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The UK’s business links to Nagorno-Karabakh mining

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The British embassy in Baku, Azerbaijan’s capital, offered to help Anglo Asian Mining after diplomats learned that the company was set to secure access to mining concessions in the disputed territory of Nagorno-Karabakh and other adjacent districts. Thousands of people were killed and many Armenian residents fled during last autumn’s war over Nagorno-Karabakh, which resulted in territorial gains for Azerbaijan.

The UK’s ambassador to Azerbaijan, James Sharp, met with Anglo Asian at the height of the conflict, according to email correspondence released under Freedom of Information. After the meeting, Anglo Asian sent Sharp a follow-up email containing information about gold deposits in Nagorno-Karabakh and the surrounding territories. The ambassador also received an update from Anglo Asian about sensitive post-ceasefire developments at a gold mine in a border district, as part of an email chain titled “Anglo Asian and the land of opportunity”. Embassy officials later offered to discreetly raise issues and questions on Anglo Asian’s behalf at a meeting with Azerbaijan’s state-owned mining company. During the meeting, trade officials sought to identify opportunities for UK firms in the country’s mining sector. The story of the friendly relationship between Anglo Asian and the embassy emerged from email correspondence released under Freedom of Information rules. The British government has heavily redacted the emails, refusing to disclose their full contents as they could not only harm the company’s interests, but also “harm the international relations of the UK and both Azerbaijan and Armenia and the interest of the UK in these countries.”

Anglo Asian has held contracts with the Azerbaijani government to exploit goldfields in the country for 20 years, but the company, which is listed on the London Stock Exchange’s Alternative Investment Market, was until recently unable to access its concessions in Nagorno-Karabakh. Since the first Nagorno-Karabakh war in the 1990s, those territories had been under Armenian control. Azerbaijan’s offensive against Armenia last autumn has brought these concessions under Azerbaijani control – and therefore under potential future Anglo Asian management.

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“The UK has been consistently clear that we support the OSCE Minsk Group’s work to facilitate a lasting end to the conflict,” the Foreign Office said in a statement to openDemocracy, referencing the international body that mediates between Armenia and Azerbaijan. “Greater prosperity across the region is an important part of securing a sustainable solution to the conflict.”

In November 2020, the UN High Commissioner for Human Rights warned of “possible war crimes” in the conflict zone – and further reports have emerged of brutal treatment, including the extrajudicial execution of Armenian civilians and captured soldiers. Baku has also retained a number of Armenian prisoners of war since the conflict, and has subjected them to cruel and inhumane treatment.

“The UK government has failed to front up to the truth that the pursuit of global trade and investment opportunities can clash with its obligation to protect human rights,” said Tom Wills, corporate accountability and trade project manager at the Business and Human Rights Resource Centre.

In a statement to openDemocracy, Anglo Asian said: “The British Embassy does not give us any ‘support’ outside of the normal course of their embassy responsibilities.”

Stable democracy


The British embassy in Baku has maintained a relationship with Anglo Asian for several years. Successive UK ambassadors to Azerbaijan, which is widely considered an authoritarian state with endemic elite corruption, severe limits on free political contest and freedom of the press, have visited the company’s Gedabek gold and copper mine.

“We are happy to help [the embassy] understand the local business environment not only as good corporate UK citizens, but because they can occasionally put us in contact with UK companies which provide goods and services for our company,” Anglo Asian said.

On its website and in other promotional materials, Anglo Asian maintains that Azerbaijan is a “politically stable democracy” with “a good human rights record.”

Azerbaijan’s gold mining sector has been dogged by allegations of nepotism. In 2012, Azerbaijani investigative journalists revealed that their country’s government had awarded stakes in gold fields to a shell company ultimately owned by the daughters of President Ilham Aliyev. As part of its contract in the country, Anglo Asian is “entitled to a maximum of 75% of the sales proceeds of minerals to set against all operating, deemed interest and capital costs.” The remaining proceeds “are allocated 51% to [Azerbaijan’s Ministry of Natural Resources] and 49% to Anglo Asian.”

Officials at the British embassy in Baku met with Anglo Asian Mining on 7 September 2020, three weeks before heavy clashes broke out between Azerbaijan and Armenia in Nagorno-Karabakh. Emails released to openDemocracy state that Anglo Asian briefed the Embassy on its projects, including information concerning its production sharing agreement (PSA) with the Azerbaijani government. This grants the company rights to exploit mineral-rich areas in western Azerbaijan, as well as deposits in Nagorno-Karabakh and other territories which were at that time still under Armenian control. The embassy followed up by offering to introduce Anglo Asian to UK engineering consultancies which develop underground mines and to help the company upskill its workforce. In a disclosed email, an embassy official also expressed an intention “to develop an economic narrative on how UK firms in Azerbaijan generate local tax, jobs and skills”. It is not clear whether Anglo Asian’s concessions in disputed territories were a focus of its discussions with the British embassy at this meeting.

