the full story about jordan phosphate mines co

1 | P a g e w w w . p h o s p h a t e . m e

Contents

Introduction: _____________________________________________________________________________________________ 4

Background _______________________________________________________________________________________________ 6

Summary of the most important insights into the case of JPMC _____________________________________ 11

The law was the first victim of this case ______________________________________________ 11

Violating the law in terms of duration of investigation ____________________________ 11

Violating the law in terms of the protection of witnesses _________________________ 11

Violating the law in terms of confidentiality of the investigation_________________ 12

Violating the law in terms of interference in judicial procedures ________________ 12

Charges AGAINST WALID Kurdi in the JPMC Case ___________________________________ 13

Summary of Charges _________________________________________________________________ 13

Responses to Allegations _____________________________________________________________ 14

Responses to Shipping Contracts Allegations ______________________________________ 15

Responses to Intermediary Companies Allegations _______________________________ 17

Responses to Phosphate Blending Allegations _____________________________________ 20

General Remarks______________________________________________________________________ 21

Facts about Walid Kurdi's Management OF JPMC ____________________________________ 24

Phosphate _____________________________________________________________________________ 24

DAP Fertiliser _________________________________________________________________________ 25

New Markets and New Partnerships ________________________________________________ 26

Achievements____________________________________________________________________________________________ 27

Conclusion _______________________________________________________________________________________________ 29

Annex A __________________________________________________________________________________________________ 30

Comparison: before and after privatisation __________________________________________ 30

Annex B __________________________________________________________________________________________________ 31

Letter from PM on decision to continue practise of blending – Arabic Original ___ 31

Letter from PM on decision to continue practise of blending - English translation

___________________________________________________________________________________________ 32


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.


Introduction:

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 success 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 or politicians - have been fair.

Walid Kurdi was Chairman of the Board of Directors and Chief Executive Officer of

JPMC from mid-2006 until March 2012. During his time there, he worked hard to

promote the interests of JPMC, and succeeded in maximizing revenues and

increasing profits. 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. Walid

Kurdi led the transformation of JPMC from a loss-making company, to one that

generated hundreds of millions of Jordanian Dinars for the National Treasury.

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. 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. These

figures provide indications that 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

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?


Background

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.

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 which state, in Article 7:

' D. - Unlike any other legislation, the Commission is bound to make its

decisions within a time limit of three months from the start of its

investigation...'

Obviously, the ACC did not uphold this in the case of JPMC, and it took two years of

investigation to send the case to trial.

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

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. Many were

warned that if they were not going to cooperate as witnesses, they would be

considered suspects.

On a number of occasions, individuals were told that they were not the target, 'it is

Walid we want'. Witnesses were sometimes called in late at night, until the early

hours of the morning, some were prevented from calling their families. Some

individuals brought in for questioning actually filed official complaints against the

Commission, because of the treatment they received.


This treatment is also in contradiction with the by-laws of the ACC, which clearly

state in article 23, about 'Providing necessary protection' for witnesses, informants

and specialists called on in corruption allegations.

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.

For almost two years, this process continued until the 18th December 2012, when

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 Bassam Haddadin.

The memorandum addressed the issue of reform and the question of how to deal

with both 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.

In his memorandum, Haddadin underlined the need for the government to take

rapid measures, in the course of one week, on the subject of anti-corruption,

particularly in the case of JPMC, because, as he maintained, this would increase the

confidence of the public regarding the commitment of the government to reform and

fighting corruption.

Immediately, and after nearly two years, there was a fast tracking of the issue,

whereby the case was handed over for trial and an unprecedentedly rapid calling of

witnesses and the unfolding of a court hearing.

By ignoring the dramatic and indisputable achievements of JPMC during the 6 years

that Kurdi was Chairman and CEO, 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 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.

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.

JPMC made the transition from being a state-run industry which incurred

substantial annual losses, to one that was efficient and capable of carving 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.

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.

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.

See annex a, for a comparison of JPMC before and after privatisation


Summary of the most important insights into the case of JPMC

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. All this is contrary to the

provisions of the laws in force and the international conventions.

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.'

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?

Summary of Charges

On 30 December 2012, the Prosecutor General indicted Walid Kurdi with ten counts

of exploitation of office. The indictment centres on the following

Shipping Contracts

Walid Kurdi had 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.

Intermediary Companies

Walid Kurdi had 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.

Blending of Phosphate

Walid Kurdi had 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.

Responses to Allegations

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.


Responses to Shipping Contracts Allegations

1. JPMC sent an official letter to the Public Prosecutor on the 26/12/2012,

indicating that it does not cover shipping fees at all, and that these costs

were borne by the buyer.

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.

THERE IS AN ALLEGATION THAT THE CEO MADE JPMC SPEND OVER 40 MILLION

DINARS IN SHIPPING FEES?

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, 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..


IS IT TRUE THAT AFTER WALID KURDI ASSUMED THE POSITION OF CHAIRMAN/CEO,

JPMC MADE THE AQABA DEVELOPMENT COMPANY ITS AGENT FOR ALL

CONTRACTS?

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.

DID JPMC BEAR THE SHIPPING COSTS TO TURKEY AND ETHIOPIA?

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, and the testimony of the witnesses who are familiar with

JPMC’s work. The shipping costs are borne by the buyer.

