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Kyrgyzstan is suing Canada's Centerra Gold (Toronto Stock Exchange symbol: CG), for alleged cyber security and employee rights violations of its former Kumtor gold mine, the latest chapter in a continuing dispute between the two sides over expropriated assets.
The legal challenge claims that Centerra has prevented users and administrators from accessing Kumtor's computers since May 2021, shortly before the government appointed a temporary external manager.
The Toronto-based miner has clashed with the Kyrgyz government over financial and environmental issues related to the mine for years. Their stalemate worsened in May, when the state controlled the mine, claiming that Centerra operated it in a way that was harmful to the environment and nearby communities.
"once again, the Kyrgyz government seems to be trying to divert attention from the fact that it sent secret police to seize the Kumtor gold mine," a spokesman for Centerra Gold said in an emailed statement.
A spokesman for Centerra Gold said, "as we said before, when authorities confiscate the computers and passwords of Kumtor individual employees, Centerra's global IT system restricts user access to protect the integrity of the organization's global IT infrastructure and its confidential information. The safety system of the mine has not been affected. "
The company responded by suing Tengiz Bolturuk, a former director, who is a dual citizen of Canada and Kyrgyzstan. The former board member worked secretly with lawyers from Canada and the United States, as well as with the Kyrgyz government, to carry out mine expropriation, Centerra said.
In late August, the miner said it had obtained photographic evidence that there was at least 40 metres of water at the bottom of the Kumtor gold mine and that an "abnormal" amount of water flowed down the pit wall, which was said to have led to catastrophic events.
Kumtor is Centerra's largest gold mine, accounting for more than 50 per cent of the company's total output.
This operation is also crucial to Kyrgyzstan. The mine accounts for 1/5 of the total industrial output of the former Soviet Union and produced more than 1320 million ounces of gold between 1997 and the end of 2020. Last year's production was just over 556000 ounces.
The country is also investigating Centerra Gold's alleged bribery of senior Kyrgyz officials to obtain a Kumtor license.
Askar Akayev, the ousted first president of independent Kyrgyzstan, has been taken to the capital Bishkek for the second time since August to be questioned in connection with an investigation into possible corruption near the mine, local media reported on Wednesday.
The country's national security council (UKMK) believes that Centerra bribed senior Kyrgyz officials, including Akayev and two other former presidents.
The company denied the allegations and called the expropriation of Kumtor "erroneous and illegal".
Since the government took over the mine, the company has also expressed concern about the lack of transparency in its operations.
Centerra said Kumtor's performance was 24 per cent lower than the mine plan for June-September 2021. This means that the current management of the business has reduced about 6.2 billion kilograms ($73.5 million) of gold based on the average gold price for the period.
At the meeting on Monday, Kyrgyz Finance Minister Almaz Baktaev (Almaz Baketaev) could not answer lawmakers' questions about the amount of gold produced by Kumtol under government control and the location and price of gold for sale, Radio Free Europe reported.
Local media also reported on Wednesday that the mine's revenue so far this year has decreased by 2.62 trillion kilograms (nearly $31 million), or 27.2 percent, compared with 2020, according to data provided by the country's Ministry of Finance.
Kyrgyz Prime Minister Aguilbek Zaparov told reporters that he has visited the mine every month since May and that "everything is going according to plan."