“The British Embassy in Baku meets a wide range of British companies in Azerbaijan, including Anglo Asian Mining PLC,” the Foreign Office told openDemocracy. “These companies are creating economic opportunities in Azerbaijan and jobs in the UK.”

Skirmishes on the Armenia-Azerbaijan border had threatened to escalate into a full-scale conflict earlier in 2020. But international calls for calm went unheeded when serious fighting erupted in Nagorno-Karabakh in the closing days of September.

In response to the outbreak of war, the UK and Canada issued a joint statement urging Azerbaijan and Armenia to “stop the violence” and for “external parties and friends of both states to redouble their efforts in support of an end to hostilities and to refrain from taking actions that risk exacerbating the crisis”.

After an initial humanitarian ceasefire faltered, Azerbaijan carried out a large-scale ground offensive, retaking lands that it had lost to Armenia during the first Karabakh war in the 1990s. As the crisis deepened, the British embassy in Baku resumed contact with Anglo Asian Mining, which had sought to calm investors’ nerves over the war’s impact on its operations with a public announcement. Prompted by the embassy, Anglo Asian sent officials an update on 14 October. In the email, much of which has been redacted, Anglo Asian sought a meeting with either an unnamed embassy official or Sharp, the ambassador. Over the following week, Azerbaijani forces made territorial gains, including in Zangilan region, a district on the Iranian border that had been under Armenian control, in contravention of a UN Security Council resolution, since 1993. Zangilan is also home to the Vejnaly goldfield, which Anglo Asian holds exclusive rights to explore and exploit, and which had been previously operated by a Swiss-Armenian businessman.

On 27 October, Anglo Asian issued an update to its investors on Azerbaijan’s “liberation” of Zangilan, adding that it was in talks with the Azerbaijani government over the future development of the site. Two days later, Sharp met with Anglo Asian for what the Foreign Office described as a “catch-up over coffee”.

Anglo Asian told openDemocracy that the meeting was “typical” of those that it has with UK representatives, but did not elaborate further. The company also told openDemocracy that it has carried out a “short site visit” to its Zangilan concession, but that it currently lacks access to its mines in Nagorno-Karabakh and Kalbajar. On 10 November, Armenia and Azerbaijan eventually signed a Russian-brokered ceasefire. Under the terms of the deal, Azerbaijan held on to areas it had captured in Nagorno-Karabakh, whilst Armenia agreed to withdraw from other adjacent territories. A week or so later, on 19 November, the British embassy in Baku sought clarification from Anglo Asian over what turned out to be a misleading report about the signing of contracts between an Azeri-led consortium and a foreign company in the formerly Armenian-controlled territories of Zangilan and Kalbajar.

“Yes, this is ‘us,’” a company representative replied. “It refers to the PSA . . . for the activity and development of three contract areas [in Nagorno-Karabakh and the formerly Armenian-controlled territories].”

“Any questions/support, always happy to help,” an embassy official replied via an email that has been partly redacted on international relations grounds.

New borders


As Azerbaijan’s commitment to the ceasefire came increasingly into question in the weeks after it was signed, grainy footage circulated on social media on 26 November apparently showing Azerbaijani troops amassed on a snow-covered mountain pass above Sotk, once the largest gold mine in Armenia. Sotk straddles the new international border between Armenia and Azerbaijan, after Armenia was forced to cede the surrounding Kalbajar district to Azerbaijan under the terms of the November ceasefire. Thousands of ethnic Armenians were forced to flee their homes in anticipation of the Azerbaijani military taking control of the area.

Anglo Asian Mining holds exclusive rights to exploit the mines in Azerbaijani territory under the terms of its contract with the government. A Russian company previously operated the mine when the lands remained under Armenian control. On 28 November, two days after the Sotk footage emerged, Anglo Asian sent an update on its operations to the UK ambassador. The email has been heavily redacted. But one detail was disclosed: an attachment of a news article about Azerbaijan and Armenia’s competing territorial claims to the Sotk gold mine. Anglo Asian told openDemocracy that this email was a “simple clarification” about its “interest in visiting the region”. The company said it “wanted to assess the general area”, but that it could only do so with the Azerbaijani government’s permission and only once a formal end to the conflict had been announced. Anglo Asian also added that it had “no expectation that the [British] Embassy would undertake any actions as a result of us sharing the information with them.”

Since the November ceasefire, disputes relating to the demarcation of new state borders between Armenia and Azerbaijan have largely remained unresolved. In May 2021, Azerbaijani incursions into Armenian territory triggered a military standoff, prompting OSCE Minsk Group co-chairs France and the US to call for Azerbaijani withdrawal. Subsequent incidents have recently been reported along the border between Kalbajar region, now under Azerbaijani control, and Armenia.

Anglo Asian’s update on the Sotk border issue featured as part of a response to an email sent by the Ambassador to the company under the subject header: “Anglo Asian and the land of opportunity”.The email chain has been almost entirely redacted under international relations and commercial interest exemptions.Just two lines of the Ambassador’s lengthy email have been disclosed. “I think it would be an excellent thing for Anglo Asian to be seen to be supporting . . . will pass on more details.”

