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The Full Story about Jordan Phosphate Mines Company
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1 | P a g e w w w . p h o s p h a t e . m e
Contents
Introduction: _____________________________________________________________________________________________ 4
Background _______________________________________________________________________________________________ 6
Summary of the most important insights into the case of JPMC _____________________________________ 11
The law was the first victim of this case ______________________________________________ 11
Violating the law in terms of duration of investigation ____________________________ 11
Violating the law in terms of the protection of witnesses _________________________ 11
Violating the law in terms of confidentiality of the investigation_________________ 12
Violating the law in terms of interference in judicial procedures ________________ 12
Charges AGAINST WALID Kurdi in the JPMC Case ___________________________________ 13
Summary of Charges _________________________________________________________________ 13
Responses to Allegations _____________________________________________________________ 14
Responses to Shipping Contracts Allegations ______________________________________ 15
Responses to Intermediary Companies Allegations _______________________________ 17
Responses to Phosphate Blending Allegations _____________________________________ 20
General Remarks______________________________________________________________________ 21
Facts about Walid Kurdi's Management OF JPMC ____________________________________ 24
Phosphate _____________________________________________________________________________ 24
DAP Fertiliser _________________________________________________________________________ 25
New Markets and New Partnerships ________________________________________________ 26
Achievements____________________________________________________________________________________________ 27
Conclusion _______________________________________________________________________________________________ 29
Annex A __________________________________________________________________________________________________ 30
Comparison: before and after privatisation __________________________________________ 30
Annex B __________________________________________________________________________________________________ 31
Letter from PM on decision to continue practise of blending – Arabic Original ___ 31
Letter from PM on decision to continue practise of blending - English translation
___________________________________________________________________________________________ 32
2 | P a g e w w w . p h o s p h a t e . m e
3 | P a g e w w w . p h o s p h a t e . m e
This document brings together information and facts compiled from
statements, documents, and reports as well as the views of the numerous
lawyers, specialists, company employees, auditors, accountants and
economists who have been involved in JPMC. All figures cited come from
official sources that can be verified, and all documents mentioned are
available to the public.
4 | P a g e w w w . p h o s p h a t e . m e
Introduction:
On more than one occasion, His Majesty King Abdullah II stressed that no one is
above the law. Was this understood by everyone? Unfortunately, even certain official
monitoring agencies did not comprehend His Majesty the King's directives, neither it
seems, did some politicians and members of the public. The King stated that "No one
is above the law", he did not say "Do not enforce the law."
The handling of the case of Jordan's Phosphate and Mining Company (JPMC) in
which the former Chairman, Walid Kurdi, is accused, is very far removed from the
application of the law, and actually violates the foundations of justice. The principle
of confidentiality in the investigation of this case was not adhered to, neither was
the legal timeframe respected, nor due legal procedures followed. The principle of
the independence of the judiciary was not upheld.
This case has presented the ultimate opportunity for fame and popularity seekers,
and political agendas seeking the approval of the Jordanian street and success of
parliamentary elections at the expense of justice. The accused, his reputation and
his family have been left exposed to critics without conscience, and a media that
often could not distinguish between right and wrong, who persisted in slandering,
maligning and defaming him. The person accused became a victim of character
assassination in which neither prosecutors or politicians - have been fair.
Walid Kurdi was Chairman of the Board of Directors and Chief Executive Officer of
JPMC from mid-2006 until March 2012. During his time there, he worked hard to
promote the interests of JPMC, and succeeded in maximizing revenues and
increasing profits. During this period, JPMC’s profile in the global market improved a
great deal, and despite the lesser quality of its products in comparison to other
producers such as Morocco, Jordan's competitiveness in the market increased. Walid
Kurdi led the transformation of JPMC from a loss-making company, to one that
generated hundreds of millions of Jordanian Dinars for the National Treasury.
Walid Kurdi stands accused of exploitation of office while at JPMC. It is said that he
caused JPMC to lose more than 40 million J.D in shipping costs alone. In reality, as
stated by the official letter sent by JPMC on 16th October 2012 to the Public
Prosecutor of the Anti-Corruption Commission JPMC actually does not bear any
shipping costs whatsoever, as these are borne in total by the buyer. So where is the
5 | P a g e w w w . p h o s p h a t e . m e
alleged loss? Claims that he owned companies that benefitted from JPMC
transactions have also been disproved by the body of evidence that was provided in
the course of the investigation. If any allegations of ownership remain, they are
based on a nonsensical insistence on disregarding and ignoring proof.
Walid Kurdi also stands accused of causing JPMC to lose more than 200 million
dollars as a result of blending phosphate to improve its quality. It is claimed that he
should have sold this improved material at a higher price than the price agreed with
buyers. Statements of witnesses before the court (as published in the media) proved
afterwards that such blending has been practiced in Jordan for over twenty-five
years. When the current company management was unable market JPMC's products
unless blended, it was forced to make a written request to the Council of Ministers,
to continue the practice of blending and marketing blended products as before, to
salvage JPMC's sales. This was approved in a Cabinet meeting held on 13 January
2013, and a letter of authorization signed by the Prime Minister. So where is the
alleged crime?
Walid Kurdi stands accused of incurring losses to JPMC amounting to hundreds of
millions of dollars as a result of not adhering to 'international prices'. Witnesses'
testimonies before the court - as published in the media - pointed out that there are
various global price bulletins, including weekly, monthly and annual prices. These
are not accurate or consistent, and they only serve as a general guideline. These
figures provide indications that are usually reported by phosphate production
companies, to serve their own commercial interests. These price bulletins were
never officially adopted nor supported by JPMC's Board of Directors previous to or
subsequent to the management of Walid Kurdi. There are many factors that affect
DAP and phosphate prices. These prices are always subject to negotiation. If price
bulletins are inaccurate, often incorrect and not certified, then, where is the alleged
crime?
