Identifier
Created
Classification
Origin
06ASHGABAT984
2006-09-18 09:25:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Ashgabat
Cable title:  

U.S. Company Loses Heart over Dispute that Attracts Turkmen

Tags:  BEXP BTIO ETRD EINV KIDE TX 
pdf how-to read a cable
VZCZCXYZ5617
RR RUEHWEB

DE RUEHAH #0984/01 2610925
ZNR UUUUU ZZH
R 180925Z SEP 06
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC 7809
INFO RUCPDOC/USDOC WASHDC 1744
RUEHTA/AMEMBASSY ALMATY 5443
UNCLAS ASHGABAT 000984 

SIPDIS

DEPT FOR SCA/CEN (PERRY),EB/CBA (WINSTEAD/WALTERS),EB/IFD/OIA
(ROSELI),L/CID (DAUGHTRY)
ALMATY FOR SCHAAG

SENSITIVE, SIPDIS

E.O. 12958: N/A
TAGS: BEXP BTIO ETRD EINV KIDE TX
SUBJECT: U.S. Company Loses Heart over Dispute that Attracts Turkmen
President's Attention

REFS: ASHGABAT 607

Summary
-------

UNCLAS ASHGABAT 000984

SIPDIS

DEPT FOR SCA/CEN (PERRY),EB/CBA (WINSTEAD/WALTERS),EB/IFD/OIA
(ROSELI),L/CID (DAUGHTRY)
ALMATY FOR SCHAAG

SENSITIVE, SIPDIS

E.O. 12958: N/A
TAGS: BEXP BTIO ETRD EINV KIDE TX
SUBJECT: U.S. Company Loses Heart over Dispute that Attracts Turkmen
President's Attention

REFS: ASHGABAT 607

Summary
--------------


1. (SBU) Amcom, a US company with a long-standing contract dispute
with "Turkmendokun" State Company over carbon black (a pigment
commonly used in automobile tires) supplies, advised embassy not to
advocate on its behalf. As Turkmenistan President Niyazov
reportedly was made aware of Amcom's contracts in conjunction with
an embezzlement case, Amcom's former local representative saw "no
chance to win the dispute." While Amcom may simply want to avoid
harming future business opportunities in Turkmenistan by dropping
the issue, the dispute further tarnishes Turkmenistan's image as a
reliable business partner. End Summary.

History of Amcom Advocacy Cases
--------------


2. (U) In December 2005, embassy began its advocacy work on behalf
of Amcom LLC, a firm incorporated and based in New York state, by
requesting the "Turkmendokun" ("Turkmen Fertilizers," formerly known
as "Turkmen Fertilizers and Chemistry") State Company to expedite
the delivery of 3,000 tons of carbon black contracted to Amcom in
November 2004 at a price of $320.00 per ton (contract #B-008830).
By early 2006, the seller provided all but 333.5 tons of carbon
black for which payment had not yet been made (see reftel). (Note:
Many contracts in Turkmenistan require pre-payment. End Note.)
Amcom paid the additional funds in early 2006, but the remaining
333.5 tons were never delivered. Amcom's advocacy case for the
remaining 333.5 tons was pending as of August 2006.


3. (U) In June 2006, Amcom filed another advocacy case for a
different contract (#B-007459) with Turkmendokun in December 2005
for the purchase of 250 tons of carbon black at a price of $955.00
per ton. Turkmendokun, without any explanation, refused to release
the carbon black to Amcom. Post received the case in August and has
not taken any action on it.

Problems Arise with Dismissal of Turkmendokun Chief
-------------- --------------


4. (U) At an August 28 Cabinet session, the National Security
Minister reported to President Saparmyrat Niyazov about embezzlement
activity at a carbon black-producing chemical plant in the western
coastal town of Hazar (formerly Cheleken). The plant falls under
the aegis of Turkmendokun. Suleyman Hanov, Turkmendokun Chairman,
was implicated. Niyazov strongly criticized Hanov, but said he
would not fire him as long as he repaid "embezzled" money. On
September 4, official media reported a presidential decree firing
Hanov and a report detailing Hanov's numerous crimes. The two Amcom
contracts, which were described as "not in the interest of the
[Turkmen] state" were among the accusations against Hanov. The
report claimed the state suffered losses of $640,000 as a result of
these contracts, but did not blame Amcom representatives for illegal
acts.

Amcom's Reaction
--------------


5. (SBU) On August 29, a day after the carbon black embezzlement
cases were announced, Amcom's former local representative told
embassy that, due to President Niyazov's attention, "Amcom has no
chance to win the dispute." He also requested that the embassy not
pursue the case any further, because "it could lead to
repercussions" for him. After learning of the August 28 and
September 4 reports, Amcom President Alexei Shehovsov stressed to
the embassy that the contracts "were duly negotiated and registered"
and that Amcom did not agree with claims that the contract prices
were low. Instead, the Amcom President noted that "the [Turkmen]
state authorities failed to take into account the substantial added
costs incurred by Amcom to bring their carbon black to market in a
marketable condition." Nevertheless, Shehovsov saw "no point to
embassy's further intervention on Amcom's behalf in pursuing any
unfulfilled contracts."

Comment
--------------


6. (SBU) Amcom's points justifying its paying a fair market price
for carbon black seem reasonable. And it is not uncommon for
Turkmenistan's investigative bodies to add ungrounded charges in its
incriminations. While Amcom seems to have given up easily, the
company either did not want to burn bridges in this country or
simply figured it had slim chances of winning this fight. Once
again, the Turkmenistan government's actions contribute to its image
as an unreliable business partner, but post expects a certain number

of small-scale risky U.S. businessmen to keep coming to Turkmenistan
looking for niche and high-margin business opportunities. End
Comment.

BRUSH