The Full Story of Jordan Phosphate Mines Company

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

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


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.


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.


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.


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.


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.


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


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.


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.


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?


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.


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.


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.


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.


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.

• 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.


• 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.


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.


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.


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 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

Source: JPMC Annual Audited Reports


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.


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.


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.


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.


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


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.


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.


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.


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)


Annex C


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. 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.

2. 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. 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.

2. 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