaNet.org the purchase of the aircraft by an investment firm called CDH but denied that Talco revenues had been used to fund the airline, Somon Air.

 

Talco also spent “millions of dollars” in 2011 to build the world’s tallest flagpole in Dushanbe in what one executive told EurasiaNet.org was a patriotic gesture.

Ky Krauthamer is a senior editor at TOL. Barbara Frye is TOL's managing editor. Rebecca Johnson and Madeleine Stern are TOL editorial interns.
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