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Background
In 2006, Jordan privatised its national company the Jordan Phosphate Mines
Company (JPMC), in line with its current economic policy which saw many key
industries also privatised. The controversies of the privatisation of JPMC are not of
relevance here, but it should be said that the issue was clouded by misinformation
and controversy, about who the new strategic partner was, and whether the sale
process was legal.
This culminated in a parliamentary committee being formed in early 2012 to write a
report on the matter, which in turn was heatedly debated by the 16th parliament.
Prior to the vote of the Parliament on the Constitutionality of JPMC's privatisation
on the 7th March 2012, the then Prime Minister Awn Khassawneh announced that
the government was satisfied with the legality of the procedures.
The outcome of the parliamentary exercise confirmed that the sale and subsequent
privatisation of JPMC was legal and correct, and it absolved all members of the
government at the time of the sale, of any wrongdoing.
That same evening, the first item of news on the JTV was an announcement that the
first case against Walid Kurdi was going to be sent to the Public Prosecutor. The
coverage that night was unprecedented in terms of its sensationalised delivery and
detail. Walid Kurdi was going to be investigated for a series of allegations, despite
the fact that he was not officially involved in JPMC's privatisation, and that he was
appointed as Chairman and CEO only after privatisation occurred. His record and
achievements while serving in this position were overlooked, despite the fact that
JPMC had made an unprecedented turn around and generated a sharp rise in profits
and operational efficiency during the six years of his management.
Nonetheless, the announcement was followed with noticeable speed by an official
statement by the then Minister for Media and Communications, and official
spokesperson for the government Rakan Majali, in which he described the
privatisation of JPMC as a 'charade', and in which he laid on Walid Kurdi 'the blame
for all that is occurring as he is the sole beneficiary of JPMC's profits'. These were
serious statements, already implying a conviction for Walid Kurdi by the official
spokesperson for the government, even before the matter went to the judiciary.
7 | P a g e w w w . p h o s p h a t e . m e
The inaccurate projection of Walid Kurdi’s involvement with the privatisation
package itself, has served as smokescreen for various officials to deflect attention,
and for those opposed to privatisation to direct the blame and divert public anger to
the person of Walid Kurdi.
The controversy about the question of corruption surrounding JPMC, and the
ensuing charges and court case made against its Chairman Walid Kurdi, date back
almost two years, to the end of 2010, when the Anti-Corruption Commission (ACC)
began its investigation into the company. This investigation was to last nearly 2
years, in direct contradiction of the Commission's by-laws which state, in Article 7:
' D. - Unlike any other legislation, the Commission is bound to make its
decisions within a time limit of three months from the start of its
investigation...'
Obviously, the ACC did not uphold this in the case of JPMC, and it took two years of
investigation to send the case to trial.
There is every indication that the ACC actually commenced its investigation having
already decided to target and indict Walid Kurdi. In order to do this, it was necessary
to build a number of charges in any way. However, if the Commission actually
believed that their efforts would eventually lead them to real evidence to prove that
there was a case, they were mistaken. Documents and information that they put
together actually contradicted all the charges.
On many occasions, from the outset of the investigation, individuals who were
brought in for questioning were subjected to intimidation and threats. Many were
warned that if they were not going to cooperate as witnesses, they would be
considered suspects.
On a number of occasions, individuals were told that they were not the target, 'it is
Walid we want'. Witnesses were sometimes called in late at night, until the early
hours of the morning, some were prevented from calling their families. Some
individuals brought in for questioning actually filed official complaints against the
Commission, because of the treatment they received.
8 | P a g e w w w . p h o s p h a t e . m e
This treatment is also in contradiction with the by-laws of the ACC, which clearly
state in article 23, about 'Providing necessary protection' for witnesses, informants
and specialists called on in corruption allegations.
The other obvious irregularity throughout the investigation period was the very
vocal role of the media, which stirred public opinion to reach a guilty verdict, in a
manner completely inconsistent with all standards of ethical and professional
journalism. This perception was exacerbated by the fact that high ranking public
officials themselves, from within the ACC and the government, made statements and
leaked selective information throughout the investigation. This was completely
against ACCs regulations, which call for utmost secrecy in the course of
investigations. Perhaps even more striking is that from the very start, certain
elements were mobilised to set in motion a process, which would completely
undermine the rights of Walid Kurdi to a fair trial and actively sought to distort facts
and influence public opinion.
Increasingly however, within legal and official circles, and even within the media,
there was a growing consensus that this process was not only unjust, but that it had
political motives at heart, to scapegoat the target, and show that in Jordan, nobody is
above the law.
Of course, the irony of this was that it failed to take into account that in Jordan,
nobody is supposed to be beneath the law either, and that such a blatant attack
violated the principles of both law and constitution.
There was a certainty amongst those who knew the details of the investigation, that
there was actually no basis to the charges that the ACC was forming. Throughout
this time however, both Walid Kurdi and his family maintained a strict silence,
believing that ultimately, the truth would prevail and that the procedures of the ACC
were to be respected, even if that meant being subjected to a far lengthier
investigation than was legally required, and despite the painful personal offense that
was unleashed in the process.
For almost two years, this process continued until the 18th December 2012, when
on the eve of the country's national elections, a memorandum came to the public's
attention, from the Minister of Parliamentary Affairs at the time Bassam Haddadin.
The memorandum addressed the issue of reform and the question of how to deal
with both the opposition's stance, as well as much of the general public’s rejection of
9 | P a g e w w w . p h o s p h a t e . m e
the format of the upcoming elections, which had stirred so much debate all over the
country.
In his memorandum, Haddadin underlined the need for the government to take
rapid measures, in the course of one week, on the subject of anti-corruption,
particularly in the case of JPMC, because, as he maintained, this would increase the
confidence of the public regarding the commitment of the government to reform and
fighting corruption.
