Hydro fends off corruption concerns

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One of Norway’s biggest international companies, Hydro, has been trying hard to control and contain information about its controversial past in the former Soviet republic of Tajikistan. It may be backfiring, though, as corruption questions keep mounting and top government officials aren’t satisfied with Hydro’s answers.

Executives here at Hydro's headquarters at Vækerø in Oslo are facing mounting questions over their involvement in Tajikistan, one of the world's most corrupt countries. PHOTO: HYDRO ASA

Executives here at Hydro’s headquarters at Vækerø in Oslo are facing mounting questions over their involvement in Tajikistan, one of the world’s most corrupt countries. PHOTO: HYDRO ASA

“Based on my evaluation of information we have received, and other information that has come forward in recent days, I will ask the company for a more thorough accounting,” Monica Mæland, Norway’s government minister in charge of business and trade, wrote in an email to newspaper Dagens Næringsliv (DN) this week.

Not only is Hydro’s management being asked to answer more questions, so is Hydro’s board of directors. DN reported on Wednesday that in a letter sent by the ministry to Hydro Chairman Dag Mejdell earlier this week, ministry official Mette Wikborg asks that he account for how the board has been involved in the case, and at what points in time.

Questions are also being raised about what each individual board member knew about Hydro’s billion-kroner business in one of the most corrupt countries in the world, not least one member who was a state secretary in Norway’s foreign ministry at a time when it, too, was involved in Hydro’s negotiations with Tajikistan’s president and his inner circle. Her name is Liv Monica Stubholt, once a high-profile politician and lawyer, and she has refused to speak with DN.

Trade Minister Monica Mæland, faced with questions from the parliament's disciplinary committee over Hydro's involvement in Tajikistan, now has some questions of her own for Hydro's management and board. PHOTO: Næringsdepartementet

Trade Minister Monica Mæland, faced with questions from the parliament’s disciplinary committee over Hydro’s involvement in Tajikistan, now has some questions of her own for Hydro’s management and board. PHOTO: Næringsdepartementet

Mæland’s mail to DN came after the newspaper published a lengthy article last weekend detailing Hydro’s nearly 20 years of trading with a those controlling an aluminum plant in Tajikistan, often ranked as one of the most corrupt countries in the world. Hydro officials negotiated directly with Tajikistan’s powerful president Emomalii Rahmon and his inner circle, all of whom, DN reported, have been suspected by international organizations and institutions for years of enriching themselves on transactions tied to the plant. Hydro had been warned by both the World Bank and the International Monetary Fund against conducting the business it did in Tajikistan.

DN also wrote about how Hydro entered into an agreement with a company said to have exclusive trading rights for the aluminum plant. The mysterious company was backed by hidden owners and based in the tax haven of the British Virgin Islands. Before that, Hydro had conducted business with two other companies tied to Tajikistan’s aluminum plant, both of them also based in tax havens.

Minister Mæland, from the Conservative Party, initially declined to comment on Hydro’s involvement in Tajikistan, but changed her mind after several members of the Parliament’s discliplinary committee said they intended to question Maeland herself on how she has monitored Hydro’s business conduct. The Norwegian state owns a major stake in Hydro that Mæland is formally responsible for overseeing.

‘Very concerned’
“I’m very concerned about companies’ work regarding openness around payments streams and anti-corruption efforts, and this applies especially to companies in which the state is an owner,” Mæland wrote to DN.

DN could also reveal that Hydro had tried to head her off in advance of DN‘s story being published. While Hydro itself insisted on communicating with DN strictly through written email correspondence and refused to set up interviews with top company executives, it clearly believed that the best defense regarding the trade minister’s reaction would be a good offense. Knowing that DN was on the verge of publishing its story last weekend, it contacted Mæland directly and asked for a meeting to explain its position on the Tajikistan trade before she had a chance to read DN‘s critical account.

“The ministry received, as responsible for the state’s ownership stake in Norsk Hydro, an orientation about the case in a meeting with the company on February 12, 2016,” Mæland disclosed in her mail to DN. The meeting came, she wrote, “at the initiative of the company.” She added, though, that Hydro to a large degree merely used the meeting to repeat a statement it had prepared and published on its own website (external link).

‘Interested in openness’
After also reading DN‘s 10-page account published last Saturday, Mæland found Hydro’s account insufficient and has since demanded more answers. “We are very open to offering an additional account if that’s desired, because we are also interested in openness around this case, and that all facts come on the table,” Erik Brynhildsbakken, assistant director for communications in Hydro, told DN on Tuesday. He referred to Mæland’s dissatifaction with Hydro’s answer as “an opportunity to shed light on the facts, so we look positively on a dialog over this complicated case.”

