Contents Overview __________________________________________________________________________________________________ 3 Summary of Charges against Walid Kurdi in the JPMC Case __________________________________________ 5
A - Shipping Contracts ___________________________________________________________________ 5 B - Intermediary Companies ____________________________________________________________ 5 C - Blending of Phosphate _______________________________________________________________ 5 Political Background _____________________________________________________________________________________ 6
The Role of Anti-Corruption Commission _____________________________________________ 7 The Law ___________________________________________________________________________________________________ 9 Allegations _______________________________________________________________________________________________ 12
Responses to Allegations _______________________________________________________________ 13 Responses to Shipping Contracts Allegations: _____________________________________ 14 Responses to Intermediary Companies Allegations _______________________________ 14 Responses to Phosphate Blending Allegations _____________________________________ 16 General Remarks ________________________________________________________________________ 16 Facts About Walid Kurdi's Management_______________________________________________________________ 18 Questions and Answers _________________________________________________________________________________ 23
Shipping _________________________________________________________________________________ 23 Intermediary Companies_______________________________________________________________ 25 Blending _________________________________________________________________________________ 27 Annex A __________________________________________________________________________________________________ 29 Annex B __________________________________________________________________________________________________ 30 Annex C __________________________________________________________________________________________________ 32
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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.
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Overview 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 during 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 that have been 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. 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.
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Investigation by the Anti-Corruption Commission in JPMC and it Chairman/CEO, commenced at the end of 2010. For two years, and in contradiction of the ACC's laws which stipulate the timeframe for investigations, there was a drawn out process of calling in witnesses, interviewing employees, and gathering files and information from JPMC. 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. The memorandum addressed the issue of reform and the question of how to deal with the opposition's stance, as well as much of the general public’s rejection of the format of the upcoming elections, which had stirred so much debate all over the country. The memorandum underlined the importance of raising the public's confidence in the government's political commitment to reform and fighting corruption, by instantly taking action in the case of JPMC. Immediately, and after nearly two years, there was a fast tracking of the issue, whereby the case of Walid Kurdi was handed over for trial. There was an unprecedentedly quick calling of witnesses and the rapid unfolding of a court hearing.
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Summary of Charges against Walid Kurdi in the JPMC Case On 30 December 2012, the Prosecutor General indicted Walid Kurdi with ten counts of exploitation of office, based on the following:
It is alleged that Walid Kurdi 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.
It is alleged that Walid Kurdi 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 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.
It is alleged that Walid Kurdi 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. 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 this mandate was given in accordance with the law and the internal 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. 5|Page
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Political Background 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 credibility 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 nor politicians - have been fair. 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.
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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. 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. 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 7|Page
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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. On a number of occasions, individuals were told that they were not the target, 'it is Walid we want'. 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. 8|Page
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The Law 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, without being allowed to call their families. All this is contrary to the provisions of the laws in force and the international conventions.
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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 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.'
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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. " 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?
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Allegations 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 (Please refer to Annex C) . So where is the 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.
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These figures provide indications which 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 diammonium phosphate (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?
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.
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Responses to Shipping Contracts Allegations: 1.
JPMC sent an official letter to the Public Prosecutor on the 26th/12/ 2012, indicating that it does not cover shipping fees at all, and that these costs were borne by the buyer (Please refer to Annex C).
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
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 diammonium phosphate (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.
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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.
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.
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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 (nonblended) 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.
•
JPMC has an internal audit department and an external auditor, and its executive management is supervised by the Board of Directors and the General Assembly. Furthermore, it duly discloses all relevant information about its operations to the Securities Commission.
•
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.
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•
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.
•
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.
•
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.
•
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.
•
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.
•
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.
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Facts About Walid Kurdi's Management From 2006 to 2011 (during Walid Kurdi's time as Chairman and CEO of the company), JPMC made 619 million Jordanian Dinars. This 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. 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. During Kurdi's management, JPMC found a new a new niche in a global market where Jordan was a small competitor. The World Bank and competitors such as Morocco had a newfound respect for JPMC, which was reflected in new partnerships, and markets. 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. Walid Kurdi led the transformation of JPMC from a state-run company that incurred substantial annual losses, to one that was efficient and generated hundreds of millions of Jordanian Dinars for the National Treasury. Direct returns to the Treasury from JPMC from 2006 until the end of September 2011 reached 437.2 million JD. Returns to the Treasury from JPMC included mining fees, customs fees, disbursed profits, state university fees, income tax, and revenues to the Aqaba Railway Corporation and Port Authorities. 18 | P a g e
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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 JD 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 JD per share). 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 Reports
Stronger Markets and New Partnerships Competition between producers is intense, especially with Morocco, whose exports of about 14 million tons annually are increasing. During the period of Walid Kurdi's management, the JPMC succeeded in acquiring markets in Indonesia, Bulgaria, Holland, Mexico, the Philippines and Turkey. Entry into these markets was either new, or certain markets were retrieved after they were lost in earlier years by previous managements.
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The Indian Market The Indian market is lucrative to world phosphate producers, and is considered the main market for phosphate and DAP fertiliser produced by JPMC, due to India's 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. 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 was that India is one of the largest importers of Jordanian phosphate. 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 to its buyers. The volume of Indian imports of phosphate 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 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 currently imports about 7.5 - 8 million tons of DAP Fertiliser. Some of the most important exporters to the Indian market are: Country United States
Million Tons Annually 2
Russia
1.5
China
2.5
Morocco
1
Saudi Arabia
2
Australia
0.5
Mexico
0.5
Jordan
0.45 Source: JPMC Annual Audited Reports
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JPMC's share in the Indian fertiliser 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 DAP 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. 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.
