Open letter


 

TIDMKZG 
 
RNS Number : 1894S 
KazakhGold Group Ltd 
06 September 2010 
 

President of the Republic of Kazakhstan 
            6 September 2010 
H.E. Mr. Nursultan Nazarbayev, 
On behalf of all our stakeholders, including our employees and unaligned 
shareholders, the Board of KazakhGold Group Limited ("KazakhGold" or the 
"Company"), having discussed and approved this letter at the meeting held on 2 
September 2010, is writing to you in your capacity as President of Kazakhstan 
and because Kazakhstan holds the Chairmanship of the Organisation for Security 
and Co-operation in Europe. We write to express our concerns surrounding recent 
events related to KazakhGold's proposed reverse acquisition of Polyus Gold. 
The commercial and strategic rationale underlying the combination of KazakhGold 
and Polyus is clear and compelling - to create the leading London listed gold 
producer and market leader in the CIS, and, by this transformation, to secure 
fresh and much needed investment into KazakhGold's assets in Kazakhstan and to 
secure thousands of jobs in the region. 
Last year, after completion of Polyus's acquisition of its initial 50.1% stake 
in KazakhGold, a number of irregularities in the Company's accounts were 
identified. These were disclosed in the Company's 2009 audited accounts, which 
were approved by the Board of the Company, including at that time Aidar 
Assaubayev. 
The Company's continuing investigations into these irregularities indicate that 
companies controlled by members of the Assaubayev family were responsible for 
the misappropriation of at least USD 180 million of the Company's funds, which, 
instead of being used for their proper purpose, were diverted through sham 
contracts to companies controlled by them. Due to the size of this loss, the 
Board of KazakhGold has a duty to seek recovery of these missing funds on behalf 
of all of the Company's shareholders. Hence, legal proceedings were commenced 
against Kanat, Marusia, Aidar, Sanzhar and Baurzhan Assaubayevs (hereinafter the 
"Assaubayevs Family" or the "Family") who were former Directors of the Company, 
as well as the entity that holds the Family's shareholdings in KazakhGold. This 
action should not just be of concern to KazakhGold and its shareholders. The 
proceedings also implicitly allege that these members of the Assaubayev Family 
misled the authorities in the Republic of Kazakhstan and the UK for several 
years in reporting falsified production and financial data. 
The initiation of legal proceedings against these members of the Assaubayev 
Family appears to have triggered a surprising and unfortunate chain of events. 
First, the Kazakh Ministry of Industry and New Technologies notified the Company 
that it was annulling the prior decision to waive the state's pre-emptive right 
to acquire KazakhGold securities, not just for Polyus's acquisition of its 
initial 50.1% stake, but also the waiver obtained as recently as on 17 June 2010 
for the proposed business combination between Polyus Gold and KazakhGold. The 
Kazakh Agency for Competition also announced the retrospective revocation of its 
approval for Polyus Gold's acquisition of a majority stake in KazakhGold. 
Following this, KazakhGold was notified that a freezing order had been placed by 
the Agency on Economic and Corruption-Related Crimes ("AECC") on certain bank 
accounts held in Kazakhstan by its main operating subsidiary, JSC Kazakhaltyn 
MMC. The freezing order was made in connection with an investigation by the AECC 
into allegations of fraud by three individuals who are currently executive 
members of KazakhGold's Board of Directors (Mr. Evgeny Ivanov, Mr. German 
Pikhoya and Mr. Alexey Teksler). The Board of KazakhGold strongly refutes all 
allegations made against its directors and believes the freezing order only 
serves to harm the interests of local employees, suppliers and business 
partners. 
Based on the rapid sequence of these events, the only plausible explanation is 
that the actions of the Kazakh authorities and the AECC investigation is in 
direct response to the legal proceedings brought against the Assaubayevs Family 
by KazakhGold. 
The Board believes that the transaction between Polyus and KazakhGold was 
conducted in accordance with all regulatory requirements and with the full 
support of the Russian and Kazakh governments. The agreement was open, 
transparent and in the interest of all shareholders, who overwhelmingly 
supported the deal. The deal effectively saved KazakhGold and its local 
subsidiaries from a position of insolvency. For the Kazakh authorities to 
rescind their approval for such a transaction a year after its completion is 
highly unusual. 
The actions by the Kazakh authorities are not only to the detriment of the 
companies concerned and the thousands of employees whose incomes depend on it, 
but also may call into question the reputation of Kazakhstan itself as a forward 
looking, growing economic centre and secure investment destination. 
We ask that, as Kazakhstan holds the Chairmanship of the OCSE, a body concerned 
with the promotion and fostering of business relationships with Europe, you 
personally intervene to investigate the matters of serious concern which we have 
raised. 
Board of Directors of KazakhGold Group Limited 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 MSCLFMPTMBTMMRM
Kazera Global (LSE:KZG)
過去株価チャート
から 6 2024 まで 7 2024