Immediately, and after nearly two years, there was a fast tracking of the issue,
whereby the case was handed over for trial and an unprecedentedly rapid calling of
witnesses and the unfolding of a court hearing.
By ignoring the dramatic and indisputable achievements of JPMC during the 6 years
that Kurdi was Chairman and CEO, critics try to attribute this radical shift to
increasing global phosphate prices. However, this view overlooks other important
factors that cannot be attributed solely to this increase. During this time, JPMC
attracted new investments and partnerships to the value of 1.5 billion dollars. The 3
DAP factories which through direct and related industries, were capable of creating
over 7 thousand jobs; the fertiliser factories in Shaydiyyeh, costing 750 million
dollars, and Abiad costing 140 million dollars. A new factory was also being built in
Indonesia.
In addition, JPMC completed a new port for the country, to replace the old port of
Aqaba (at the cost of 240 million dollars). This new port is fully equipped with
modern technology, and which also provides a dust free environment, unlike the old
port which posed an environmental hazard for the people of the area. The port was
completed as promised, after 26 months.
Under Kurdi's management, JPMC's contribution to communities in its areas of
operations in the south of the country rose dramatically. The number of small
industries and related businesses in these areas also grew and flourished. Not only
did the CSR contributions rise dramatically, but also worker compensations and
retirement benefits also improved drastically.
JPMC made the transition from being a state-run industry which incurred
substantial annual losses, to one that was efficient and capable of carving a new
niche in a global market where Jordan was a small competitor. The World Bank and
10 | P a g e w w w . p h o s p h a t e . m e
competitors such as Morocco had a newfound respect for JPMC, which was reflected
in new partnerships, and markets.
Already, the rapid period of growth witnessed by JPMC is slowing down, and
indicators make the prospect for its future seem bleak. Strong competition from
neighbouring countries will pose tremendous challenges for JPMC, but even more
damaging is the destructive effect the long smear campaign against the previous
management has had on the morale of its thousands of employees throughout the
country.
As the following pages will indicate, there was never any question about the
efficiency or integrity of the former Chairman Walid Kurdi or his management from
the parties who were actively involved in JPMC. The major shareholders, Brunei,
Kuwait and the Jordanian Government never expressed anything but satisfaction
with the management and progress being made. Ernst and Young, JPMC’s auditors,
cleared JPMC's financial performance every year. Shareholders in general were very
satisfied with their growing revenues.
See annex a, for a comparison of JPMC before and after privatisation
11 | P a g e w w w . p h o s p h a t e . m e
Summary of the most important insights into the case of JPMC
Violating the law in terms of duration of investigation
One of the peculiarities of JPMC case, which raises some questions about the
investigation procedures carried out by the Anti-Corruption Commission, is the fact
that it went on for almost two years. The duration of the investigation was not
supposed to exceed three months from its start. Paragraph (d) of Article VII of the
Anti-Corruption Commission Act stipulates that:
"Notwithstanding the provisions of any other legislation, the Commission shall issue
its decisions not later than three months from the date of the start of the
investigation and inquiry in the complaint."
In reality, the investigative procedures of the Anti-Corruption Commission lasted
several times longer than the period specified in the law. The prolongation of the
investigation period by the Anti-Corruption Commission in violation of the
provisions of law, which established the Commission, has no explanation except to
keep the issue in the limelight as a sensational subject of debate, at the expense of
law and justice.
Violating the law in terms of the protection of witnesses
A number of witnesses who have been summoned by the Anti-Corruption
Commission recount how their testimony was heard. This includes bargaining with
some of them and giving them the choice of either being witnesses or becoming
accused themselves, when their testimonies did not meet the expectations of the
investigators. Furthermore, some who gave their testimonies were threatened
during investigation, and some of these cases are actually documented. Others were
put under harsh psychological conditions keeping them in the Commission building
behind closed doors for long hours, even beyond midnight. All this is contrary to the
provisions of the laws in force and the international conventions.
Ironically, all clauses of Article 23 of the ACC law deal with "providing the necessary
protection for whistle-blowers and witnesses, informers and experts in corruption
cases, as well as their relatives and close associates, from any attack or potential
12 | P a g e w w w . p h o s p h a t e . m e
retaliation or intimidation." The same article points out in details the methods and
ways in which the process of protecting these people should be conducted.
Violating the law in terms of confidentiality of the investigation
The Anti-Corruption Commission did not comply with the principle of
confidentiality of the investigation throughout the investigation procedures in the
JPMC case. Numerous statements were made to the media (audio, video and
written) through press conferences, various seminars and televised interviews to
local and Arab television channels. As a result, there was much sensationalism of the
issue by the media, although the investigation should have been conducted
professionally and confidentially. More shocking, was that some government
officials took it upon themselves to talk about the topic and predict a guilty verdict
even before the case was reviewed by the judiciary.
Violating the law in terms of interference in judicial procedures
The Jordanian Constitution expressly provides for an independent judiciary and
prohibits interference in its functions by any other authority. Article 97 of the
Constitution provides that "Judges are independent, with no authority over them
except that of the law." At the time that the prosecutors at the Anti-Corruption
Commission were investigating the case of JPMC, Bassam Haddadin, Minister of
Political Development, sent a letter dated 18 December 2012 to Prime Minister Dr.
Abdullah Ennsour, which had been leaked to the media. The letter states that:
"The upcoming parliamentary elections constitute a big challenge to the Jordanian
State, since it is a collision point between two agenda: the democratic reform agenda
… and the boycott agenda .... Those boycotting the elections have taken advantage of
public frustration and the confidence crisis in parliament due to past practices, and
the faltering anti-corruption measures in some of the files that concern Jordanians.
… to continue their campaign of incitement against the official reform programme …
With the elections approaching, the political conflict is increasing and heating up.'