Mæland’s many recent predecessors as trade minister, all of whom served when Hydro was still active in Tajikistan, have all professed that they have no memory of its business there, even though Norway’s foreign minister at the time (Jonas Gahr Støre of the Labour Party) got personally involved as did several diplomats and ambassadors in the foreign ministry. They have all claimed they can’t remember any details around the Tajikistan trade as well.

Inge K Hansen, deputy leader of Hydro's board, has been an outspoken critic of Telenor's corruption scandal. Now, faced witih corruption concerns at Hydro, he's gone quiet. PHOTO: Hydro

Inge K Hansen, deputy leader of Hydro’s board, has been an outspoken critic of Telenor’s corruption scandal. Now, faced witih corruption concerns at Hydro, he’s gone quiet. PHOTO: Hydro

Hydro’s professed desire for “openness,” meanwhile, clearly does not extend to its own executives or members of its own board of directors. None has agreed to interviews, and in a story published in DN on Wednesday, not even the board member who represents Hydro employees would respond to DN‘s questions. One board member who’s held his seat since 2007, Billy Fredagsvik,  initially told DN he couldn’t remember the case being discussed at board level but later sent a message asking that his response be ignored. “On winter holiday,” he wrote. “Contact (those responsible for dealing with the press) at Hydro.”

Inge K Hansen, deputy leader of Hydro’s board who’s been highly outspoken and critical about management at Telenor over how it has handled a recent corruption scandal, is now keeping a much lower profile as a corruption cloud settles over Hydro. “The case is being handled by the administration at Hydro, so please contact them with any questions,” he wrote in response to DN‘s request for an interview.

Monica Stubholt is a former state secretary who was involved in Hydro's negotiations with the president of Tajikistan. She later became a member of Hydro's board. Now she won't talk about her role in Hydro's business in Tajikistan. PHOTO: Hydro ASA

Liv Monica Stubholt is a former state secretary who was involved in Hydro’s negotiations with the president of Tajikistan. She later became a member of Hydro’s board. Now she won’t talk about her role in Hydro’s business in Tajikistan. PHOTO: Hydro ASA

Also ducking any interview is Hydro board member Liv Monica Stubholt, the high-profile state secretary in the foreign ministry from 2005 to 2007, right when top Hydro executives were negotiating with Tajikistan’s president, the president’s brother-in-law and his inner circle at meetings in both Tajikistan and Dubai.  DN reported that it has copies of correspondence that shows how Stubholt, in her role as as state secretary, received information about the negotiations along with other diplomats and foreign ministry officials.

Stubholt, now a partner at Oslo law firm Selmer, also refused to speak with DN when it asked her to comment, referring all questions to Hydro’s administration. DN then sent its questions to Hydro’s communications department and Stubholt sent a terse reply back:

“I was state secretary in the foreign ministry in the period 2005 to 2007. I was not actively involved in the case in my time as state secretary at the foreign ministry. I have been a member of the board of Hydro since 2010. The board’s leader (Mejdell) will orient the (trade minister) about the board’s involvement in the case. Beyond that, I defer to Hydro’s (press spokesmen).”

When DN asked for a comment from Stubholt about the correspondence she received about Hydro’s involvement in Tajikistan while she was state secretary, Brynhildsbakken replied that “Stubholt does not want to comment on that beyond what I sent to you earlier.”

Hydro Chairman Dag Mejdell had 'no further comment' apart from telling DN he had read its report on corruption concerns at the company. PHOTO: Hydro

Hydro Chairman Dag Mejdell had ‘no further comment’ apart from telling DN he had read its report on corruption concerns at the company. PHOTO: Hydro

Stubholt joined Hydro’s board in 2010, when Hydro was still doing business with the regime-controlled aluminum plant in Tajikistan. By that time, even the International Monetary Fund was criticizing the country’s financial operations as being completely non-transparent, and that owners of companies charged with the plant’s trade were kept hidden. Other international organizations were condemning how hidden owners in tax havens were handling the money streams flowing around the smelter’s operations. DN has reported that Hydro’s involvement continued until 2013.

It’s also difficult to find many traces of Hydro’s nearly 20 years of doing business in Tajikistan on its own website or in officials presentations, reports to investors and quarterly reports since Hydro’s annual report in 2005. Chairman Mejdell won’t answer when he first became aware of the company’s Tajikistan engagement, or Mæland’s interest in the board’s role. “I have naturally enough read DN‘s front-page story but have no further comment apart from what’s published on Hydro’s homepage,” Mejdell wrote in a text message to DN.

newsinenglish.no/Nina Berglund