TALCO has failed to publish an external audit after it promised to do so. [Nazim Kalandarov]
DUSHANBE – The Tajikistan Aluminum Company (TALCO) is months behind in its obligation to publish the findings of an external audit. Meanwhile, some politicians have proposed selling off the company, saying it does nothing for the public good.
An audit by Britain’s Moore Stephens Company was due last December, Luc Moers, International Monetary Fund (IMF) Resident Representative in Tajikistan, said.
“We are concerned over the lack of transparency in a company that is one of the country’s major taxpayers and provides more than 75% of the republic’s hard currency revenues”, Moers said.
“The IMF’s arrangement with the Tajik government on mandatory audits of TALCO and Barki Tochik dates back to 2008”, said independent economist Karim Pulatov.
In 2008, the IMF demanded repayment of more than US $47m borrowed by Tajikistan under the Poverty Reduction and Growth Facility and recommended an audit of the National Bank of Tajikistan (NBT).
“The audit exploded like a bomb, revealing a number of schemes involving the National Bank’s former management, including NBT President Murodali Alimardon, who was later replaced as the bank’s head but appointed vice-premier”, Pulatov said.
“If a scandal flares up around TALCO, it may have even broader repercussions than the NBT scandal”, political scientist Rustam Samiyev said.
A TALCO scandal could cause “deep internal resonance: if information surfaces about the company misusing state budgetary funds, mass protests may follow”.
The TALCO management explained the delay in publishing the audit by referring to a January 1 government decision.
“In line with that decision, we were to reappraise our fixed assets, for which purpose the U.S. firm American Appraisal Inc. was hired”, TALCO spokeswoman Sayokhat Kadyrova said.
“Comparing the reappraisal and audit results will help avoid misreporting and prevent the auditors from making (mistaken) conclusions. … Besides, the IMF insisted on having our performance audited for two years, and we did a three-year review, for 2006-2008”, Kadyrova said.
For Georgy Koshlakov, a Tajik economist, TALCO’s transparency is unquestionable: “The delay in publishing the audit is completely justifiable because reporting on the audit without first settling the issue of reappraisal doesn’t make sense”, he said.
“The report will be published, after all”, he said confidently. “TALCO is …half the national economy. So why act hastily?”
TALCO’s fixed assets on December 31, 2008, were worth US $615m, versus TALCO’s own book listing of US $180m, according to American Appraisal Inc.
After publication of the reappraisal data, Khodzhi Akbar Turadzhonzoda, a politician and religious leader, suggested selling the corporation:
“While it is being appraised, we’d rather sell this company that doesn’t pay anything into the state budget”, he said. “The plant brings profit to individuals, not to the state”.
Samiyev agreed.
“Most likely, TALCO is trying to conceal its ‘tolling system’ of partnerships with raw material suppliers that helps deflect hundreds of millions of dollars into tax-free zones”, he said. “Nothing is wrong with that practise in the eyes of international business and donors. … Yet it betrays the Tajik people’s interests”.
Since the company reports directly to the government, a scandal could lead to a replacement of its management or even to political problems for President Emomali Rakhmon, Samiyev added.
“Another version is that TALCO is heavily indebted to its tolling partners and actually flat broke. It has not been declared bankrupt only because those tolling companies belong to the same Tajik citizens who run the aluminum plant. This status is being maintained as insurance against the loss of control over the company for some reason or other”, Samiyev said.
Many Tajik observers express certainty that TALCO eventually will publish the audit. Koshlakov predicts publication by the end of the summer.
“There will be some interim or full-scale report that … that will hardly tell the people much – definitely not who the beneficiary of TALCO is or who owns the offshore companies controlling the plant”, Samiyev said.
“If the report is not published or fails to satisfy international financial institutions”, he said, “some government initiative is likely to be advanced to distract public attention – for example, replacing the general director, who does not decide anything important, or passing a resolution to privatise the plant”.
Pulatov is more sceptical about TALCO’s intentions of publishing the report. The firm has such serious financial problems it might never publish a report or will delay publication as long as possible, he said.
TALCO has a history of confounding the Tajik people’s expectations, observers noted. Some point to how the company sued two alleged embezzlers (Avaz Nazarov and Abdukodir Yermatov) in 2008 yet ended up settling amicably with them.
“TALCO’s procrastination in publishing the audit is rooted in ongoing negotiations with the auditor … whom it must be persuading to adjust the final data”,