The fourth point of Haddadin's recommendations was: "that the state should take
swift action within a week in its fight against corruption, and accelerate
implementation of all the measures announced by the Prime Minister on the
phosphate file. Such actions would enhance citizens' trust in the intentions of the
state and its serious goals of reform, crushing corruption at its root. "
13 | P a g e w w w . p h o s p h a t e . m e
According to what was published in the media, and prior to the date of this letter,
Haddadin confirmed during a debate held between him and the president of the
Shura Council of the Islamic Action Front Party on the eve of Tuesday 11 December
2012, that the government was about to take immediate action regarding the
corruption files that had "upset the Jordanian people", before the upcoming
parliamentary elections.
Following the above-mentioned letter, and after a period of nearly two years,
prosecutors scrambled to hear witnesses, and in less than a week, the case of Walid
Kurdi was referred to the court with certain procedural irregularities. This is a
serious indication of intervention in the course of the investigation with the Public
Prosecutor, which demonstrates an explicit violation of the principle of the
independence of the judiciary.
The question here is whether it is appropriate for the government to
interfere in the judiciary, as in the case of JPMC, in order to strengthen
citizens' trust in the reformist intentions of the state? Should justice, the
Constitution and the law, be allowed to be manipulated in order to
motivate citizens to participate in parliamentary elections?
Summary of Charges
On 30 December 2012, the Prosecutor General indicted Walid Kurdi with ten counts
of exploitation of office. The indictment centres on the following
Shipping Contracts
Walid Kurdi had exploited his office in JPMC by giving preferential treatment in
freight contracts, which resulted in a loss of more than 40 million JD in freight
charges incurred by JPMC. Also, that Walid Kurdi had exploited his office by
benefiting the Aqaba Development Company through freight charges paid by JPMC.
Intermediary Companies
Walid Kurdi had exploited his office by setting up an intermediary company (Astra)
which bought fertilizers from JPMC at preferential prices and not according to
international price bulletins. ASTRA in turn sold the fertilizers to the Indian buyer at
14 | P a g e w w w . p h o s p h a t e . m e
higher prices. This, it was alleged, made substantial profits at the expense of JPMC
estimated at hundreds of millions of dollars. Partiality given to this company was
with the aim of acquiring personal gains.
Blending of Phosphate
Walid Kurdi had exploited his office by selling quantities of blended (improved)
phosphate to the company Quartz at lower prices than international bulletins, and
that this in turn caused significant loss of profits for JPMC. Preferential treatment
given to Quartz was in order to achieve personal gains.
Responses to Allegations
Prior to responding to the allegations, the following facts which are related to Walid
Kurdi's mandate during his management of JPMC should be stated:
1. The Chairman was delegated in writing by the Board of Directors to set
sales prices and conditions and signing contracts and he exercised his
mandate within the framework of the law and JPMC's Articles of
Association.
2. The Board of Directors includes representatives of the Government and the
Social Security Corporation and Kuwaiti shareholders, none of whom ever
expressed any dissatisfaction- until this day- with the actions of the
Chairman.
3. The Chairman never set prices alone but always on the recommendations
of JPMC's Sales Division according to Company's policy.
4. JPMC has an internal audit division as well as External Auditors, and the
Executive Management is overseen by the Board, the General Assembly of
Shareholders, the Companies Control Department, and the Securities
Commission, and none of the aforementioned authorities ever expressed
reservations on any action taken by Walid Kurdi as Chairman of the Board
of Directors and CEO of JPMC.
15 | P a g e w w w . p h o s p h a t e . m e
Responses to Shipping Contracts Allegations
1. JPMC sent an official letter to the Public Prosecutor on the 26/12/2012,
indicating that it does not cover shipping fees at all, and that these costs
were borne by the buyer.
2. As stated by the press, numerous witnesses concurred in court that during
Kurdi’s tenure, JPMC did not cover any shipping costs (FOB + Freight at
Actual) these costs were deducted from the buyers.
3. The Aqaba Development Company was established in the early nineties,
and is classified as other commercial agencies, representing local and
foreign companies, providing vessel maintenance services. It is not an
agent for JPMC and was not paid for any services during Walid Kurdi's time.
In addition, Walid Kurdi was not in charge of the daily administrative tasks
of the Aqaba Development Company, which was sold in early 2011.
THERE IS AN ALLEGATION THAT THE CEO MADE JPMC SPEND OVER 40 MILLION
DINARS IN SHIPPING FEES?
Not true. JPMC did not cover the cost of shipping and actually confirmed this in
writing, as can be seen in the official letter sent to the Public Prosecutor on the
16/10/2012, even though the Public Prosecutor refrained from declaring this
letter or drawing attention to it, as should have been done, before handing the
case over to the court. Therefore, if JPMC did not actually cover the shipping fees
and it was the responsibility of the buyer, then there is actually no basis for this
particular charge..
16 | P a g e w w w . p h o s p h a t e . m e
IS IT TRUE THAT AFTER WALID KURDI ASSUMED THE POSITION OF CHAIRMAN/CEO,
JPMC MADE THE AQABA DEVELOPMENT COMPANY ITS AGENT FOR ALL
CONTRACTS?
No. The Aqaba Development Company was established in 1991, and during the
management of JPMC by Kurdi, JPMC did not utilise the Aqaba Development
Company as charged, and the Aqaba Development Company did not benefit from
JPMC contracts as claimed. As for the Aqaba Development Company’s
contractual relationships with third parties (if any), such relationships do not
constitute any legal violations whatsoever. The Aqaba Development Company
fees, if any, are covered by the buyer or from the vessel's owner, none of which
are borne by JPMC.
DID JPMC BEAR THE SHIPPING COSTS TO TURKEY AND ETHIOPIA?
No, JPMC did not bear the shipping costs to these countries or to any other
countries, and this is proven in JPMC’s letter addressed to the public prosecutor
on 16 October 2012, and the testimony of the witnesses who are familiar with
JPMC’s work. The shipping costs are borne by the buyer.