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Community and Employee Benefits During This Time 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. 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 2000 and 2005. 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%.
The Situation Today Audited reports indicate that revenues in general 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. 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.
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Questions and Answers
QUESTION: THERE IS AN ALLEGATION THAT THE CEO MADE JPMC SPEND OVER 40 MILLION J.D IN SHIPPING FEES?
Answer: 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 (please refer to Annex C), 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. QUESTION: IS IT TRUE THAT AFTER WALID KURDI ASSUMED THE POSITION OF CHAIRMAN/CEO, JPMC MADE THE AQABA DEVELOPMENT COMPANY ITS AGENT FOR ALL CONTRACTS?
Answer: 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.
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QUESTION: DID JPMC BEAR THE SHIPPING COSTS TO TURKEY AND ETHIOPIA?
Answer: 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 (please refer to Annex C), and the testimony of the witnesses who are familiar with JPMC’s work. The shipping costs are borne by the buyer. QUESTION: 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?
Answer: 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. QUESTION: IS IT TRUE THAT THE MARINE CHARTER COMPANY (AL MUSHARATA) IS A CERTIFIED INTERMEDIARY FOR JPMC?
Answer: No. JPMC owns 30% of the Marine Charter Company, and did not appoint the Marine Charter Company as a intermediary to dock vessels, at least after 2004. QUESTION: IS IT TRUE THAT THE MARINE CHARTER COMPANY (AL MUSHARATA) WAS ESTABLISHED TO SERVE JPMC AND THE ARAB POTASH COMPANY?
Answer: 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.
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QUESTION: 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?
Answer: 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. QUESTION: DID JPMC PROVIDE THE COMPANY QUARTZ WITH ADDITIONAL QUANTITIES TO THOSE AGREED UPON, AS SOME KIND OF PREFERENTIAL TREATMENT?
Answer: 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. QUESTION: 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?
Answer: 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 25 | P a g e
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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. QUESTION: WERE THE NEGOTIATIONS ON THE PRICES CONDUCTED BY WALID KURDI ALONE WITHOUT THE INTERFERENCE OF THIRD PARTIES?
Answer: No, Kurdi was not responsible for negotiating prices. The negotiations were done by the relevant managers in charge in JPMC and Kurdi signed the contracts upon their recommendation, on the basis of their negotiations. QUESTION: DOES JPMC SOMETIMES DEAL WITH THE FINAL BUYER THROUGH INTERMEDIARIES?
Answer: 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.
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QUESTION: WERE THERE OTHER COMPANIES FOR WHOM BLENDING WAS DONE, OR WAS IT ONLY DONE FOR QUARTZ?
Answer: 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. QUESTION: 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?
Answer: 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. QUESTION: DID JPMC’S MARKETING DEPARTMENT REPORT ANY VIOLATIONS OR DIFFERENCE BETWEEN REQUESTED QUALITY AND THE SHIPPED QUALITY OF THE PHOSPHATE?
Answer: 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.
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QUESTION: WHAT WERE THE AUDIT MECHANISMS IN PLACE AND WERE THEY UNAWARE OF THE IRREGULARITIES AND ALLEGED CORRUPTION ONGOING IN JPMC?
Answer: 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.
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Annex A
Revenues
Registered Profit (period)
Average Yearly Profit
Share Book Value
1953 – 2005 ( 52 years )
2006 – 2011* ( 5 Years )
238 Millions
575 Millions
5 Millions
115 Millions
1.86 JD
8.45 JD
Source JPMC Annual Audited Report * During the Management of Walid Kurdi
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Annex B
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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)
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Annex C
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JORDAN PHOSPHATE MINES CO. PLC Amman – The Hashemite Kingdom of Jordan Ref: ……………… Date: ……………..
His Excellency Mr Abdul Elah El Assaf, the venerable Attorney General of Anti-Corruption Commission Dear Sir, With reference to your letter No. 22/2012 dated 10/10/2012 in relation to the investigation case No. 22/2012, and your request that the Jordan Phosphate Mines Company: 1.
2.
Declares the responsible party for the shipping charges of phosphate and fertilizers exported to India through Sencomix and Astra Global during the period between the beginning of 2008 and the middle of 2011. In the event that the Jordan Phosphate Mines Company pays such charges, to declare whether such fees are charged to purchasers in the Indian market separate from the prices of the shipped materials (phosphate and fertilizers) or whether they are charged to the Jordan Phosphate Mines Company.
After reviewing the files related to this matter, please be advised of the following: 1.
2.
The Jordan Phosphate Mines Company has paid the shipping charges directly to Sencomix. However, the Phosphate Company did not conclude any contracts with Astra Global to transport any quantities of phosphate and fertilizers to India. The Jordan Phosphate Mines Company did not actually bear these shipping charges. Rather, the purchasing companies in India paid them through incoming credits or remittances based on the bills of sale issued to these companies, and based on the sale contracts which specify the price of sale and the price of shipping. Thus, the purchasers bore the shipping charges away from the prices of the shipped material. In cases where the purchaser was given a grace period for deferred payment, the Company paid the transport charges before receiving the amount of remittance or credit. The Jordan Phosphate Mines Company used to obtain the purchaser’s prior agreement on the amount of the shipping charges.
Best Regards, Emad El Madadha Executive President 33 | P a g e
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