Two days later, Anglo Asian agreed to sponsor the embassy’s flagship annual Queen’s Birthday Party event, which took place this month, although it is not clear whether this was related to the ambassador’s initial email. Anglo Asian told openDemocracy that it has sponsored the event for many years.

Sensitive climate


In 1997, Anglo Asian struck a deal with the Azerbaijani government to exploit mineral riches in western Azerbaijan and in other disputed territories under de facto Armenian control. The contract was modelled on agreements signed with foreign companies during Azerbaijan’s 1990s oil boom.

“At the time, this was seen as an American-owned investment,” said Richard Kauzlarich, a former US Ambassador to Azerbaijan (1994-1997), who was present at the signing ceremony at which President Heydar Aliyev – the father of the current president – hailed the agreement with Anglo Asian as a significant development in US-Azerbaijan economic relations. The Anglo Asian company that signed the deal was incorporated in the US state of Delaware.

“It seemed like a good idea from a US foreign policy point of view in getting more investment in Azerbaijan outside of the energy sector,” Kauzlarich continued.

The deal partly came about through the efforts of John Sununu, former Governor of New Hampshire and chief of staff to President George HW Bush, one of a number of well-connected US political figures who came to Azerbaijan seeking investment opportunities after the fall of the Soviet Union. Sununu remains a major shareholder of Anglo Asian.

Sununu formed a partnership with Iranian-born businessman Reza Vaziri, who at the time had a memorandum of understanding with the Azerbaijani government. Vaziri co-chairs the US-Azerbaijan Chamber of Commerce, which has lobbied for Azerbaijani commercial interests in Washington. He is now Anglo Asian’s CEO and largest shareholder.

Reza Vaziri has been described as a “personal friend” of President Ilham Aliyev, who has ruled the country since 2003, by another Anglo Asian executive. Vaziri’s access to Azerbaijan’s ruling elite was highlighted in leaked emails published in 2016, concerning the oil consultancy Unaoil’s business in the country during the 2000s.

According to a leaked email obtained by the Australian newspaper The Age, Vaziri, who was working for Unaoil at the time, “was described as being able to set up a meeting with Azerbaijan oil minister Natig Aliyev and prime minister Artur Rasizade ‘anytime’. Vaziri could get oil minister Natig to ‘say exactly what we want’.”

As part of his work for Unaoil, Vaziri, The Age’s leaked documents show, also apparently “provided inside information from a ‘friend’ in Azerbaijan about project milestones and shortlists of bidders for work on a major pipeline project connecting several countries in the Caspian region.”

“Unaoil was, for a short period of time, a client of Mr. Vaziri”, Anglo Asian told openDemocracy.

Allegations concerning the managing director of Unaoil Azerbaijan suggest the risk of doing business in the country. As The Age reported, the leaked information it obtained suggested that Unaoil’s director in Azerbaijan could have been a conduit for bribes in relation to the country’s oil and gas business. There was no suggestion of wrongdoing by Vaziri in The Age’s reporting. Unaoil is currently under investigation as part of a UK Serious Fraud Office criminal probe into corrupt payments in Iraq’s oil sector. Four Unaoil executives have so far been convicted.

“The events to which you refer took [place] many years after this relationship ended and Mr. Vaziri had no involvement in them,” said Anglo Asian.

In January 2021, British embassy officials in Baku met with Azerbaijan’s state-owned mining company, AzerGold, to discuss potential opportunities for collaboration with UK companies. Prior to this meeting, an embassy official wrote to Anglo Asian offering to discreetly raise issues or questions with AzerGold on the company’s behalf. Anglo Asian’s response to the Embassy has been redacted on international relations grounds.

UK investment


The UK remains the single largest investor in Azerbaijan, according to government statistics. UK ties with Azerbaijan are founded on the involvement of British multinationals, such as BP, in the country’s dominant oil and gas sector.

Last month, President Aliyev welcomed the UK’s minister for exports, Graham Stuart, to Baku. At a meeting with the minister, Aliyev said that British firms were “among the first foreign companies to work with us on the restoration, reconstruction of the liberated territories”.

The following week, Eurasianet reported that Azerbaijan had awarded a multi-million dollar contract to UK architects Chapman Taylor, to design a masterplan for the reconstruction of the city of Shusha (Shushi) in Nagorno-Karabakh, which had formerly been under Armenian control.

The UK government recently updated its official guidance on overseas business risk in Azerbaijan to include information about the “vast potential” of the “recently liberated territories” in sectors such as renewable energy, agriculture, tourism, and mining.

“As the government goes about its work – negotiating new trade deals, engaging with the World Trade Organisation, and spending money promoting UK business interests overseas – it urgently needs a strategy that makes it clear that human rights come before the profits of British corporations,” said Tom Wills from the Business and Human Rights Resource Centre.

Source: opendemocracy.net



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