ARE COMMISSIONS AMOUNTING TO 2.5% DEDUCTED FROM SHIPPING COSTS, AND
IS IT TRUE THAT JPMC WAS ENTITLED TO CLAIMING COMMISSION BUT DID NOT
COLLECT THEM?
No. JPMC does not receive commissions, nor is this one of its objectives to do so.
JPMC is a manufacturing company which aims to sell phosphate and DAP; it is
not a commission agent, nor an agent of the vessels owners. It is also not a ship
owner and does not bear shipping costs, and it is not concerned with such costs.
IS IT TRUE THAT THE MARINE CHARTER COMPANY (AL MUSHARATA) IS A CERTIFIED
INTERMEDIARY FOR JPMC?
No. JPMC owns 30% of the Marine Charter Company, and did not appoint the
Marine Charter Company as an intermediary to dock vessels, at least after 2004.
17 | P a g e w w w . p h o s p h a t e . m e
IS IT TRUE THAT THE MARINE CHARTER COMPANY (AL MUSHARATA) WAS
ESTABLISHED TO SERVE THE JPMC AND THE ARAB POTASH COMPANY?
No; the Marine Charter Company's registration certificate does not indicate that
its mandate when established was to serve the Phosphate and Potash
companies. The certificate issued by the Companies Controller is official
evidence and statements to the contrary could only have been forgeries.
Responses to Intermediary Companies Allegations
There was a claim made by the Anti-Corruption Commission that Walid Kurdi
established intermediary companies for the purpose of gaining profit at the expense
of JPMC through selling them phosphate and DAP at prices lower than those
included in international prices bulletins. This claim is unfounded for the following
reasons:
1. Dealing through intermediates was a policy followed prior to the
appointment of Walid Kurdi as the Chairman of the Board of
Directors/Chief Executive and this policy was followed by him, and is today
followed by the current management.
2. Walid Kurdi does not own any shares in Astra and Quartz. Astra is owned
by the company Tradex which is owned by JPMC's agent in India, and the
second is a family owned Indian corporation as well. The Anti-Corruption
Commission was provided with the official documents which prove these
facts.
3. Dealings between JPMC and the company's agent in India did not start
during the management period of Walid Kurdi. This began in the early
nineties, through the company Tradex. JPMC also dealt with the company
Macliff since the early nineties.
4. Dealing with Astra Global by JPMC was in compliance with the written
request of the Indian buyer, IPL (Indian Potash Limited). The Board of
Directors of JPMC approved this request and the long-term contract with
Astra Global.
5. Dealing with Quartz came as a result of Astra Global's specific request due
to the logistical difficulties it was facing.
18 | P a g e w w w . p h o s p h a t e . m e
6. The company Quartz was never given preferential prices, and JPMC records
prove this. It is also proven in tables and documents that JPMC used to sell
to all buyers, including intermediary companies, without preferential
treatment.
7. The international prices bulletins are not considered a strict measure by
which to determine prices, due to the fact that they do not reflect actual
prices at the time of sales, and are based on statements made by buyers
and sellers. The sources of these bulletins are multiple and varied.
8. The comparison of sale prices in a valid manner should to be made with
sale prices of competitive companies at the time of the sale and not with
the prices stipulated under the international prices bulletins.
9. Sale prices are controlled by several factors including the quantity sold,
specifications, distance and type of customer, competition, and the desire
to keep older markets and customers and to create and maintain new
markets.
Essentially, the allegations that the Chairman/CEO of JPMC profited from
contracts that the company executed with intermediaries or that he exploited his
office, or that he executed contracts through companies owned by him, or had
shares in, or favoured companies at the expense of JPMC or caused it damage, are
false.
THERE IS AN ALLEGATION THAT THE FORMER CHAIRMAN/CEO ESTABLISHED AN
INTERMEDIARY COMPANY (ASTRA) THAT WAS SOLD DAP AT FAVOURABLE PRICES
(LOWER THAN GLOBAL PRICES). THIS COMPANY, IT WAS CLAIMED, IN TURN SOLD TO
THE INDIAN BUYER AT HIGHER PRICES, THEREBY MAKING ASTRA PROFITS AT THE
EXPENSE OF JPMC?
Not true. Walid Kurdi had no personal interests - direct or indirect – in any
intermediary companies or any other companies that worked with JPMC.
Furthermore, costs of the Indian consultant that JPMC has dealt with since the
nineties are deducted from the agency fees and there is no duplicate payment
made to him. The ownership of all these companies has been established and
documents are available and verifiable.
19 | P a g e w w w . p h o s p h a t e . m e
DID JPMC PROVIDE THE COMPANY QUARTZ WITH ADDITIONAL QUANTITIES TO
THOSE AGREED UPON, AS SOME KIND OF PREFERENTIAL TREATMENT?
No. The party responsible for calculating quantity is a neutral party, and it is not
actually possible to ship more than what is agreed in any contract. The Port of
Aqaba itself would have charged for any excess weight should the quantities have
been tampered with after sales prices were agreed, and this would be
documented.
THERE IS AN ALLEGATION THAT THAT THE CEO ABUSED HIS POSITION AT JPMC
THROUGH 10 CONTRACTS RELATED TO SALES AND THAT THIS WAS AT THE EXPENSE
OF JPMC, FOR HIS BENEFIT OR THE BENEFIT OF A THIRD PARTY?
Not true. The CEO was delegated in writing by the Board of Directors to set prices
for sales and conditions and for signing contracts, and he practiced this within
this mandate. It should also be pointed out here that the sales division at JPMC
was responsible for making price recommendations that the CEO then authorised.
Also, as the external auditor indicated in the last general assembly of
shareholders in 2012, which reviewed 2011 performance, sales prices conformed
to the range cited in world pricing bulletins, such as the World Bank. The External
Auditor (Ernst and Young), in the General Shareholders meeting in April 2012,
which reviewed JPMC's performance in 2011, stated that JPMC's sales prices did
not exceed or fall below prices quoted in international bulletins, such as the
World Bank and those quoted on Stormgateagree.com, and several other
recognized sources.
