Luxor Capital Group

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Luxor Capital Group LLP is a New York-based private equity firm. As of January 2011, Luxor reportedly has a 36.14% share in the highly contested Phulbari Coal Project in Bangladesh.[1] On Dec. 21, 2010, a WikiLeaks cable revealed US diplomats had secretly pushed the Bangladeshi government to re-open plans for the mine as “Asia Energy Corporation, the company behind the Phulbari project, has sixty percent U.S. investment,” much of which documents show to be held by Luxor.[2][3]

Luxor Capital includes Luxor Capital Partners Offshore, Ltd., a Cayman Island exempted company, Luxor Management LLP, and LCG Holdings. The firm was started by Christian Leone, who used to work for Goldman Sachs.[4][5]

Phulbari Coal Project

Coal was discovered at Phulbari in Northwest Bangladesh during surveying and drilling between 1994 -1997 by the Australian mining company BHP, which entered into licensing and investment agreements with the Government of Bangladesh. The agreements were assigned to Asia Energy Corporation (Bangladesh) Pty Ltd in 1998.[6]

Many in Bangladesh have opposed the project. According to Asia Energy, 40,000 people would be involuntarily resettled by the project, although activists say the number of people evicted is likely to be ten times more.[7] According to the group Cultural Survival, a government-sponsored study estimates that 130,000 people in more than 100 villages would be immediately displaced by the mine, and another 100,000 would gradually be forced to leave as their wells and irrigation canals run dry from the mining. Independent researchers and the Jatiya Adivasi Parishad (National Indigenous Union) estimate that 50,000 Indigenous people belonging to 23 different tribal groups would be displaced or impoverished by the mine.[8]

On August 26, 2006, more than 50,000 people took part in protests against the proposed mine. The Bangladesh Rifles, a paramilitary force, opened fire on the protesters. Three young men, Tariqul, son of the municipal commissioner and panel chairman, Ameen, a young carpenter, and Salehin of the adjoining upazila Nawabganj, died instantly. One to two hundred people are reported to have been injured.
[7]

After the 2006 protest, a national strike closed down the country for four days. It ended when the government agreed to ban open-pit coal mining in Phulbari and expel Asia Energy Corporation from the country. However, the government plans to announce a new coal policy by June 2011, and GCM Resources (formerly Asia Energy Corp.) expects the mine to move forward. The National Indigenous Union and a broad coalition of human rights and environmental organizations are appealing for international support to stop the mine.[8]

WikiLeaks cable

On Dec. 21, 2010, a WikiLeaks cable revealed US diplomats had secretly pushed the Bangladeshi government to re-open plans for the mine. The cable includes comments by US Ambassador to Dhaka James Moriarty stating that “Asia Energy, the company behind the Phulbari project, has sixty percent US investment.” In the cable, sent in July of 2009, Moriarty also states that he urged the prime minister’s energy advisor Tawfiq Elahi Chowdhury to authorize coal mining, saying the “open-pit mining seemed the best way forward.”[2]

Later on in the cable, Moriarty privately noted: "Asia Energy officials told the Ambassador they were cautiously optimistic that the project would win government approval in the coming months." Moriarty also notes that Chowdhury admitted the coal mine was "politically sensitive in the light of the impoverished, historically oppressed tribal community residing on the land". Chowdhury, according to the cable, then agrees to build support for the project through the parliamentary process.[9]

Between 40% to 60% of all GCM shares are owned by companies that make up the Luxor Capital Group, all of which are owned by Christian Leone, a U.S. citizen and former Goldman Sachs employee who also operates a New-York-based hedge fund in his own name.[2]

Financing for Phulbari Project

According to BankTrack in 2010, the following firms have invested in GCM Resources (although the final tally adds up to above 100%)[10]:

LCG and Luxor Capital Group are owned by Christian Leone, which means that Leone’s companies own an estimated 53.59% of all GCM shares.

  • Credit Suisse manages shares on behalf of GCM.
  • Fidelity Investments holds equity in GCM.
  • Polo Resources holds equity in GCM.
  • As of November 2008, more than half of GCM equity is held by U.S. hedge funds including: Luxor Capital, Hound Partners LLC, L-R Capital partners, Southpoint Capital Advisors, Ospraie, and Capital Group Companies.

Articles and Resources

Sources

  1. "Phulbari coal financiers Banktrack, Jan. 2011.
  2. 2.0 2.1 2.2 "Phulbari Coal Mine, Bangladesh" International Accountability Project, accessed Feb. 2011.
  3. "GCM:Notification of major interest in shares" Investegate, Nov. 2010.
  4. "Christian Leone" SEC, February 24, 2011.
  5. Sarah Wood, "The Goldman Sachs Brand Demystified" AR, Dec. 19, 2009.
  6. "Overview" GCM Resources, accessed March 2011.
  7. 7.0 7.1 "‘You cannot eat coal’: resistance in Phulbari" Banglapraxis, August 19, 2008.
  8. 8.0 8.1 "Bangladesh: Ban Coal Mine, Save Forests and Farms" Cultural Survival, accessed Feb. 2011.
  9. Fariha Karim, "WikiLeaks cables: US pushed for reopening of Bangladesh coal mine" Guardian, Dec. 21, 2010.
  10. "Phulbari coal mine - Bangladesh - Bank Role" BankTrack, accessed March 2011.

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