Red Star Enterprises Ltd. and Mina Corp, two companies at the center of a US congressional investigation into fuel contracting practices in Kyrgyzstan, have pledged to cooperate with investigators and have negotiated a document submission extension, according to a reliable source familiar with the investigation.
In addition, three individuals associated with the companies, Chuck Squires, Erkin Bekbolotov and Doug Edelman, will not have to appear before a congressional committee in the coming days, despite being issued with subpoenas on July 1. [For background see EurasiaNet’s archive]. Squires had been due to appear on July 15, with Bekbolotov and Edelman’s testimony dates scheduled for July 20 and July 22 respectively.
William Burck, Red Star's attorney and a partner in the law firm Weil, Gotshal and Manges' White Collar Defense and Investigation Group, disputed the idea that a deal had been struck. “The companies remain in discussions with the subcommittee and hope to achieve a resolution soon,” William Burck told EurasiaNet.org on July 15.
Meanwhile, the source close to the investigation said Squires and Edelman will now be asked to give depositions under oath at a later date. Bekbolotov may also be called. They will be questioned extensively by lawyers for the House Subcommittee for National Security and Foreign Affairs. The new arrangement will give subcommittee lawyers time to thoroughly review documents submitted by the companies and individuals involved, the source said.
“The Committee wants a deposition not a hearing. It’ll be serious and focused,” the source said. The depositions will be heard privately, but transcripts may be made available at a later date, the source added.
Investigators originally asked Red Star and Mina Corp representatives to provide requested information by May 3. [For background see EurasiaNet’s archive]. The companies and their lawyers used a variety of legal tactics to delay and avoid making these documents available, including arguments that the foreign registration of Red Star and Mina Corp provides them with grounds to not cooperate, the source said.
The companies do not pay US taxes and are registered in the offshore tax haven of Gibraltar. Mina Corp also maintains company registration in London, while Red Star’s London registration was dissolved on May 5, 2009. “The [companies’] lawyers were drawing things out and shuffling. The subpoenas were leverage [to get them to cooperate.] The [House] committee wants to see the documents, they want to ask serious questions,” the source continued.
“The companies were using their status as overseas registered entities to evade compliance,” the source continued. “US Marshals were involved in serving the subpoenas, and they were finding it difficult to do so.”
The subcommittee is seeking to establish what business relationships Red Star and Mina Corp built in Kyrgyzstan with companies reportedly controlled by Maxim Bakiyev, the son of former Kyrgyz president Kurmanbek Bakiyev. [For background see EurasiaNet’s archive].
Investigators are also trying to determine what the Department of Defense and the State Department knew about fuel contracting arrangements. Investigators have requested a variety documents and correspondence from Red Star, Mina Corp, the Pentagon, the State Department, the Federal Bureau of Investigations and from Squires, Bekbolotov and Edelman.
Red Star and Mina Corp, the previous and current holders of US government contracts to supply jet fuel to the Manas air base near Bishkek, deny any wrong doing.
Mina Corp’s current contract at Manas, signed last July by deputy director of operations Edward M. Graves, is worth up to $730.9 million over three years. It contained an option clause that allowed it to be re-bid annually. The contract is now subject to a full and open competition. A fuel industry insider described the competition for the multi-million dollar opportunity as “vigorous.”
There were no other bidders for the Manas fuel contract in 2009. The justification cited was the “national security” clause of the Federal Acquisition Regulations system.
Deirdre Tynan is a Bishkek-based reporter specializing in Central Asian affairs.
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