WERE THE NEGOTIATIONS ON THE PRICES DONE BY WALID KURDI ALONE WITHOUT
THE INTERFERENCE OF THIRD PARTIES?
No, Kurdi was not responsible for negotiating prices. The relevant managers in
charge in JPMC did the negotiations and Kurdi signed the contracts upon their
recommendation, based on their negotiations.
20 | P a g e w w w . p h o s p h a t e . m e
DOES JPMC DEAL SOMETIMES WITH THE FINAL BUYER THROUGH INTERMEDIARIES?
Yes, JPMC still deals through intermediaries, whether for the Indian market or
other markets. There are a number of intermediary companies for both DAP sales
and phosphate sales. There are recorded contracts, which were executed in 2012
(after Walid Kurdi left JPMC), through intermediaries including Green Olive and
Blue Deebaj, (through the Sami Abu Taweeleh Company) as well as INDO GULF,
Agora, Sun International, Trimex, and Wilson International. As for DAP, there are
contracts through intermediaries such as Key Trade, Transglobal, Sun
International, and Mid Gulf International. A number of these recent sales were
actually to India. This fact completely contradicts witness's testimony that the
contractual relationship with India is conducted directly and not through
intermediary companies.
Responses to Phosphate Blending Allegations
On the subject of blending, it is claimed that Walid Kurdi is guilty of mixing low
quality phosphate with high quality phosphate, and selling the resulting product
(after blending) at the price of lower quality phosphate. The following should be
stated:
1. Phosphate blending, with the aim of raising its quality, has been JPMC
policy for decades and continues to be common practice today (as is the
case in many Phosphate producing countries), particularly as Jordanian
Phosphate is known to be of medium quality and buyers expect it to be
improved. It should be noted that without the blending process JPMC
would not have been able to market its often-poor quality products. In fact,
the current management of JPMC’s attempts at selling a lower-grade (non-
blended) phosphate failed.
2. The current management of JPMC therefore requested that the Council of
Ministers approve that blending be allowed to continue, without the
accusations that were levelled against Kurdi over the same issue. The
Council of Ministers approved the request in its resolution dated 13
January 2013 and JPMC’s management was duly informed (annex b).
Blending has been an established practice in Jordan for over 30 years, and
one, which is common in the global Phosphate market, and demanded by
clients.
21 | P a g e w w w . p h o s p h a t e . m e
WERE THERE OTHER COMPANIES FOR WHOM BLENDING WAS DONE, OR WAS IT
ONLY DONE FOR QUARTZ?
Blending was done for all clients, not only Quartz, and sometimes in greater
quantities than was done for Quartz. This was done to improve the quality of the
product for the client, and to secure buyers. This information is documented in
official tables and can be verified.
IS IT TRUE THAT EVEN AFTER BLENDING WAS DONE, THE INDIAN BUYER DIRECTED
FORMAL COMPLAINTS TO JPMC REGARDING PHOSPHATE QUALITY, MAINTAINING
THAT THE SHIPPED PRODUCT WHICH HE PAID FOR WAS OF LOWER QUALITY THAN
THE SAMPLES AGREED UPON?
Yes, this is true. The complaints are retained in JPMC’s files and are available for
interested parties. It should also be noted that examinations of product are
conducted on one sample of shipped product, and therefore results would differ
from one sample to the other. It is also known that phosphate blending is not
conducted in laboratory conditions, so results vary. Kurdi’s responsibilities did
not extend to this technical aspect of the blending process nor did he supervise it
or operate it, as this was the area of specialist employees in JPMC.
DID JPMC’S MARKETING DEPARTMENT REPORT ANY VIOLATIONS OR DIFFERENCE
BETWEEN REQUESTED QUALITY AND THE SHIPPED QUALITY OF THE PHOSPHATE?
No. There were no violations to report due to the fact that observing clients’ silica
(soil) specifications requires blending, the practice of which was approved by the
Council of Ministers (see annex c, letter 16/1/2013 signed by Prime Minister). If
the blending process was a violation, the Council of Ministers would not have
approved blending as they in fact did.
General Remarks
o JPMC has an internal audit department and an external auditor, and the
Board of Directors and the General Assembly supervise its executive
management. Furthermore, it duly discloses all relevant information
about its operations to the Securities Commission.
22 | P a g e w w w . p h o s p h a t e . m e
o The external auditor clarified in the General Assembly meeting held on
April 2012, (regarding JPMC's operation for the year 2011) that sale
prices of JPMC's products did not fall below price ranges indicated by
international prices bulletins, including the bulletin issued by the World
Bank.
o The last investment prior to privatization that JPMC was able to attract
was in 1993, amounting to 26.6 Million Dollars. After the appointment
of Walid Kurdi in 2006, investments in JPMC amounted to 1.5 billion
Dollars, and created approximately employment opportunities.
o The annual profits of JPMC for 2012 are lower than they were in the
previous years under the management of the former Chairman. This
indicates that no waste or misappropriation of funds took place as is
alleged.
o The crime of "abuse of position" requires proof of personal intent, as
well as general intent based on knowledge and will, and neither of
which were present in this case.
o The crime of "abuse of position" requires a proof of attaining "personal
gain" by the defendant through cheating or by way of violating the rules
that govern the suspicious transactions. It is clear that the legal
prerequisite of "personal gain" has not taken place. "Personal gain" has
not been established in this case.
o The internal by-laws issued by public shareholding companies do not
include provisions for criminalization or penalization. They are no more
than decisions made by the Board of Directors and as such, they can be
amended or cancelled by Board decisions whether explicitly or
implicitly. Violating these by-laws does not constitute a crime but could
give rise to civil liability, should the elements of such liability exist.
o The attempt to criminalize a violation of JPMC's internal by-laws, by way
of analogy with the violation of laws and regulations issued by the
Government, is in fact a breach of the principles of legitimacy and
illustrates a clear ignorance of legal principles.
