Tajik tempest

The week just past witnessed a trading halt in Gulf International Minerals, owner of a 49% interest in a small gold- and silver-producing operation in Tajikistan. The trading halt, imposed by Toronto Stock Exchange regulators, was lifted after the company disclosed it had been discussing a criminal and securities investigation with the British Columbia Securities Commission and the commercial crime unit of the Royal Canadian Mounted Police.

As we reported in early March, Gulf International directors secured the resignation of the company’s president, Alastair Ralston-Saul, after the board heard allegations that he had misappropriated US$30,000 in company money and, the company said, “devised a scheme to receive a secret profit of approximately US$1.5 million on a proposed company acquisition.” Subsequent reports allege the US$30,000 went to set up an apartment in Dushanbe for Ralston-Saul’s local squeeze, and that other company money went toward personal travel and entertainment, and that well-known Central Asian staple, bribes. The string of allegations — and they are only allegations at this stage — is collected in a report by outside counsel, submitted to Gulf International’s board.

The company says Ralston-Saul admitted the wrongdoing. Ralston-Saul has since denied that. No matter: this is the kind of thing that gives venture capital companies a bad name. So does sending a president away with a $560,000 non-compete payment (which has since been rescinded).

But in that there is a kernel of hope: not all that long ago, these shows would have played out behind the curtains. Public attention, as embarrassing as it might be to the mining business, at least airs any scandals before they turn into bigger ones.