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?

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.

IS IT TRUE THAT THE MARINE CHARTER COMPANY (AL MUSHARATA) IS A CERTIFIED

INTERMEDIARY FOR JPMC?

No. JPMC owns 30% of the Marine Charter Company, and did not appoint the

Marine Charter Company as an intermediary to dock vessels, at least after 2004.


IS IT TRUE THAT THE MARINE CHARTER COMPANY (AL MUSHARATA) WAS

ESTABLISHED TO SERVE THE JPMC AND THE ARAB POTASH COMPANY?

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.

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 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.

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.

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?

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.


DID JPMC PROVIDE THE COMPANY QUARTZ WITH ADDITIONAL QUANTITIES TO

THOSE AGREED UPON, AS SOME KIND OF PREFERENTIAL TREATMENT?

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.

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?

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

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.

WERE THE NEGOTIATIONS ON THE PRICES DONE BY WALID KURDI ALONE WITHOUT

THE INTERFERENCE OF THIRD PARTIES?

No, Kurdi was not responsible for negotiating prices. The relevant managers in

charge in JPMC did the negotiations and Kurdi signed the contracts upon their

recommendation, based on their negotiations.


DOES JPMC DEAL SOMETIMES WITH THE FINAL BUYER THROUGH INTERMEDIARIES?

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.

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 (non-

blended) 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.


WERE THERE OTHER COMPANIES FOR WHOM BLENDING WAS DONE, OR WAS IT

ONLY DONE FOR QUARTZ?

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.

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?

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.

DID JPMC’S MARKETING DEPARTMENT REPORT ANY VIOLATIONS OR DIFFERENCE

BETWEEN REQUESTED QUALITY AND THE SHIPPED QUALITY OF THE PHOSPHATE?

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.

General Remarks

o JPMC has an internal audit department and an external auditor, and the

Board of Directors and the General Assembly supervise its executive

management. Furthermore, it duly discloses all relevant information

about its operations to the Securities Commission.


o 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.

o 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.

o 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.

o 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.

o 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.

o 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.

o 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.


WHAT WERE THE AUDIT MECHANISMS IN PLACE AND WERE THEY UNAWARE OF THE

IRREGULARITIES AND ALLEGED CORRUPTION ONGOING IN JPMC?

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.


The unjustified hype surrounding the case of JPMC overlooks a number of major

achievements during the management of Walid Kurdi. Among these achievements is

the successful opening up of new markets, increasing export quantities and reaching

record profits unprecedented in nearly fifty years since JPMC’s establishment.

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 is that India is one of the largest

importers of Jordanian phosphate. The Indian market is considered the main market

for DAP fertiliser and phosphate produced by JPMC, due to the 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.

Phosphate

This important market gained recognition in 1970s, with exports growing

significantly in recent years, more specifically after the privatization of JPMC, where

phosphate imported from Jordan was the basis for many Indian industries.

The volume of Indian imports of phosphates 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 the 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 is lucrative to world phosphate producers. Competition between producers

is intense, especially with Morocco, which exports about 14 million tons annually.


DAP Fertiliser

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 Million Tons Annually

United States 2

Russia 1.5

China 2.5

Morocco 1

Saudi Arabia 2

Australia 0.5

Mexico 0.5

Jordan 0.45

JPMC's share in the Indian 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 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.


New Markets and New Partnerships

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 its

buyers.

It should also be noted however, that during the period of Walid Kurdi's

management, the Jordan Phosphate Company succeeded in acquiring markets in

Indonesia, Bulgaria, Holland, Mexico, the Philippines and Turkey. Either entry into

these markets was done for the first time or to retrieve these markets after they

were lost in earlier years by previous managements.

During the time that Walid Kurdi was Chairman, JPMC brought in 1.5 billion dollars,

building three new fertiliser factories (which could create thousands of new jobs), a

new port in Aqaba, and other investments for JPMC.

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.


Achievements

From 2006 to 2011 (during Walid Kurdi's chairmanship of the company) JPMC made

619 million Jordanian Dinars, which 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.

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 Report. The gross profit decreases in 2009 & 2010 as the

company renovated Shaydiyyeh Factory and established a new port, besides other

factors in the market

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 J.D 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 J.D per share).

The rise in JPMC's profits reflected positively upon the national treasury, for which

direct returns from JPMC from 2006 until the end of September 2011 reached 437.2

million JD.


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%.

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 200 and 2005.

During Walid Kurdi's management, JPMC made considerable achievements on

numerous fronts, including gains to the national treasury for over 437 million JD

from mining fees, customs fees, disbursed profits, state university fees, income tax,

and revenues to the Aqaba Railway Corporation, Port Authorities and others.

Audited reports indicate that revenues 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.


Conclusion

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 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 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.

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 that this mandate was given in accordance with the law

and the internal by-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.


Annex A

Revenues 1953 – 2005

( 52 years )

2006 – 2011*

( 5 Years )

Registered Profit (period)

238 Millions 575 Millions

Average Yearly Profit 5 Millions 115 Millions

Share Book Value 1.86 JD 8.45 JD

Source JPMC Annual Audited Report

* During the Management of Walid Kurdi


Annex B


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)

the full story about jordan phosphate mines co

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