23 | P a g e w w w . p h o s p h a t e . m e
WHAT WERE THE AUDIT MECHANISMS IN PLACE AND WERE THEY UNAWARE OF THE
IRREGULARITIES AND ALLEGED CORRUPTION ONGOING IN JPMC?
As the writer Ziad Dabbas pointed out in his article in Al Rai on the 30th January
2013, the seven bodies responsible should take direct responsibility – if indeed
graft and fraud did occur, as alleged- for neglect and inefficiency in safeguarding
the interests of their shareholders.
The government of Jordan and Social Security own 42% of JPMC's capital, while the
strategic non-Jordanian shareholder, Brunei owns 37%, the Government of Kuwait
9.3%, and the number of individual shareholders is 2892. This would lead one to
assume a high level of credibility and professional competence as reflected in 1) the
Internal Audit Department 2) the External Auditors 3) the Members of the Board of
Directors 5) the Financial Department 6) the Department of Corporate Management
at the Ministry of Industry 7) the Commission of Financial Securities.
As the writer of the article points out, these 7 parties would be largely to blame for
the extreme allegations of financial fraud and mismanagement that the Chairman
has been accused of, particularly as they, until now, have not expressed the opinion
that any fraud or mismanagement occurred.
The Board of Directors never cast any doubt on the legality of the dealings that the
Chairman authorized, as mandated by the Board, nor did JPMC specialists, senior
managers or departments ever express dissatisfaction due to perceived losses. This
entire case is based on mere allegations that lack solid legal and/ or factual grounds,
allegations which violate the principles of justice and are not upheld by facts or the
rule of law.
24 | P a g e w w w . p h o s p h a t e . m e
The unjustified hype surrounding the case of JPMC overlooks a number of major
achievements during the management of Walid Kurdi. Among these achievements is
the successful opening up of new markets, increasing export quantities and reaching
record profits unprecedented in nearly fifty years since JPMC’s establishment.
During his management of JPMC, Kurdi bought in the major Indian company IFCO, as
a partner, in the Shaydiyyeh mine. This ensured IFCO's commitment as a buyer of
Jordanian phosphate, in a market in which competition may only be described as
harsh. The main reason behind attracting IFCO is that India is one of the largest
importers of Jordanian phosphate. The Indian market is considered the main market
for DAP fertiliser and phosphate produced by JPMC, due to the large annual
imported volume and a big increase in domestic consumption. Jordan's geographic
location plays an important role for Indian buyers, since their needs are met within
ten days as compared with other producers.
Phosphate
This important market gained recognition in 1970s, with exports growing
significantly in recent years, more specifically after the privatization of JPMC, where
phosphate imported from Jordan was the basis for many Indian industries.
The volume of Indian imports of phosphates is estimated at about 8 million tons per
year, and the current share of Jordanian phosphates in this market is about 3.5
million tons. Prior to the privatization of JPMC, it was estimated at about 1.5 million
tons, representing about 65% of the total annual exports of the company. The Indian
market is lucrative to world phosphate producers. Competition between producers
is intense, especially with Morocco, which exports about 14 million tons annually.
25 | P a g e w w w . p h o s p h a t e . m e
DAP Fertiliser
The Indian market currently imports about 7.5 - 8 million tons of DAP Fertiliser.
Some of the most important exporters to the Indian market are:
Country Million Tons Annually
United States 2
Russia 1.5
China 2.5
Morocco 1
Saudi Arabia 2
Australia 0.5
Mexico 0.5
Jordan 0.45
JPMC's share in the Indian market is about 4-5% of its total requirements, and this
accounts for about 60-65% of the production of JPMC since the start of production
in 1982.
The Indian market is one of the most important markets for JPMC because of its
proximity to Jordan and because it imports light coloured fertiliser (even though
DAP fertiliser importing countries prefer brown-coloured fertilizers) while
importing brown-coloured fertilizer from other countries.
Due to the colour and quality of Jordanian fertilizer, its markets are very limited,
namely India, Ethiopia and Iraq. Previously, markets included Saudi Arabia and
some African countries in small quantities. Ethiopia issues international bids to
procure fertilizers, and if JPMC does not succeed in winning such contracts then the
only alternative is the Indian market.
26 | P a g e w w w . p h o s p h a t e . m e
New Markets and New Partnerships
The size of the Indian market, the volume of its imports from the Jordanian
phosphate products and the intensity of competition require any prudent company
management to strive to keep this market and provide all the necessary facilities its
buyers.
It should also be noted however, that during the period of Walid Kurdi's
management, the Jordan Phosphate Company succeeded in acquiring markets in
Indonesia, Bulgaria, Holland, Mexico, the Philippines and Turkey. Either entry into
these markets was done for the first time or to retrieve these markets after they
were lost in earlier years by previous managements.
During the time that Walid Kurdi was Chairman, JPMC brought in 1.5 billion dollars,
building three new fertiliser factories (which could create thousands of new jobs), a
new port in Aqaba, and other investments for JPMC.
While Kurdi was Chairman/CEO, a contract was signed with the leading Indian
company IPL to buy up all the DAP that JPMC offered them. This in turn secured a
consistent market for JPMC all year round, and insured that any material that JPMC
could not secure buyers for, IPL would be obliged to purchase.
After Walid Kurdi left JPMC, this contract was cancelled by the next administration,
and this secure market was lost. As a result, from the end of 2012 up until the
present time (February 2013) hardly any DAP was sold at all, and it is piled up in
JPMC warehouses, while the factory plant that produces DAP has shut down. This
ongoing situation will lead to serious cash problems, as indeed has already started
to occur.
