GET OUT,,,,, NEWS JUST OUTKazakh Agency Accuses Ex-Kazatomprom, BTA Heads of Embezzlement
By Nariman Gizitdinov
June 1 (Bloomberg) -- Mukhtar Dzhakishev, the former president of Kazakh state-run nuclear energy company Kazatomprom, and Mukhtar Ablyazov, the ousted chairman of BTA Bank, created offshore companies to embezzle money from uranium sales, the Kazakh National Security Committee said.
The security committee, the successor to the Soviet-era KGB, said that from 2004 to 2006 Dzhakishev and Ablyazov founded companies including UrAsia London Ltd. and Jeffcott Group Ltd., whose assets were later acquired by Canada’s Uranium One Inc.
The offshore companies then created joint ventures including TOO Kyzylkum and TOO Betpak Dala, which acquired the mining rights to the Kharasan, Akdala and South Inkai uranium deposits “free of charge,” the security committee said on its Web site today. The deposits in question contain more than 200,000 metric tons of uranium worth tens of billions of dollars, it said.
The move against Dzhakishev and other former Kazatomprom officials may increase political risk in Kazakhstan and have a negative impact on foreign investment in uranium production, Edward Sterck, an analyst at BMO Capital Markets, said in a note last week. Kazakhstan has 15 percent of the world’s uranium reserves, according to the World Nuclear Association.
The accusations against Dzhakishev and Ablyazov follow the state’s takeover of BTA, the country’s biggest lender. Ablyazov was removed as BTA chairman on Feb. 2, the same day the National Wellbeing Fund Samruk-Kazyna, the primary conduit for Kazakhstan’s economic bailout, agreed to take over the bank. Kazakh prosecutors in March issued an international arrest warrant for Ablyazov for allegedly embezzling money from BTA and laundering it via loans to fictitious companies.
Nazarbayev’s Son-in-Law
Timur Kulibayev, President Nursultan Nazarbayev’s son-in- law and co-owner of Halyk Savings Bank, became a deputy head of Samruk-Kazyna and chairman of Kazatomprom in October.
Daniyar Kanafin, a lawyer for Dzhakishev, declined to comment on the security committee’s accusations and said he hadn’t been given access to case materials. Dzhamilya Dzhakisheva, wife of the former Kazatomprom chief, denied the authorities’ embezzlement claims, saying state control of the Kazakh nuclear energy company made large-scale theft impossible.
Ablyazov dismissed the accusations as “nonsense.”
“As the head of Kazatomprom, Dzhakishev couldn’t sell uranium mines, since such deals are concluded and approved by the government,” he said by telephone from an undisclosed location. “Moreover, President Nursultan Nazarbayev personally approves the sale of uranium mines.”
‘Absurd’ Reports
The security committee said the embezzlement scheme had been “confirmed in full” by a government audit in 2007.
In that year, Dzhakishev and Kazatomprom denied media reports of alleged illegal uranium-mine sales to foreign companies, calling them “absurd,” according to a company statement released to the Kazakhstan Stock Exchange.
In September 2005, former U.S. President Bill Clinton flew aboard Canadian businessman Frank Giustra’s plane to Almaty, Kazakhstan’s financial capital, where the two men dined with Nazarbayev, according to interviews and public statements at the time.
Dzhakishev said in February 2008 that Clinton, Giustra and Nazarbayev discussed the sale of stakes in three Kazakh uranium mines. “OK, keep working,” Dzhakishev quoted Nazarbayev as saying. “That’s basically all that was devoted to Kazatomprom during that meeting.”
The titular seller of two of the mines was Ablyazov, Kazakhstan’s energy minister in the late 1990s. He received $350 million through holding companies he controlled in Cyprus and the British Virgin Islands, according to an October 2005 Canadian securities filing that outlines the deal.
College Roommate
Dzhakishev said Ablyazov, a college roommate of his in the 1980s, had obtained title to the uranium deposits from the government in early 2005, assuming $1.7 million in debt.
Ablyazov declined to comment on the transaction.
Nikolai Galikhin, a deputy spokesman for Nazarbayev, declined to comment on the Clinton visit or deals concluded by Giustra.
Dzhakishev was arrested two weeks ago and accused of embezzling state shares in uranium deposits. The security committee said he had ordered Kazatomprom to sell a 30 percent stake in Kyzylkum to an offshore company for 15.6 million tenge ($104,000).
“Kazatomprom is entirely under government control,” Dzhamilya Dzhakisheva said in an open letter to Nazarbayev. For this reason, “large-scale embezzlement isn’t possible” at the company, she said. The letter, distributed to reporters in Almaty, was co-signed by Dzhakishev’s mother, the wife of his bodyguard and the wives of seven other arrested executives.
Mine Acquisitions
Giustra acquired stakes in the Kharasan, Akdala and South Inkai mines, which he consolidated in UrAsia Energy Ltd., a Toronto Stock Exchange-listed company created by his Vancouver investment bank Endeavour Financial Corp., according to the Canadian securities filing.
Giustra didn’t immediately reply to a request for comment left at his Vancouver office.
UrAsia Energy subsequently sold the Kazakh assets to Uranium One Inc.
“Uranium One’s Kazakh assets were acquired in November 2005 from a group of Kazakh investors by UrAsia Energy Ltd., which became a subsidiary of Uranium One in April 2007,” Uranium One said in a statement last week.
‘Full Value’
“UrAsia paid full value for these assets, including $75 million for its 30 percent interest in Kyzylkum, which operates the Kharasan uranium project, and $350 million for its 70 percent interest in the Betpak Dala joint venture, which operates the Akdala and South Inkai mines,” Uranium One said.
“UrAsia’s acquisition of these assets, as well as Uranium One’s subsequent acquisition of UrAsia, were completed in accordance with the requirements of Kazakh law, and both transactions were approved by the Kazakh authorities,” the company said.
To contact the reporter on this story: Nariman Gizitdinov in Almaty, through the Moscow newsroom at +7- ngizitdinov@bloomberg.net
Last Updated: June 1, 2009 13:09 EDT