Kyrgyz Republic former PM who signed deal with Centerra charged with corruption

Kyrgyz Republic former Prime Minister Sapar Isakov, who last year signed a deal with Centerra Gold ending long-dragged disputes, has now been charged with corruption over a power plant project.

According to the State Committee for National Security, or GKNB, the recently fired politician is being investigated over his role in the overhaul of a power plant in the capital, Bishkek, Eurasianet reported.

Isakov made the decision of settling the government’s differences with Centerra only four days after being appointed as Prime Minister and, allegedly, without the parliament’s approval. In April, he told Kyrgyz Service, a subsidiary of Radio Free Europe and Radio Liberty, that international consultants had told him Kyrgyzstan had no chance of winning in court, so an agreement was the best option for the country.

Some MPs are reportedly saying the pact agreed by Sapar Isakov is rather sketchy as increased Centerra’s annual environmental contributions in exchange for the government dropping a $100 million lawsuit in a local court.

While Isakov and Centerra called the agreement "strategic", some members of the parliament are saying the pact is rather sketchy as increased Centerra’s annual environmental contributions in exchange for the government dropping a $100 million lawsuit in a local court, the Kyrgyz new agency reported.

It’s believed that the former PM’s charges of corruption may put the pact between the Asian country and the Canadian miner in jeopardy.

Asked about the matter, Centerra's vice president, investor relations, John W. Pearson, told MINING.com that the company continues to work with the Kyrgyz government to complete the agreement. In an update last week, the company said it expected to sign it by June 22.

'Pathway' for differences resolution

The wide-ranging arrangement would end a long-dragged dispute that crippled investor confidence in the impoverished Central Asian country and prevented Centerra from partaking in any profit from its majority-held and majority-operated Kumtor mine, resulting in the Canadian miner filing for international arbitration.

Other key terms of the deal include a comprehensive settlement and release of all outstanding arbitral and environmental claims, disputes, proceedings and court orders, and releases of the company and its Kyrgyz subsidiaries from future claims covering the same subject matter as the existing environmental claims arising from approved mine activities.

The pact would also provide for the termination of the Kyrgyz court order which, among other things, restricted subsidiary Kumtor Gold Company (KGC) to transfer cash to Centerra.

Under the terms of the settlement, the Kyrgyz government would also acknowledge there would be no future restrictions on the ability of KGC to distribute funds to Centerra.

Further, all restrictions would be lifted on the free movement of KGC's employees.

“While the agreement provides a pathway for the resolution of all outstanding matters affecting the Kumtor Project, there are no assurances that all of the conditions precedent to the completion of the settlement will be satisfied,” Centerra warned last month.

Kumtor, which lies near the Chinese border at an altitude of 4,000 metres, has produced around 11m ounces since inception and remaining reserves are pegged at 5.6m ounces.