27 | P a g e w w w . p h o s p h a t e . m e
Achievements
From 2006 to 2011 (during Walid Kurdi's chairmanship of the company) JPMC made
619 million Jordanian Dinars, which equates to 260% of the total revenues that the
company achieved in the 52 years since its establishment until 2005, the total of
which was 237,5 million JD. Critics try to attribute this radical shift to increasing
global phosphate prices. However, this view overlooks other important factors that
cannot be attributed solely to this increase.
Year Gross Profit (Million JD)
Total Assets (Million JD)
2002 5.519 348.923
2003 5.064 318.485
2004 4.339 316.319
2005 10.369 320.280
2006 16.071 320.770
2007 46.110 318.295
2008 238.622 551.098
2009 92.878 574.284
2010 80.232 659.318
2011 145.255 911.721
Source JPMC Annual Audited Report. The gross profit decreases in 2009 & 2010 as the
company renovated Shaydiyyeh Factory and established a new port, besides other
factors in the market
The net ownership rights of JPMC at the end of 2005 reached 139 million Jordanian
Dinars, whereby the book value per share reached 1.86 J.D per share, compared to
633.7 Million J.D until the end of September of the current year (i.e. the book value
per share now is 8.45 J.D per share).
The rise in JPMC's profits reflected positively upon the national treasury, for which
direct returns from JPMC from 2006 until the end of September 2011 reached 437.2
million JD.
28 | P a g e w w w . p h o s p h a t e . m e
Employee benefits were improved and expanded, and JPMC was a pioneer in
granting employees the 15th and 16th level salaries. JPMC took on 800 new
employees, and end of employment compensation of 1000 JD for each year's
employment was granted. During the time of Kurdi's management, employee
incomes increased by 100%.
Local community development and social services were enhanced through JPMC's
strong support, for which the company provided more than 18 million JD between
2006 and 2011, as compared to 527 thousand JD between 200 and 2005.
During Walid Kurdi's management, JPMC made considerable achievements on
numerous fronts, including gains to the national treasury for over 437 million JD
from mining fees, customs fees, disbursed profits, state university fees, income tax,
and revenues to the Aqaba Railway Corporation, Port Authorities and others.
Audited reports indicate that revenues for 2012 (after Kurdi's resignation) were
lower than previous years. The implications of this marked decrease in productivity
and profits after he left should be more thoroughly addressed by interested parties.
29 | P a g e w w w . p h o s p h a t e . m e
Conclusion
The achievements of the 6 years of Walid Kurdi's management of JPMC have been
largely overshadowed by the smear campaign and negative coverage of recent
months. These achievements included new markets, higher exports and record
profits not reached the previous 50 years since JPMC was established.
Suffice it to say that despite the negative atmosphere and media hype created
around this case, there is sufficient evidence to show that Walid Kurdi made a very
positive contribution to JPMC, which gave the company a new and respected status
in the industry globally. Sufficient evidence also exists to show that Kurdi is not
guilty of exploitation of office and unlawful profit, nor that he gave preferential
treatment to companies for personal gain or otherwise. The documents, evidence
and witness testimonies supplied are sufficient evidence to prove that there is no
validity to the charges made against him, and that he has been subjected to the most
extreme injustice.
There is clear evidence that the justice system has not been given access to complete
information. The former Chairman/CEO acted within the mandate given to him by
the Board of Directors and that this mandate was given in accordance with the law
and the internal by-laws of JPMC. Moreover, the Chairman approved the sales
contracts upon the recommendations of JPMC employees with the specialization and
experience to negotiate (in strictly professional terms).
Dealing with intermediary companies and also the issue of blending were both
practices of JPMC since 1991 and which continue until today. Questioned ownership
has also been officially established and clarified.
30 | P a g e w w w . p h o s p h a t e . m e
Annex A
Revenues 1953 – 2005
( 52 years )
2006 – 2011*
( 5 Years )
Registered Profit (period)
238 Millions 575 Millions
Average Yearly Profit 5 Millions 115 Millions
Share Book Value 1.86 JD 8.45 JD
Source JPMC Annual Audited Report
* During the Management of Walid Kurdi
31 | P a g e w w w . p h o s p h a t e . m e
Annex B
32 | P a g e w w w . p h o s p h a t e . m e
In The Name of Allah, The All-Merciful, The Ever-Merciful
Prime Ministry
Ref : 31/17/28/1009
Date: 4th of Rabie Awwal 1434 H
16/1/2013 A.D.
Attention: Minister of Industry and Trade
With reference to your letter, No. 1/1/1/748 dated 7/1/2013.
The Cabinet has reviewed your above-mentioned letter and the enclosed letter of the Chairman of
the Board of Directors of the Jordan Phosphate Mines Company No. RM/5/2013/61 dated
7/1/2013, concerning the Jordan Phosphate Mines Company. The Cabinet, in its meeting convened
on 13/1/2013, approved the following:
1- To notify the Board of Directors of the Jordan Phosphate Mines Company of the
Government’s support of the Board to take all the necessary administrative, technical,
marketing, and legal decisions to protect the continuity of JPMC’s work and the marketing of
its products. This includes undertaking all necessary precautions to safeguard JPMC's
competitiveness in international markets, through technical procedures that improve the
quality of the product, whether by blending the raw materials or through marketing
strategies that maintain the historical markets of Jordanian phosphate, while protecting its
competitiveness in terms of the prices.
2- To postpone the consideration of taking the necessary steps to give JPMC new areas for
mining, until the completion of negotiations with Kamil Holdings Limited, whereby these
procedures will be taken in accordance with the Constitution.
Please accept the assurances of our highest consideration and esteem.
Abdullah Ensour
Prime Minister
CC:
Minister of Finance
Chairman of the Board of Directors of
the Jordan Phosphate Mines Company
Secretariat of the Cabinet
Decision No. (873)
Recommended