David Hampson: Leonard Homeniuk’s Bad Luck*

Novinite Insider » OPINIONS | September 1, 2015, Tuesday // 19:39
Bulgaria: David Hampson: Leonard Homeniuk’s Bad Luck* View of Kumtor gold mine. Photo credit: centerragold.com

*This is the English-language version of an opinion piece by David Hampson about the fate of  Leonard Homeniuk, a former CEO of Toronto-based Centerra Gold mining company , which is developing Kumtor gold mine in Kyrgyzstan. Homeniuk was detained in the Bulgarian Danube city of  Vidin at the request of Kyrgyzstan’s government in late July and is facing potential extradition proceedings in Bulgaria. The original opinion piece has been published in Bulgarian by life.bg under the title "The Case of Leonard Homeniuk". 

David Hampson, Ph.D., is a Political Analyst and International Business Consultant. He is a managing partner at Sofia-based governmental and strategic advisory firm Technology Transfer Associates Ltd.


What is the connection be­tween an American family holidaying on the Danube, a successful highly productive mine in Kyrgyzstan and Bulgaria? The answer is in the fact that the until June of 2008, Mr. Homeniuk, the head of the family, was the Chief Executive Officer of a subsidiary of the Canadian uranium mining giant Cameco Corporation - the developer of Kumtor, the larg­est producing mine in Kyrgyzstan.

Mr. Homeniuk, a dual Canadian/US citizen, was detained in Vidin by the Border Police and currently is being held by Bulgarian authorities, pending potential extradition hearings, on the basis of a contested Interpol Red Notice placed there by the Kyrgyz authorities, which were not required to provide any evidence of Mr. Homeni­uk‘s criminal wrongdoing at the time.

Kyrgyzstan is a politically turbulent, former Soviet Union republic that has undergone two revolutions since it de­clared its independence in 1991. Each subsequent government accused all previous governments of corruption, abuse of power, and self-dealing. In the highly charged, unstable political environment of Kyrgyzstan, the Kum­tor mine has always been the front and center of unscrupulous political intrigue.

Ever since the Canadian Cameco and the Kyrgyz government entered into a definitive agreement in 1994, through the begining of the mine‘s commercial operations in 1997, and to this date, Kumtor continues to represent the largest foreign invest­ment in Kyrgyzstan. It also accounts for approximately 7.4% of the country’s GDP. At the insistance of the IMF, Kyrgyzstan reports on its economy separately with and without the Kumtor‘s con­tribution, which indicates just how important the mine is to the country‘s economy.

From the begining, the agreements between the Canadian operator and the Government of Kyrgyzstan were considered a model for foreign in­vestment in the region. The European Bank for Reconstruction and Devel­opment and the International Finance Corporation co-financed the project and insisted on the highest standards of transparency and disclosure where Kumtor was concerned.

However, by year 2000 the Kyrgyz economy was suffering, construction costs soared and a massive pit wall fail­ure at the mine in July of 2002 added to country‘s fiscal problems. The govern­ment became unhappy with the terms of the original agreement. Cameco was put under pressure to renegotiate.

The deal was renegotiated in 2003, once again with participation of in­ternational financial organizations. It passed the scruitiny of Canadian regu­latory authorities, independent expert valuation, and an army of legal and financial advisors. It was made public in an open and transparent manner. Yet, in 2005, after Kyrgyzstan expe­rienced the first revolution, the new government pressured the company to renegotiate once again.

In 2009, a year after Mr. Homeniuk retired from his position with the company, at the initiative of the Kyrgyz Government, the parties renegotiated the agreements for the second time.

However, in 2010, the second revo­lution swept Kyrgyzstan. The Canadian company found itself once agan locked in acrimonious renegotiations, now with the current government. These negotiations continue to date without any light at the end of the tunnel. Kyr­gyzstan threatened nationalization, as well as laying criminal charges against some of the current Canadian executives.

In June 2014, without providing any notice or reason to any of the parties involved, the office of Prosecutor General laid criminal charges against Mr. Homeniuk, citing unfair economic disadvantage to Kyrgyzstan resulting from the renegotiation of 2003. With­out providing any proof or evidence, Kyrgyzstan issued an Interpol Red Notice for the arrest of Mr. Homeniuk.

By challenging the legitimacy of the 2003 agreements, Kyrgyzstan hopes to either find firm footing for its goal to nationalize Kumtor, or, alternatively, attain a larger shareholding in the mine. 68-year-old Mr. Homeniuk, who has not been involved with the project since 2008, presents a convenient target, cast in the role of a “hostage” or a “scarecrow” to Canadian-Kyrgyz negotiations.

Since then, the Kyrgyz Supreme Court upheld a lower court’s decision to drop all similar criminal charges against all the Kyrgyz officials who were involved in this transaction. However, they have persisted in pur­secution of Mr. Homeniuk. In May of this year Mr. Homeniuk lodged an ap­peal with the Interpol Commission to remove the Red Notice on the grounds that the Kyrgyz charges against him are politically and economically motivated and have no legitimacy. It is set for review in September.

Bulgaria has been injected into this controversy when acting on the Kyr­gyz Interpol Red Notice, its Border Police arrested Mr. Homeniuk on July 27 while he was vacationing with his family on the Danube. He has since been detained in Sofia, pending pos­sible extradition proceedings to Kyrgyzstan. The Bulgarian justice sys­tem is now required to decide if Mr. Homeniuk should be extradited to Kyrgyzstan. They will review the legal evi­dence and are well qualified to provide a ruling. However, any decision to take such a step will be made against the back­drop of Kyrgyzstan’s record on human rights. Numerous international bodies have strongly criticized that country's human rights record. Among the charges are “Tor­ture and other cruel, inhuman or degrading punish­ment”, “Harsh prison conditions, sometimes life-threatening due to food and medicine shortages”, “Pre-trial and temporary detention centers were particularly overcrowded”. Ad­ditionally, “Denial of a fair trial due to corruption, for example, trial procedures of presumption of innocence are regularly violated”.

With this human rights record it is not surprising that numerous Euro­pean and other countries have rejected extradition re­quests from Kyrgyzstan in recent years. Among them are France, Ireland, Georgia, Latvia, Belarus, the United Kingdom, Russia and many others. Looking at the record, the vast percentage of such requests for extradition by Kyrgyzstan have been rejected.

Mr. Homeniuk appears to be the victim of a chain of unfortunate events and circumstances. He is the Western executive most closely identified with the Kumtor mine. As such he is seen as a target in a long-stand­ing commercial dispute between the Canadian company and the Kyrgyz government, which shows no signs of resolution. In addition, there is a highly charged pre-election environment in Kyrgyzstan, and the Interpol Red Notice system is easily misused and manipulated. The man who has not set foot in Kyrgyzstan since 2008 is being used as a convenient scapegoat by Kyrgyzstan’s increasingly bold ambitions. Perhaps his most unfortunate decision was to take his wife and his 15-year-old son on a Danube holiday and cross the border into Bulgaria. Border police in Vidin which could not possibly have any knowledge of the broader picture, simply followed the rules. It is perhaps up to the Bulgarian Justice system, recognizing that there is no extradition treaty between Bulgaria and Kyrgyzstan, to move rapidly to review the case and take what they consider to be the cor­rect measures. Hope­fully, Mr.Homeniuk and his family may still have a chance to enjoy the beautiful tourist side of Bulgaria in peace.

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Tags: Centerra Gold, gold mine, Kumtor, Kyrgyzstan, Vidin, Homeniuk, Bulgaria, extradition, arrest, detained, family, Interpol Red Notice

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